Proceedings

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IN THE MATTER OF THE SECURITIES ACT,
R.S.O. 1990, c. S.5, AS AMENDED

– AND –

IN THE MATTER OF REZWEALTH FINANCIAL SERVICES INC.,
PAMELA RAMOUTAR, JUSTIN RAMOUTAR,
TIFFIN FINANCIAL CORPORATION, DANIEL TIFFIN,
2150129 ONTARIO INC., SYLVAN BLACKETT,
1778445 ONTARIO INC. and WILLOUGHBY SMITH

REASONS AND DECISION ON SANCTIONS AND COSTS
(Subsection 127(1) and Section 127.1 of the Securities Act)



Hearing:

September 17, 2013

 

 

 

Decision:

July 8, 2014

 

 

 

Panel:

Edward P. Kerwin

--

Commissioner and Chair of the Panel

 

Appearances:

Yvonne Chisolm

--

For Staff of the Ontario Securities Commission

 

Catherine Weiler

 

 

 

 

Michael Donsky

--

For Daniel Tiffin and Tiffin Financial Corporation

 

 

Justin Ramoutar

--

For himself, Pamela Ramoutar and Rezwealth Financial Services Inc.

 

 

Willoughby Smith

--

For himself and 1778445 Ontario Inc.

 

 

No one appeared for

--

Sylvan Blackett

 

 

 

2150129 Ontario Inc.

I. INTRODUCTION

[1] This was a hearing before the Ontario Securities Commission (the "Commission") pursuant to sections 127 and 127.1 of the Securities Act, R.S.O. 1990, c. S.5, as amended (the "Act") to consider whether it is in the public interest to make an order with respect to sanctions and costs against Rezwealth Financial Services Inc. ("Rezwealth"), Pamela Ramoutar ("Ms. Ramoutar"), Justin Ramoutar ("Mr. Ramoutar"), Tiffin Financial Corporation ("Tiffin Financial"), Daniel Tiffin ("Tiffin"), 2150129 Ontario Inc. ("215 Inc."), Sylvan Blackett ("Blackett"), 1778445 Ontario Inc. ("177 Inc.") and Willoughby Smith ("Smith") (collectively, the "Respondents").

[2] The hearing on the merits began on October 31, 2012 and continued from time to time over the course of 16 hearing days until March 1, 2013 (the "Merits Hearing"). The decision on the merits was issued on July 17, 2013 (Re Rezwealth et al. (2013), 36 O.S.C.B. 7446 (the "Merits Decision")).

[3] After the release of the Merits Decision, a separate hearing to consider submissions from Staff and the Respondents regarding sanctions and costs was held on September 17, 2013 (the "Sanctions and Costs Hearing").

[4] On September 17, 2013, Staff, Mr. Ramoutar, on behalf of himself, Ms. Ramoutar and Rezwealth (the "Rezwealth Respondents"), Smith, on behalf of himself and 117 Inc., and counsel for Tiffin and Tiffin Financial (the "Tiffin Respondents") appeared, tendered evidence and/or made submissions at the Sanctions and Costs Hearing. Staff, Mr. Ramoutar and Ms. Ramoutar also filed written submissions on sanctions and costs.

[5] Blackett and 215 Inc. were not represented and did not participate in the Sanctions and Costs Hearing or any other part of the proceeding. In the Merits Decision, I decided that I was satisfied that Staff had served the Respondents with notice of the hearing. I am also satisfied by the Affidavits of Sharon Nicolades, sworn August 13, 2013 and September 12, 2013, that Staff served the Respondents with Staff's written submissions on sanctions and costs. Therefore, I proceeded with the Sanctions and Costs Hearing in the absence of the Respondents who did not appear, in accordance with subsection 7(1) of the Statutory Powers Procedure Act, R.S.O. 1990, c. S.22, as amended and Rule 7.1 of the Commission's Rules of Procedure (2012), 35 O.S.C.B. 10071 (the "Rules of Procedure").

