A seventh B.C. company, originally associated in an alleged illegal consulting scheme connected to Vancouver financial services firm BridgeMark Financial Corp., has been issued a hearing notice for issuing misrepresentations to investors.
The B.C. Securities Commission (BCSC) alleges G2 Energy Corp., formerly known as Green 2 Blue Energy Corp., issued two news releases in April 2018 that contained misrepresentations.
G2 Energy is one of 11 Canadian Securities Exchange (CSE)-listed companies named in a November 2018 hearing notice that’s since been amended, resulting in a pending hearing for illegal insider trading and market misconduct by four local stock promoters and their consulting companies. Meanwhile, dozens of alleged co-participants were dropped from the once extraordinary hearing notice.
G2 Energy was among the dozens of participants dropped from the original November 2018 hearing notice, which alleged a fraudulent exchange of pre-paid consulting fees and free-trading shares between 11 companies and a group of consultants and company directors.
The commission issued the new notice against G2 Energy on Dec. 19, 2022. The notice is similar to those of six other companies once involved in the Bridgemark case.
Three companies and/or their directors have since admitted to “conduct abusive to the capital markets” and/or misrepresentations to investors. Another three have hearings scheduled this year.
The commission will set a hearing date for G2 Energy Corp. on Feb. 7, 2023.
“In the first news release, Green 2 Blue announced a financing but did not disclose its intention to spend most of the funds on consultants. In the second, Green 2 Blue announced the amount raised in the financing but did not disclose that it spent most of the funds on consultants,” the commission alleges.
The notice names three former directors, who face the same allegations as the company: president and CEO Slawomir Smulewicz of West Vancouver; CFO Michael Louis Young of Vancouver; and director Glenn Albert Little of Langley.
The company had raised $4.28 million. CSE trading records showed all the funds came from the consultants, who went on to sell the shares to retail investors for a loss. However, the consulting fees they charged the companies more than covered those losses.
“Green 2 Blue stated that the proceeds would be used to complete facility upgrades, equipment purchases and for general working capital. Green 2 Blue did not disclose that it would only retain $556,340, or about 13%, of the amount raised because it spent $3,723,660 on consulting fees,” the notice states.
“Green 2 Blue made a statement to investors it knew, or ought reasonably to have known, was a misrepresentation contrary” to the B.C. Securities Act.
The commission alleges little or no consulting was actually done, as part of the arrangements. Over $50 million was raised across the 11 companies, according to the commission’s original allegations.
This is the latest in a long list of hearing notices, trade orders, amended orders, court challenges and lawsuits — including a class-action lawsuit that’s already resulted in a $2.4 million settlement from one of the companies.
Vancouver-area residents (and their respective companies) Anthony Kevin Jackson (BridgeMark Financial Corp. and Jackson & Company Professional Corp.), Justin Edgar Liu (Lukor Capital Corp. and Asiatic Management Consultants Ltd.), Robert John Lawrence (Tavistock Capital Corp.) and Cameron Robert Paddock (Rockshore Advisors Ltd.) are now alleged, in an amended hearing notice, to have conducted themselves contrary to the public interest as company directors and performed illegal insider trading.
“The Scheme and the conduct contrary to the public interest that are alleged in the amended [notice of hearing] remain largely unchanged from the allegations made in the original [notice of hearing],” BCSC executive director Peter Brady has noted.
