One of B.C.'s highest-paid local government employees implicated in alleged stock scheme
"I don't believe the B.C. Securities Commission has ever issued allegations against such a large number of individuals and entities,"
said the regulator's executive director
DAN FUMANOUpdated: February 1, 2019
The recently retired city manager of North Vancouver, one of B.C.’s highest-paid local government employees for several years, has been implicated by the province’s securities regulator with dozens of other people and companies in an alleged stock market scheme.
Ken Tollstam, whose full name is Albert Kenneth Tollstam, and his firm, Tollstam & Company Chartered Accountants, were named with more than 50 individuals and companies in a November temporary cease-trading order from the B.C. Securities Commission. The order alleged participation in a multimillion-dollar scheme involving penny stocks for cryptocurrency, mining, alternative energy and cannabis companies.
The order said the commission is investigating over concerns Tollstam and his fellow respondents generated profits through a
“scheme that involves conduct abusive to the capital markets and the illegal distribution of securities.”
The order was issued Nov. 26, the same day that land titles show Tollstam completed a purchase of a beachfront mansion in West Vancouver. One notable thing about Tollstam’s November purchase of the Bellevue Avenue residence was that, according to land titles, he and his co-purchaser bought the $15,888,888-million property without a mortgage.
At the time of the purchase, Tollstam was only a few months into retirement after 37 years of service to the City of North Vancouver. For more than two decades, Tollstam was the North Van city manager, the most senior bureaucrat for the municipality of 53,000 people, earning as much as $310,000 a year, plus expenses.
When The Vancouver Sun reached Tollstam by phone Thursday and asked about the securities commission investigation, he replied:
“You know, I’m not going to comment on that, thank you very much.”
He hung up and did not return a voice message on Friday.
The commission’s November notice referred to the group of 51 respondents collectively as the “BridgeMark Group,” after BridgeMark Financial Group. BridgeMark’s sole director, Anthony Kevin Jackson, is the husband of Tollstam’s daughter, West Vancouver realtor Lisa Jackson.
Property records list “Lisa Michelle Jackson, realtor/business woman,” as the co-owner of the $15.8-million West Van mansion purchased in November, along with “Albert Kenneth Tollstam, chartered accountant.”
Most of the respondents in the case are in Metro Vancouver, including several on the North Shore, although some members of the group have addresses in the Cayman Islands, Marshall Islands, Australia, Hong Kong, the Czech Republic and Switzerland.
The securities commission alleged that between February and August of last year, the respondents, including Tollstam, privately bought at least $50 million of stock at pennies a share in 11 companies listed on the Canadian Securities Exchange.
The allegations, all of which are unproven, are outlined in commission filings.
The companies sold the securities without a prospectus through what’s known as the “consultant exemption,” but the commission alleges in its November ruling that no consulting services were provided. The 11 companies later paid much of that $50 million back to the respondents, for supposed consulting services, the commission said. In a January ruling, the commission said many of the repayments were “effectively ‘cash swaps,’ in full or in part.”
Yet, the commission alleged in its November ruling, the companies issued news releases “informing the market they had raised the full amount of the private placement when they had only retained a small portion of the funds,” and the respondents resold their securities on the market.
Lisa Jackson is not named in the B.C. case, but she was named in a December order from the Alberta Securities Commission, with her husband and some other respondents from the B.C. Securities Commission’s so-called “BridgeMark Group.” The Alberta regulator is investigating whether Calgary-based Prize Mining Corp. violated securities laws, in a manner the regulator described as “similar conduct” to the allegations set out in the B.C. commission’s November order.
On Friday, the B.C. Securities Commission’s executive director, Peter Brady, said:
“To my knowledge, this is the first time a Canadian securities regulator has taken action in response to something referred to as a cash swap, in which money goes into a public company and comes out. So it’s novel. It’s also a very large case, I don’t believe the B.C. Securities Commission has ever issued allegations against such a large number of individuals and entities. So it is a unique case.”
The B.C. commission’s temporary order in November placed market restrictions on Tollstam and the other respondents. Such temporary orders are “required to stop the respondents from abusing the capital markets while Commission staff complete their investigation,” the notice said.
At a December hearing at the commission offices, the case had so many lawyers for so many different respondents that commission executive commissioner Nigel Cave began by stating that “for fire code reasons” some participants would be viewing the proceedings via a video feed.
Cave quickly summarized the evidence against each respondent. Regarding Tollstam, he said:
“Again, similar behaviour, Green 2 and Beleave (two of the companies involved), purchase of units, sale of shares, consulting agreement and funds received.”
In a decision announced Jan. 16, the panel chose to lift the orders against several of the respondents. But the panel found it “necessary and in the public interest” to extend the orders against a number of the respondents, including Tollstam and his firm.
The commission executive director had provided “prima facie” evidence — meaning a preliminary case — that Tollstam, his firm, and other respondents had “engaged in conduct that raises significant public interest concerns,” the panel wrote in their decision.
A Sun reporter contacted Lisa Jackson by phone Thursday. After the reporter identified himself, Jackson responded:
“Yes, I have nothing to say.”
Asked about the Bellevue Avenue property, Jackson replied:
“Sorry, I’m not going to make any comments right now. If you want to get a hold of my lawyer, you can.”
Jackson hung up Thursday without providing the name of her lawyer, and did not answer a subsequent phone call. A lawyer named Craig Leggatt contacted the Sun Friday afternoon and said he represented Jackson, but did not reply to subsequent emails or phone calls.
Property records list Lisa Jackson’s residential address at the Bellevue Avenue home, which the B.C. Assessment Authority pegged as the 249th most expensive property in the province.
Tollstam is identified in the hearing documents as a resident of North Vancouver, and the sole proprietor of Tollstam & Company. Corporate records show Tollstam & Company is a sole proprietorship registered in 2011, and its nature of business is listed as “offices of accountants.” Kenneth Tollstam is listed as the proprietor, and the address is 800–1199 West Hastings St. in Vancouver.
That same address is listed for BridgeMark Financial and other companies involved in the investigation. As the commission panel chair noted at the December hearing, “that’s an address that comes up again and again in the evidence.”
The orders concerning Tollstam and his fellow respondents will remain in effect until at least April, pending the next commission hearing.
The investigation is continuing, said Brady, the commission executive director.
“It is impossible to predict (a timeline). It’s a larger case,”
“But it’s a major priority and we’ll be working as quickly as we can to get the evidence that we need.”