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Investor defrauded of $1M over Sooke hotel ownership, B.C. Securities Commission says

The B.C. Securities Commission is alleging a Sooke resident was involved in defrauding an investor who believed a $1-million investment would buy 40 per cent ownership in the Sooke Harbour House hotel.
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B.C. Securities Commission sign. In a Ponzi scheme, about $23.3 million was handed over by B.C. investors, who received payments of only about $10.3 million in return.

The B.C. Securities Commission is alleging a Sooke resident was involved in defrauding an investor who believed a $1-million investment would buy 40 per cent ownership in the Sooke Harbour House hotel.

It alleges Timothy Craig Durkin and SHH Holdings Ltd. told the investor that SHH owned Sooke Harbour House through a subsidiary, and that by buying 40 per cent of the shares of SHH, the investor would obtain a 40 per cent ownership interest in the hotel.

The money was raised between December 2015 and March 2016, the Securities Commission said. But according to the commission’s notice of hearing issued Oct. 14, SHH did not have an ownership interest in the corporation owning the hotel. The investor, who was not identified, did not recover their money.

It’s the latest chapter in the history of the hotel and restaurant, which won regional and international recognition under former owners Frederique and Sinclair Philip but has been closed since March 2020.

After the Philips ran into financial difficulties, they became involved in a failed share-purchase agreement in 2014 and related agreements with SHH Management and SHH Holdings, companies headed by Durkin.

The parties went through a lengthy trial in B.C. Supreme Court over the agreements, resulting in B.C. Supreme Court awarding the Philips $4 million in 2020. A claim by SHH Holdings Ltd. and SHH Management Ltd. was dismissed. SHH Holdings and SHH Management have filed an appeal.

The Securities Commission alleges Durkin and SHH contravened the Securities Act.

The commission’s allegations have not been proven. On Nov. 10, a date will be set for a hearing before a panel of commissioners.

Durkin said in an email that he had not yet been able to fully read the complaint because of computer difficulties. “I have not yet given up on our justice system despite the procedural unfairness it can deliver to an unrepresented litigant.”

Durkin, who is a permanent resident of Canada with British citizenship, is in the midst of an immigration hearing into whether he will be allowed to remain in Canada or will be sent to the U.S., where he was indicted in 2013 on allegations of securities and wire fraud.

Durkin denies those allegations and has applied to become a Canadian citizen. He says he is entitled to citizenship because he came to this country with his parents, who lived here previously, at the age of 14 months.

No timeline for a citizenship decision has been announced. The immigration hearing has been adjourned for three months to give the Department of Immigration, Refugees and Citizenship time to examine Durkin’s applications.

Sooke Harbour House is owned by North Vancouver’s IAG Enterprises Ltd., which bought the property for $5.6 million in 2020 under a court-ordered sale following a foreclosure action.

Alex Watson, chief operating officer for IAG, said that the hotel is being renovated and is not expected to open this year. “There’s more work here than we thought,” he said. “We are plugging away at it. It is going to be a long process.”

Getting materials in the current market has been incredibly difficult, he said, adding they waited months for roofing materials. “We are working as hard as we can and we are trying to do it in a way that is respectful and mindful of the history of the place and worthy of what it is.”

cjwilson@timescolonist.com