II. THE MERITS DECISION

[1] In the Merits Decision, I concluded that:

(a) The Respondents traded in securities and/or engaged in acts in furtherance of trades in securities without having been registered under the Act to do so, contrary to subsection 25(1)(a), for conduct predating September 28, 2009 and subsection 25(1), for conduct on and after September 28, 2009, of the Act and contrary to the public interest;

(b) The Respondents engaged in an illegal distribution of securities contrary to subsection 53(1) of the Act and contrary to the public interest;

(c) 215 Inc., Blackett, Rezwealth and Ms. Ramoutar participated in acts and engaged in courses of conduct relating to securities that they knew or reasonably ought to have known perpetrated a fraud on persons or companies contrary to subsection 126.1(b) of the Act and contrary to the public interest;

(d) Mr. Ramoutar participated in acts and engaged in a course of conduct relating to securities that he reasonably ought to have known perpetrated a fraud on persons or companies contrary to subsection 126.1(b) of the Act and contrary to the public interest;

(e) Blackett, as officer and director of 215 Inc., Smith, as officer and director of 177 Inc., Ms. Ramoutar, as officer and director of Rezwealth, and Tiffin, as officer and director of Tiffin Financial, authorized, permitted or acquiesced in non-compliance with the Act by the corporate respondents, respectively, and are deemed to have not complied with Ontario securities law pursuant to section 129.2 of the Act and such conduct is contrary to the public interest; and

(f) Mr. Ramoutar, as officer and director of Rezwealth, permitted or acquiesced in non-compliance with the Act by Rezwealth and is deemed to have not complied with Ontario securities law pursuant to section 129.2 of the Act and such conduct is contrary to the public interest.

(Merits Decision, supra at para. 280)

III. SANCTIONS AND COSTS REQUESTED

[6] Staff has requested that the following sanctions and costs orders be made against Blackett, 215 Inc. and the Rezwealth Respondents:

(a) that trading in any securities by or of each of them cease permanently;

(b) that the acquisition of any securities by each of them be prohibited permanently;

(c) that any exemptions contained in Ontario securities law not apply to each of them permanently;

(d) that Blackett, Ms. Ramoutar and Mr. Ramoutar resign any position that any of them holds as a director or officer of an issuer;

(e) that Blackett, Ms. Ramoutar and Mr. Ramoutar be prohibited permanently from becoming or acting as a director or officer of any issuer, registrant or investment fund manager;

(f) that Blackett, Ms. Ramoutar and Mr. Ramoutar be prohibited permanently from becoming or acting as a registrant, as an investment fund manager or as a promoter;

(g) that Blackett pay an administrative penalty of $500,000, Ms. Ramoutar pay an administrative penalty of $400,000 and Mr. Ramoutar pay an administrative penalty of $250,000, to be allocated to or for the benefit of third parties in accordance with subsection 3.4(2)(b) of the Act;

(h) that Blackett and 215 Inc. jointly and severally disgorge $1,635,527 and the Rezwealth Respondents jointly and severally disgorge $2,239,111 to the Commission, to be allocated to or for the benefit of third parties in accordance with subsection 3.4(2)(b) of the Act;

(i) that Blackett and 215 Inc. pay $110,000 of the costs of the investigation and hearing, for which they shall be jointly and severally liable; and

(j) that the Rezwealth Respondents pay $90,000 of the costs of the investigation and hearing, for which they shall be jointly and severally liable.

