Advisor claimed loan was a gift so he could accompany client to Mexico
The MFDA has permanently banned John Elwood, a former advisor registered with FundEX Investments from 2000 to 2013, for borrowing $16,000 from a client, misleading his member firms, and failing to report that he was being sued. He denied the money was borrowed.
According to the MFDA’s reasons for decision, Elwood borrowed the money from his client in 2012. Between September 2013 and January 2017, Elwood was registered with Queensbury and misled that member by providing false responses to their questionnaires. As well, between February 2016 and April 2017, he failed to report that he was a defendant in a civil claim related to this loan from his client.
While Elwood did not inform FundEX or Queensbury that he had borrowed this money from his client, named as RW in the reasons for decision, he signed a demand promissory note to RW acknowledging the debt and naming himself as “the Borrower”.
In an affidavit and in testimony to the MFDA, Elwood testified that the money he received from RW was a “gift or receipt on a resulting trust”. He also testified that he only signed the promissory note to appease RW’s “angry demands” that he acknowledge the borrowing.
He said the “gift” was given so he could accompany RW to Mexico, which he claims he could otherwise not do because of his $1,500 monthly condo fee and a large debt to the CRA.
After RW sued Elwood in Small Claims Court, he settled and agreed to a repayment schedule for the borrowed money in February of 2017. He made three $500 payments to RW before defaulting on the settlement terms in May of 2017. RW passed away on November 2, 2017.
Only after RW obtained a garnishment order against Elwood was Queensbury made aware of Elwood’s debt. Elwood then admitted to Queensbury that he had borrowed from his client.
The MFDA did not accept Elwood’s testimony at the hearing.
“Based on the oral and documentary evidence outlined above and the absence of contrary evidence prior to commencement of these proceedings, it is the panel’s conclusion that the Respondent borrowed $16,000.00 from client RW as alleged,” the reasons for decision reads.
In addition to the ban, the MFDA fined Elwood $25,000. He must also pay costs of $12,500.
