06/21/2013 05:52 EDT | Updated 08/21/2013 05:12 EDT

Wiliam Peever, Phillip Curtis Owe US Securities Commission $4.5 Million

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Sheets of five dollar notes sit on a pallet before being printed with a serial number at the Bureau of Engraving and Printing in Washington, D.C., U.S., on Tuesday, April 23, 2013. Stocks rallied amid growth in U.S. home sales, better-than-forecast earnings and speculation the European Central Bank will cut interest rates. U.S. equities recovered after briefly erasing gains following a false report of explosions at the White House. Photographer: Andrew Harrer/Bloomberg via Getty Images

VANCOUVER - Two British Columbia men must pay the United States securities commission more than US$4.5 million over a stock manipulation scam, a B.C. judge ruled Friday.

The enforcement order follows a 2011 civil ruling in a New York court that found William Peever and Phillip Curtis liable breaking securities laws.

B.C. Supreme Court Justice Peter Rogers ruled that Peever and Curtis failed to prove the United States Securities and Exchange Commission would keep the money rather than distribute it to their victims, and further dismissed an argument by Peever that the U.S. judgement was obtained by fraud.

Rogers said the ruling by the United States District Court for the Southern District of New York was enforceable in B.C., and in so doing criticized Peever harshly.

"Mr. Peever’s bare assertion of dishonesty by the plaintiff, when it is made by an admitted fraudster like Mr. Peever, when it is unsupported by any documentation and in the face of his having ample prior opportunity to examine and refute the plaintiff’s calculations, deserves no weight at all," said Rogers in his ruling.

"Mr. Peever’s complaint that the plaintiff obtained the U.S. judgment by fraud is not persuasive, does not raise a triable issue, and is no reason to dismiss the proceeding or to order that it proceed to a conventional trial."

Lawyers for Peever and Curtis declined to comment on the ruling, and the legal counsel representing the securities commission did not respond to a request for an interview.

According to the ruling, the securities commission, a U.S. federal agency tasked with enforcing trading laws, argued the defendants had participated in an illegal manipulation of stock prices of one or more U.S. corporations by claiming the cost of the shares was $400,000 when the actual quantified cost was only about $200,000.

The securities commission applied for injunctions to prevent the defendants from further wrongdoings, penalties for breaking securities laws and the surrender, known as disgorgement, of profits.

While Peever and Curtis consented to the injunction and liability judgment, they did not consent to the monetary award.

The securities then took the men to court over the money, which the defendants did not respond to or defend against, according to Rogers.

The New York court ruled on Aug. 16, 2011 the men were liable for US$2,894,537 and pre-judgment interest of US$1,611,998 after which the securities commission sought an enforcement order in B.C. Supreme Court.

Peever argued the securities commission obtained the court ruling by fraud, which Rogers dismissed.

Both defendants also questioned whether the judgment was penal or public in nature, in other words whether the money would go to the U.S. government or be distributed to the victims.

If the U.S. government kept the money, the defendants argued, the ruling was not truly civil and could not be enforced in Canada because the U.S. government did not suffer by their fraud.

But Rogers sided with the securities commission.

"I find that the defendants have not shown that it is more likely than not that the plaintiff will simply keep the proceeds of judgment to itself," he said. "I find, therefore, that the defendants have not discharged their burden of proof of showing that enforcement of the judgment in B.C. would be to serve a foreign penal or public law purpose."

Rogers said the parties can now apply to the court for directions about interest and currency conversion.