[7] Staff has requested that the following sanctions and costs orders be made against Smith, 177 Inc. and the Tiffin Respondents:

(a) that trading in any securities by or of each of them cease for a period of 5 years;

(b) that the acquisition of any securities by each of them be prohibited for a period of 5 years;

(c) that any exemptions contained in Ontario securities law not apply to each of them for a period of 5 years;

(d) that Smith and Tiffin resign any position that either of them holds as a director or officer of an issuer;

(e) that Smith and Tiffin be prohibited for a period of 5 years from becoming or acting as a director or officer of any issuer, registrant or investment fund manager;

(f) that Smith and Tiffin be prohibited for a period of 5 years from becoming or acting as a registrant, as an investment fund manager or as a promoter;

(g) that Smith and Tiffin each pay an administrative penalty of $25,000, to be allocated to or for the benefit of third parties in accordance with subsection 3.4(2)(b) of the Act;

(h) that Smith disgorge $137,383, 177 Inc. disgorge $41,150 and the Tiffin Respondents disgorge $517,000 to the Commission, to be allocated to or for the benefit of third parties in accordance with subsection 3.4(2)(b) of the Act;

(i) that Smith and 177 Inc. pay $37,658.18 of the costs of the investigation and hearing, for which they shall be jointly and severally liable; and

(j) that the Tiffin Respondents pay $15,000 of the costs of the investigation, for which they shall be jointly and severally liable.

IV. POSITIONS OF THE PARTIES

A. Staff's Submissions

[8] In its submissions, Staff differentiates between respondents who were found to have committed fraud (Blackett, 215 Inc. and the Rezwealth Respondents) and respondents who referred investors to them (Smith, 177 Inc. and the Tiffin Respondents). Staff's submissions on specific sanctions focused on the level of participation of each respondent in the conduct that led to unregistered trading, illegal distributions and, in some cases, fraud. The two categories of submissions on sanctions are discussed separately below.

[9] In support of its submission on costs Staff filed the Affidavit of Michelle Spain, sworn on July 26, 2013, which attaches a bill of costs and time dockets. Staff submits that it employed a conservative approach to its calculation of costs. Staff relies upon the Commission's decision in Goldpoint Sanctions for its submission that it is reasonable to order costs incurred for the time of the primary investigator during the investigation and testimony and of the primary counsel assigned to the matter (Re Goldpoint Resources Corp. (2013), 36 O.S.C.B. 1464 ("Goldpoint Sanctions") at para. 86).

[10] Staff submits that, in taking into account Rule 18.2 of the Commission's Rules of Procedure, and the factors cited in the Ochnik decision, costs sought should be apportioned in the manner suggested by Staff (Re Ochnik (2006), 29 O.S.C.B. 5917 ("Ochnik") at para. 29). Staff takes the position that Blackett and 215 Inc. should be ordered to pay costs of $110,000 because they neither participated in the proceeding nor cooperated with Staff. Staff argues that the Rezwealth Respondents should pay $90,000 of costs incurred because despite having cooperated in the investigation and participating in the Merits Hearing, their conduct was nevertheless among the most egregious and took a good portion of the Merits Hearing time. Smith and 177 Inc., Staff submits, should pay costs of $37,658.18 because although he cooperated in the investigation and participated in the Merits Hearing, Staff still expended time proving allegations on the merits and the Tiffin Respondents should pay costs of $15,000 as a result of having only agreed to facts at the beginning of the Merits Hearing.

i. Blackett, 215 Inc. and the Rezwealth Respondents

[11] Staff submits that fraud is one of the most egregious violations of securities law (Re Al-Tar Energy Corp. (2010), 33 O.S.C.B. 5535 ("Al-Tar") at para. 214). Blackett, personally and through 215 Inc., formulated and perpetrated a fraudulent ponzi scheme (Merits Decision, supra at para. 263). Blackett sold investment products referred to as "loan agreements", which investors understood to be for the purpose of engaging in foreign currency ("forex") trading (the "Blackett Investments"). Staff submits that Blackett and 215 Inc.'s conduct involved multiple contraventions of the Act, over a prolonged period of three years, which was widespread by having raised $3,018,649 from at least 56 investors (Merits Decision, supra at para. 223). Blackett and 215 Inc. paid out approximately $1.3 million to investors as represented returns when only $27,540 had been received from forex entities (Merits Decision, supra at para. 261). Staff submits that Blackett, as the directing mind of 215 Inc., created and was responsible for the Blackett Investments.

