Calgary 'fraud on investors' case linked to Facebook IPO has N.L. connection

A Calgary man accused by Alberta securities regulators ofan alleged "fraud on investors" has ties to Newfoundland and Labrador, with an allegedmoney trail outlined in separate civil court documents suggesting that some of his clients were in St. John's.

Nelson Peter Bradbury is scheduled to appear at a hearing this fall to face allegations that he breached Alberta's Securities Act.

• Read the full Alberta Securities Commissionnotice of hearing

Bradbury's lawyer, Michael Loberg, declined interview requests on his client's behalf.

The Alberta Securities Commission believes that Bradbury entered into investment agreements with approximately 16 investors "from Alberta and elsewhere" between January 2010 and March 2013, raising $1.5 million.

That included the opportunity to acquire pre-IPO stock in Facebook before it hit the markets.

However, regulators allege that Bradbury never actually ended up owning any Facebook stock.

They believe that Bradbury funnelled some of the investors' money into personal expenses, including:

• personal credit card payments;
• cash withdrawals;
• household, grocery, clothing, restaurant, entertainment, vacation, gambling, and recreational expenses;
• transfers to his personal savings account.

According to the ASC, other transfers benefitted his spouse and his parents.

The regulator alleges that updates he provided to investors during this time period were "fictitious" and "masking massive actual losses."

No comment from securities commission

Officials at the securities commission declined interview requests from CBC News.

"As this case is set to go before a hearing panel, we cannot comment directly on Mr. Bradbury or this case," spokesman Mark Dickey said in an emailed statement.

Dickey noted that, in general terms, an ASC panel can impose administrative penalties of up to $1 million per contravention of the act, and take other administrative actions.

As this case is set to go before a hearing panel, we cannot comment directly on Mr. Bradbury or this case.- ASC spokesmanMark Dickey

He declined to confirm whether there is any Newfoundland connection to the Bradbury matter. "This information may come out during the hearing," Dickey wrote.

However, CBC News has learned that Bradbury's parents live in St. John's, where he grew up before moving out west.

The ASC alleges that some money from investors was transferred "to the benefit of his parents."

Bradbury's parents are not implicated in the alleged fraud.

And there are other ties to Newfoundland.

According to a civil lawsuit filed in Alberta against Bradbury and his wife court action that is separate from the ongoing ASC action other apparent investors appear to be located in St. John's.

Civil suit filed in 2013

Seven Calgary-area individuals and two companies sued Bradbury and his wife in 2013.

According to their statement of claim, Bradbury and his companies "designed, orchestrated and implemented a scheme to defraud the investors."

There were never any investments.These representations were untrue.- statement of claim against Nelson Peter Bradbury

The plaintiffs say they invested in funds with names like Nelson Investments, Nelson Investments Facebook Fund, NIF Facebook Fund and NPB Investment Fund.

They say they were told the cash in those funds would go towards shares in companies such as Facebook, and were informed that their investments were doing well.

But that turned out not to be the case.

"There were never any investments," their statement of claim alleges. "These representations were untrue."

The plaintiffs say they are owed more than $1 million, plus another US$260,000 and interest. They want that amount and additional $1 million in punitive damages. They are also going after property owned by Bradbury and his wife.

None of the allegations made by the securities commission or the plaintiffs in the civil suithave been proven.

'Aware of the high risk'

In his statement of defence to the civil suit, Bradbury says he allocated the cash he received from the plaintiffs to different investment funds and spent it on "various high risk and potentially very lucrative trades."

He acknowledges paying himself compensation from profits, but says he did so in accordance with the terms of the agreements the investors had signed.

Bradbury notes that all of the plaintiffs were friends or family members "and were at all times aware of the high risk nature of their investment. It was the high risk, high return nature of the venture that attracted the plaintiffs in the first place."

It was the high risk, high return nature of the venture that attracted the plaintiffs in the first place.- Nelson Peter Bradbury's statement of defence

His court filings contend that the investment funds were "very successful" at first.

"After January 2012 the market started to go against Bradbury," the statement of defence notes.

"By October 2012 he had lost 70 per cent of the funds under his control. He borrowed the sum of $100,000 to try to prop up the funds so that he could win back his losses, but he was unable to turn the tide. By March 2013, he had lost all of the plaintiffs' funds as well as his own."

Bradbury wants the lawsuit against him dismissed with costs.

His wife has filed a separate action to be dropped from the lawsuit.

She says she has no knowledge of her husband's business dealings, never received any funds from the plaintiffs, and never received any money from her husband that she knew were the plaintiffs' funds.

'Small amount' went to trading accounts

In an affidavit filed in February, one of the plaintiffs says money his family provided to Bradbury for investments was instead funnelled elsewhere.

"Most of the money he took from us was used to pay for his personal expenses and to repay other investors," Larry Pickett said in court filings.

"Only a small amount was deposited into trading accounts."

According to Pickett's affidavit and financial documents filed with the court, at least three of those other investors are in St. John's.

No investors from Newfoundland are listed as plaintiffs in the ongoing lawsuit filed in Calgary.

Pickett and the other plaintiffs in the case declined comment through their lawyer, Jordan Deering.

Court proceedings are ongoing.