06/07/2013 01:13 EDT | Updated 08/06/2013 05:12 EDT

Victoria advisor cost investors $65M, alleges BCSC

A Vancouver Island financial advisor has been accused of perpetrating a massive fraud that cost hundreds of investors a total of $65 million.

The B.C. Securities Commission alleges that between 2007 and 2010 Cowichan Bay resident David Michaels acted as an investment advisor without being registered to do so.

The BCSC says Michaels used a weekly radio infomercial on CFAX in Victoria to promote his investment business, telling potential investors he gave up his registration as a stockbroker because he had lost faith in the market and resigned when he foresaw the impending market crash.

According to the securities commission, this was a fraudulent claim because the former mutual fund salesman actually lost his licence in 2006 when he was under investigation by the Investment Dealers Association of Canada for "a number of off-book transactions with clients".

On Thursday the commission announced that not only was Michaels under investigation for fraud, but also for improperly advising 484 clients to buy $65 million worth of market-exempt securities without being registered.

BCSC spokesman Paul Bourque alleges Michaels pocketed $5.8 million in commissions for himself by talking seniors into buying the securities by taking out loans on their homes

"They had a relationship of trust with him when he was registered and he used that relationship of trust to keep selling these high-risk exempt market securities."

In addition, the BCSC claims that "virtually all of the roughly $65 million invested by Michaels's clients is now worthless, leaving many of them financially destitute while their home equity loans remain."

The BCSC investigation is ongoing and no determinations have been made. The BCSC says a public hearing is expected to be held within six months time.

The CBC was not able to reach Michaels for comment and he has not yet filed a defence to the recent allegations.

No criminal charges have been laid against Michaels in relation to the investigation.