[12] The Rezwealth Respondents raised $2,910,305 from at least 45 investors (Merits Decision, supra at para. 232). Staff submits that Ms. Ramoutar, as the directing mind of Rezwealth, created and was responsible for the investment contracts (the "Rezwealth Investments") sold to investors. From July 2009 to December 2009 (the "2009 Period"), despite not making payments to or receiving payments from any forex traders, Rezwealth continued to solicit new investments, used new investor funds to pay other investors and repapered existing investment contracts that were not in compliance with the Act (Merits Decision, supra at para. 265). Such conduct, Staff argues, involved multiple breaches of the Act, over a sustained period and amounted to a significant level of participation in the capital markets.

[13] Staff submits that Blackett, 215 Inc. and the Rezwealth Respondents cannot be trusted to participate in the capital markets. In particular, Staff submits that Blackett has shown disregard for Ontario securities laws by not participating in the proceeding and has not shown remorse, nor acknowledged the seriousness of his conduct. Staff also takes the position that the written submissions of the Rezwealth Respondents blame others and demonstrate their refusal to take responsibility for their conduct. Staff argues that an aggravating factor for Ms. Ramoutar includes the fact that she was previously registered with the Commission and should have been aware of the registration requirements. Staff further submits that there are no mitigating factors available to Blackett, 215 Inc. or the Rezwealth Respondents. Therefore, Staff takes the position that permanent market and director/officer bans are necessary in the circumstances and that no carve-outs should be granted to Blackett, 215 Inc. or the Rezwealth Respondents (Re Al-Tar Energy Corp. (2011), 34 O.S.C.B. 447 ("Al-Tar Sanctions") at para. 33;Re Lyndz Pharmaceuticals Inc. (2012), 35 O.S.C.B. 7357 ("Lyndz Sanctions") at para. 80; and Goldpoint Sanctions, supra at para. 63).

[14] Staff submits that a joint and several disgorgement in the amount of $1,635,527 by Blackett and 215 Inc. is appropriate as it reflects the amount that was not returned to investors (Merits Decision, supra at paras. 223 and 261). Staff submits that the Rezwealth Respondents ought to be ordered to disgorge $2,910,305 collected from investors, less the $671,194 returned to investors, for a net amount of $2,239,111, but not less commission amounts paid to the Tiffin Respondents or any other payments, to Blackett or otherwise (Merits Decision, supra at paras. 195, 197, 232 and 265). Staff submits that it is unclear where the amount directed to Blackett and 215 Inc. was ultimately spent and conceded that it may be a part of the funds for which Staff seeks disgorgement from Blackett and 215 Inc.

[15] Staff takes the position that as the directing mind of 215 Inc. and the creator of the Blackett Investments, Blackett should be ordered to pay $500,000 as an administrative penalty. Staff submits that the $500,000 sought is in line with administrative penalties ordered by the Commission in Lyndz Sanctions, in which $1.7 million was raised through fraudulent conduct, and Al-Tar Sanctions, in which respondents raised $658,109 through a fraudulent scheme (Lyndz Sanctions,supra at paras. 19, 24 and 110; Al-Tar Sanctions, supra at paras. 11-12 and 48-55).

[16] Staff relies upon the Commission's decisions in Maple Leaf Sanctions and Goldpoint Sanctions in support of its submissions on administrative penalties sought from Ms. Ramoutar and Mr. Ramoutar. Staff argues that significant penalties that match the general and specific deterrence required are necessary, including a $400,000 administrative penalty for Ms. Ramoutar and a $250,000 penalty for Mr. Ramoutar. Staff submits that these administrative penalties are proportionate and similar to those ordered in other matters involving findings of fraud, including Maple Leaf Sanctions, in which the Commission ordered a $450,000 administrative penalty, and Goldpoint Sanctions, in which the Commission ordered a $300,000 administrative penalty (Re Maple Leaf Investment Fund Corp. (2012), 35 O.S.C.B. 3075 ("Maple Leaf Sanctions") at paras. 7 and 55; and Goldpoint Sanctions, supra at paras. 5 and 90).

[17] Staff notes that the Blackett Investments scheme occurred over a longer period of time than the Rezwealth Investments scheme and that Blackett used over $1 million of investor funds for personal purposes (Merits Decision, supra at para. 261), while Ms. Ramoutar and Mr. Ramoutar and their family members benefited from more than $200,000 of investor funds during the 2009 Period (Merits Decision, supra at para. 265). Further, Staff acknowledges that Blackett was found to have been running a fraudulent ponzi scheme from the beginning, while the Rezwealth Respondents were not. Staff further distinguishes the participation level of Ms. Ramoutar and Mr. Ramoutar. Staff submits that while Ms. Ramoutar made decisions to accept or refuse investors and controlled the Rezwealth account, accepting funds into it and directing funds out, Mr. Ramoutar reasonably ought to have known of the fraud perpetrated by his mother, which reflects a lesser degree of participation in the fraud. It is upon these bases that Staff submits the administrative penalties should be calibrated, such that they are proportionate to the level of each respondent's culpability in the matter.

ii. Smith, 177 Inc. and the Tiffin Respondents

[18] Staff submits that, although they did not participate in fraud, Smith, 177 Inc. and the Tiffin Respondents committed significant breaches of the Act, including non-compliance with registration and disclosure requirements over a sustained period of time. Staff relies upon the Commission's decision in Simply Wealth Sanctions, which dealt with respondents who also solicited and promoted investments for a forex trading program that, in reality, was a ponzi scheme, for its submissions relating to these respondents (Re Simply Wealth Financial Group Inc. (2013), 36 O.S.C.B. 5099 ("Simply Wealth Sanctions")). In Simply Wealth Sanctions, the Commission acknowledged the importance of registration as a gate-keeping mechanism and stated that the filing of a prospectus is fundamental to the protection of the investing public (Simply Wealth Sanctions, supra at paras. 28 and 30, citingRe Limelight Entertainment Inc. (2008), 31 O.S.C.B. 1727 ("Limelight") at para. 135).

[19] Smith referred at least 48 investors who invested approximately $1.2 million in the Blackett Investments (Merits Decision, supra at para. 227). The Tiffin Respondents admitted to having referred 19 investors to Rezwealth, who collectively invested approximately $2 million in the Rezwealth Investments (Merits Decision, supra at para. 238). Staff submits that all the respondents who referred investors committed multiple breaches over a sustained period and that their level of activity in the marketplace was significant.

[20] Staff submits that Smith was a prior registrant with the Commission, who should have known that his actions were in breach of the Act, and who has not made any acknowledgment of the seriousness of his conduct. Staff notes that Tiffin was also previously registered with the Commission who should have known that his actions were in breach of the Act. However, Staff acknowledges that mitigating factors for Tiffin include his cooperation with Staff in arriving at an agreed statement of facts agreed (the "Agreed Facts"), which contributed to efficiency of the hearing and can be viewed as recognition of the seriousness of his conduct.

[21] Staff takes the position that, as in Simply Wealth Sanctions, five-year trading, acquisition and exemption application bans are appropriate in the circumstances and may be made subject to carve-outs upon payment of amounts ordered for each of Smith, 177 Inc. and the Tiffin Respondents (Simply Wealth Sanctions, supra at para. 47). Staff argues that resignation from and prohibitions on becoming or acting as directors and officers for Smith and Tiffin are also necessary to deter these and similar individuals from engaging in such conduct in the future.

