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Candidate banned for investment fraud
A candidate for North Cowichan council is banned
from trading on the B.C. Securities Exchange until 2030 for admitted fraud.
B.C. Securities Commission documents from May 6, 2005 state Michael Ernst Ruge was also required to pay $150,000 after admitting to illegally distributing securities to investors between late 2001 and early 2003, through the Chivas Hedge Fund, the BCSC says.
Terms of the BCSC’s 2005 statement were confirmed Thursday by the agency’s director of enforcement, Lange Evans.
“We stand by that settlement agreement,” Evans said. “It was signed by Mr. Ruge and it was all supported by a thorough investigation and independent, credible evidence.”
Ruge painted a different story.
“The document I signed never had the ‘f’ word (fraud) in it, or I wouldn’t have signed that,” he said. “They only used the ‘f’ word in their press release.
“It was a settlement agreement, never a trial or a hearing. It was the only way to stop the bleeding and return money that was available to investors.”
According to the BCSC, Ruge admitted in the settlement to perpetrating fraud when he placed more than $780,000 of investors money with himself, or companies and individuals affiliated with him. Nearly none was used according to the offer.
The BCSC also states Ruge falsely claimed to have top investment people working in a New York office; that Chivas sold all it units — hitting a $20-million cap — when it only sold some $1.5 million units; and that the fund had a 26- to 45 per cent rate of return.
About $240,000 was refunded to investors, the BCSC continues, noting little chance of additional recovery.
Ruge, however, said the failure of Chivas can be attributed to the mishandling of the fund while it was in BCSC hands.
Evans said BCSC’s paperwork proves otherwise.
“All of these things are attributed to Mr. Ruge, and none of them were attributed to any activities we took.”
Ruge presented the News Leader Pictorial with a 2005 document from lawyer, James Hall, stating one could argue the actions of the BCSC were by far the single greatest cause of the demise of the Chivas limited partnership.
However, Hall recommended against legal action because of the cost and the likelihood the BCSC would not likely be held liable as long as it had acted within its authority and without malice.
Ruge, now a business marketing advisor, said he’s only been able to pay $5,000 of his $150,000 fine.
“This basically bankrupted me when they took over the fund. That’s basically the mentality of the government.”
Ruge said he’s running because he wants to make his community a better place to live, adding he’d be good for North Cowichan.
“No councillor ever touches any funds — I’d never accept a position of touching funds.
“I’d only do what’s right for North Cowichan.”
Mary Beth MacKenzie, North Cowichan’s chief election officer, said the municipality doesn’t check into candidate backgrounds.
Candidates sign declarations, stating they’re not disqualified under the Local Government Act, or other legislation, from being elected or holding local office, she said.
According to the Local Government act, candidates are eligible to run unless serving time for an indictable offence.
For the BCSC’s official statement on Ruge’s ban, go to http://www.bcsc.bc.ca/release.asp?id=2399.