Fraudster gets jail time: OSC

The operator of an investment scheme that raised more than $20 million from investors in a pitch that offered access to their locked-in retirement savings has been sentenced to jail time and ordered to pay $7.75 million in restitution to investors.

In October 2021, the Ontario Securities Commission (OSC) charged Stéphane Gagnon of Ottawa with one count of fraud over $5,000 and one count of forgery in connection with the scheme. The plan saw Gagnon raise money from investors to invest in his company — which operated under various names, including The Finance Company, Unlock My RSP, SMAP Financial Service, and The Loan Shop — promising them immediate access to the assets in their locked-in accounts. The regulator alleged that Gagnon used a portion of investors’ funds for personal expenses.

At the time, a warrant was issued for Gagnon’s arrest, but he wasn’t apprehended until 2023, when he was arrested by police in Bali.

According to the OSC, in an agreed statement, Gagnon admitted that he raised more than $20 million from investors between Aug. 1, 2015 and May 31, 2021, and used some of that money for purposes other than what investors were promised. “He also admitted that he used forged lawyers’ letters to attempt to continue his business relationship with one of the trust companies into which the victims’ money had been deposited,” it said.

Ultimately, Gagnon was convicted on both counts in the Superior Court of Justice in Toronto, and he has now been sentenced to five years in jail, less time served. He was also ordered to pay more than $7.75 million in restitution to investors, and a fine, in lieu of forfeiture. The OSC noted that if Gagnon doesn’t pay the fine, he may have to serve additional jail time.

“Today’s decision is a significant outcome for Ontario’s investors who were harmed by Mr. Gagnon’s actions,” said Bonnie Lysyk, executive vice-president of enforcement with the OSC, in a release Wednesday.

“Where the OSC sees evidence of harm, we will take action to protect investors, and the integrity of our capital markets. We are pleased with the judgment of the Superior Court and thank everyone involved in this case,” she added.

James Langton

James is a senior reporter for Advisor.ca and its sister publication, Investment Executive. He has been reporting on regulation, securities law, industry news and more since 1994.