The B.C. Securities Commission has imposed fines totalling $1.6 million on a company and its director for defrauding a Chinese citizen who believed she was investing $1 million to become a part-owner in the now-closed Sooke Harbour House hotel and restaurant.
Timothy Craig Durkin, 72, who was ordered deported from Canada in January, has been fined $600,000, the commission announced Wednesday.
Durkin was a director of SHH Holdings Ltd., the other respondent, which has been ordered to pay $1 million.
“The respondents lied about Holdings’ ownership of the hotel to entice the investor to provide $1 million. That is a very serious matter,” the commission’s panel said in a 14-page report.
The panel also barred Durkin from B.C.’s investment market. He is permanently prohibited from trading or buying securities or derivatives, serving as an officer or promoter of a company, advising or consulting in the securities or derivatives markets and promoting such products.
“Only a broad, multi-decade long prohibition will provide a meaningful level of protection to the public,” the panel said.
Durkin, who was raising money in 2015 and 2016, told the investor from China, who was trying to immigrate to Canada, that he owned all the hotel shares through a subsidiary. He told her that by purchasing 40 per cent of the shares in SHH Holdings Ltd., she would acquire a 40 per cent ownership stake in the hotel.
But SHH did not actually own any shares in the corporation that owned the hotel, the commission said.
The panel said that on three occasions, Durkin and SHH made false statements about the hotel’s ownership.
Based on that misleading and false information, the investor’s company signed an agreement with SHH and advanced $1 million for the shares.
That money was spent and never recovered, the panel said.
No information was provided on how the investor’s money was used or on the financial circumstances of the respondents. There was no evidence to support the respondents’ position that the money had been used to benefit the hotel, the panel said, calling the lack of proper record-keeping an aggravating factor.
Sooke Harbour House was internationally known for its top-quality food and picturesque waterfront setting, attracting local residents and celebrities for decades when it was owned by Frederique and Sinclair Philip.
In 2015, the Philips announced they had new investors to expand the restaurant and hotel and pay off outstanding debt. That investor was SHH Holdings, with Durkin as a director.
That relationship, however, soon broke down and eventually ended up in court.
After a B.C. Supreme Court trial, $4 million in damages were awarded to the Philips in 2020. The money was to be paid by two companies in which Durkin was a director.
Frederique Philip said Wednesday they have not received any money.
A foreclosure led to the hotel going on the market. IAG Enterprises, a North Vancouver-based real estate company, bought it for $5.6 million in a court-ordered sale.
Renovations were carried out at the hotel and IAG put it up for sale for $13.3 million last year. Provincial government records show IAG remains its owner.
Durkin could not be reached Wednesday for comment.
He attended the panel’s hearing virtually and his submissions on sanctions were delivered in written form, the commission said. It said it does not have any current information on Durkin’s whereabouts but his last known address was in Sooke.
In one of his submissions to the panel, Durkin said the respondents are “indigent” and have no plans to enter the capital markets and no projects on the horizon.
He said the only fundraising they were doing was to be able to take the case to the B.C. Court of Appeal. He said the respondents would be seeking leave to appeal the commission’s decision.
As for a lifetime ban in the markets, he called the decree “nothing more than a cruel grandstand folly,” the panel’s report said.