[22] Staff relies on Commission decisions in Simply Wealth Sanctions and Sabourin Sanctions for its submission that Smith, 177 Inc. and the Tiffin Respondents should disgorge the entire amounts received by them in non-compliance with the Act (Simply Wealth Sanctions, supra at para. 48; and Re Sabourin (2010), 33 O.S.C.B. 5299 ("Sabourin Sanctions") at para. 65). Staff submits that Smith received $137,383 from Blackett (Merits Decision, supra at para. 190), but acknowledges that on the basis of a 10 percent commission, it is possible that $120,000 of that amount could relate to referral fees and the remaining amount to returns on Smith's investment with Blackett. Staff also noted that 177 Inc. received $41,150 in service fees for facilitating monthly payments to investors through its account (Merits Decision, supra at para. 227). The Tiffin Respondents agreed to having received $517,000 in referral fees as a result of referring investors to Rezwealth (Merits Decision, supra at para. 238). The Tiffin Respondents should be, in Staff's submission, jointly and severally liable to disgorge the full amount of $517,000.

[23] Staff further submits that, in order to achieve specific and general deterrence, administrative penalties should take into account the facts that although these respondents were not found to have engaged in fraud, their activities still amounted to multiple breaches, which enabled them to obtain significant commissions. Staff submits that Smith and Tiffin should each pay an administrative penalty of $25,000. By comparison to Tiffin, Staff took the position that Smith's activity was conducted over a longer period and affected more investors. On the other hand, Tiffin received substantially more in commissions and his referrals constituted roughly two thirds of the amount of funds obtained in the Rezwealth Investments scheme. Therefore, Staff submits that Smith's conduct and Tiffin's conduct were similarly egregious and should be subject to the same penalty. Staff notes that the penalty sought is higher than the $15,000 administrative penalties ordered by the Commission in Simply Wealth Sanctions, but distinguishes the matter in this respect because the misconduct in Simply Wealth Sanctions related to a shorter period and respondents obtained less in commissions (Simply Wealth Sanctions, supra at paras. 1, 4 and 52).

B. The Rezwealth Respondents' Submissions

[24] At the Sanctions and Costs Hearing, Mr. Ramoutar asked to be considered separate and apart from Ms. Ramoutar and Rezwealth and submitted that they were not acting in the same mindset and did not always share the same knowledge. Mr. Ramoutar submits that he was 23 years old and was trusting of more experienced professionals when he started his career.

[25] In his written submissions, Mr. Ramoutar submits that he was not a directing mind, did not participate in acts of trading and that neither he nor his mother knew that their actions constituted fraud. Mr. Ramoutar argues that the Rezwealth Respondents were themselves victims of fraud, indicating that Blackett and Smith took money from them and Tiffin gave them instructions to engage in conduct they may not have known was illegal or contrary to the public interest. Mr. Ramoutar submits that he understood organizations could borrow money from people to help the organization to grow and produce a profit that could benefit those people.

[26] At the Sanctions and Costs Hearing, Mr. Ramoutar took issue with Staff's position that Rezwealth received $2.9 million as it did not account for amounts paid to Tiffin, investors or Blackett. Mr. Ramoutar submits that Tiffin was responsible for $2 million raised from investors and that to order Mr. Ramoutar to pay an administrative penalty of $250,000 would be unjust for someone who, in Mr. Ramoutar's submission, only made $35,000 in commissions during the material time. Mr. Ramoutar submits that he currently earns a $30,000 salary and argues that if the Commission requires him to pay the full amount he will be 55 years old before he is able to complete payment. Mr. Ramoutar requested that he be ordered to pay the commissions he made in the amount of $35,000. In his written submissions, Mr. Ramoutar argues that monies shown as withdrawals and payments from Rezwealth's account should be considered as profit and nothing more.

[27] With respect to Ms. Ramoutar, Mr. Ramoutar submits that her goal is and has always been to recover money from Blackett. Mr. Ramoutar submits that any amount ordered to be paid by Mr. Ramoutar or his mother will simply delay their ability to pay back investors, who were friends and family. He submits that he and his mother will continue to try and pay the investors back. In her written submissions, Ms. Ramoutar submits that the Rezwealth Respondents are extremely sorry and "vows to get justice for all".

[28] Mr. Ramoutar submits that it is disproportionate for Staff to seek that a lifetime ban be imposed upon him while seeking only a five-year ban for Tiffin, an experienced market participant. