04/04/2012 03:22 EDT | Updated 06/04/2012 05:12 EDT

Vancouver Ponzi Scheme: Rashida Samji, Vancouver Notary, Accused Of Bilking Investors

VANCOUVER - A Vancouver notary public is being accused of running a Ponzi scheme that bilked 218 investors of $83 million.

The B.C. Securities Commission issued a news release Wednesday saying Rashida Samji promised returns of 12 to 30 per cent a year if investors placed their money in her notary trust account.

The money was to be used as collateral for investments by Mission Hill Winery in Kelowna.

But the commission alleges Samji put the money into her own bank accounts, paid existing investors with money from new investors, and the winery was not aware of the scheme.

"In reality, Samji had no notary trust account," the commission wrote in a news release.

"She deposited investors’ money into two personal bank accounts in the name of her two companies, Rashida Samji Notary Corporation and Samji & Assoc. Holdings Inc. She did not provide letters of comfort to any wineries, and she paid existing investors with money from new investors under the guise of investment fees."

Paul Bourque, executive director of the commission, is also alleging that Samji falsified documents and created a false land title search as part of a fraudulent mortgage.

He said the RCMP are also investigating the allegations against Samji.

The allegations have not been proven and Bourque said the commission will appoint a panel to hear the allegations against Samji, who has since resigned as a notary.

A date for the hearing will be set on May 1.

The commission said Samji became a notary public in 1988. In 1995, she began running her notary practice through her Notary Corporation. In 2006, she became a so-called roving notary whose job was limited to covering the practices of other notaries who were ill or on vacation.

The Society of Notaries Public of B.C. suspended Samji on Feb. 7, and obtained a court order appointing a custodian over Samji’s practice on Feb. 8. She subsequently submitted her resignation on March 6, 2012.

In a related case, the commission also said a 58-year-old Vancouver mutual fund salesman has been given a permanent ban from B.C. markets for his role in the fraud.

The commission said Arvin Patel, who was a financial planner at Coast Capital Savings, admitted to luring about 90 investors into the scheme, including co-workers and clients, who invested about $29 million, most of which has been lost.

"Patel had invested a significant amount of his own money and encouraged his family to do the same," Bourque said.

In a settlement agreement with the B.C. Securities Commission, "Patel stated that investors would provide their funds to Samji and sign a letter of direction," the commission said in a news release.

It said Patel admitted he told investors money would be held in Samji's notary trust account and would not be paid out. The account, he told them, was monitored and audited by the Society of Notaries Public of British Columbia.

"Patel has settled with us on the basis he was negligent and should have known better but he was not implicated in the fraud itself nor did he make any deliberately fraudulent representations," Bourque said.

"He settled on the basis that he would transfer property and other assets that we had frozen as part of our investigation, that those assets would be transferred to a receiver that we appointed in order for those assets to be subsequently distributed to the investors."

Patel also agreed to a permanent market ban on any trading activity, Bourque said.

The commission said investors were told Samji would provide the owner of the winery, Mark Anthony Group Inc., and other wineries with a comfort letter that would allow the wineries to use the funds — without accessing them — as collateral for loans in foreign countries.

The commission said investors were required to deposit funds for terms of at least six months, and earned interest-like guaranteed returns, which were described as fees, of six per cent every six months, or 12 per cent a year.

"Patel knew his clients were relying on him to provide investment and financial guidance, and yet he introduced them to the Notary Trust Fund Investment with little to no due diligence of his own, except for his own experience as an investor," the commission said in the news release.

Further, it said Patel had no authority to make the deals with at least 80 of the investors, who collectively invested about $25.3 million.

"Patel is 58, unemployed, has substantial liabilities, and is a defendant in multiple civil actions by investors. Consequently, he has no reasonable prospect of being able to pay the multi-million dollar fine that would otherwise have been levied against him for his misconduct," the release said.