Ont. man who ran $15M Ponzi scheme banned from securities trading for life
Linda Nguyen , The Canadian Press
Published Tuesday, January 7, 2014 4:06PM EST
Last Updated Tuesday, January 7, 2014 4:30PM EST
TORONTO -- An Ontario man who defrauded investors, many of them friends and family, of more than $15 million in a long-running Ponzi scheme has been banned from securities trading for life.
In a 76-page settlement ruling released Tuesday, the Ontario Securities Commission also permanently banned Kevin Warren Zietsoff from acting as a director or officer of any company or as an investment fund manager.
Zietsoff, 41, has previously admitted to losing more than $10 million of money he had taken from friends, family and acquaintances between January 2006 and December 2012.
The other $5 million was returned to investors as so-called interest payments that kept up appearances for the scheme.
Victims included Zietsoff's elderly parents, who lost their life savings of $2.5 million, and his estranged wife, who lost $300,000 from an RRSP, and recently declared bankruptcy.
The scheme came to light in January 2013 when Zietsoff turned himself in to the RCMP, who were unaware of it prior to his confession. Zietsoff has since pled guilty to one count of fraud over $5,000.
In documents filed as evidence in the Ontario Court of Justice, Zietsoff said he borrowed and invested money he raised from 59 people in Ontario and Arizona, where his parents had a home, although he was not registered with the OSC to do securities trading.
"Over time, he presented himself as a successful trader with a no-risk investment strategy that paid guaranteed returns. In fact, his gains were significantly and consistently overtaken by losses," according to the securities commission.
"Although the investors' money was often soon lost in trading, Zietsoff frequently assured them that their investments were safe and maintained that illusion by making interest or capital payments, often in cash, from other investors' money."
Zietsoff admitted that he had convinced investors that he had created a unique "positive expectancy system" that were "low-risk" or "risk-free" and would result in hefty interest payments.
"To many investors, Zietsoff portrayed himself as successful, when he was not," said the commission.
"His actual lifestyle was different from what his investors believed. While they saw him flying across North America delivering large interest payments, in reality, he was being supported by his parents and wife. He stated that he did not use the defrauded funds to live a lavish lifestyle."
When questioned by investors after the interest payments stopped, Zietsoff gave them various excuses, including that assets were tied up in bankruptcy proceedings, linked to short-selling of Arizona real estate, invested in Greek debt and invested in U.S. currency.
None of these explanations were true, the OSC said.