CIRO says perpetrator 'preyed' on fellow Polish speakers
A mutual fund advisor has been banned for life by the Canadian Investment Regulatory Organization (CIRO) and fined $300,000 plus costs after losing investors a combined $1.3 million through unapproved outside business activities.
In its reasons for decision, a hearing panel found that Leszek Dziadecki “preyed” on investors, both those who were clients and other individuals, to have them invest in a syndicated mortgage investment called Bionorth by capitalizing on his link as a fellow Polish speaker. He also marketed the opportunity on Polish-speaking radio.
“A number of the Investors testified that they put their trust in [Dziadecki] both as a mutual fund advisor for some of the investors, and also as part of the same cultural and linguistic community as the investors,” the CIRO reasons for decision stated.
Between May 7, 2004 and October 1, 2018, Dziadecki was registered in Ontario as a dealing representative with Global Maxfin Investments Inc. He was also the owner and president of Advantage Group of Finance Inc., a company through which he sold insurance products and provided financial planning, and retained other individuals to provide mortgages and income tax preparation services.
Advantage was approved as an outside business activity by Global but was not approved to sell SMIs. In fact, Global clearly advised all its approved persons that SMIs were securities which could be sold only through its facilities and that, if they were approached or solicited to sell them, they should immediately contact Global’s compliance department.
Despite this, Dziadecki reportedly told one client the investment in BioNorth was “guaranteed and essentially no risk.” The same client, and her husband, were also persuaded to use both the proceeds from a mutual fund that was being discontinued and to borrow money from a home equity line of credit to invest in the BioNorth SMI.
The CIRO said the losses incurred were “devastating, psychologically and financially”. Investors were repeatedly told the investment was “safe” and several remortgaged their houses to participate.
The CIRO said these investors are now left with substantial debts that they are required to repay from their income or from selling their homes. One client said he had been required to delay his retirement while another must sell her matrimonial home as a consequence of mortgaging it to invest. Another client described herself as "destroyed”.
Dziadecki was first registered in the securities industry in 1995 and had been a branch manager between May 7, 2004 and June 1, 2006 and between July 15, 2008 and October 1, 2018.
He had been prosecuted by the OSC for precisely the same misconduct in 2006 after selling $200,000 of debentures, unapproved by the member firm, for a business operated by Edward Tsang. Investors suffered no losses that time.
Tsang again approached him, this time with the BioNorth SMI opportunity, but his previous penalty by the OSC proved no deterrent, at a devastating cost for investors.
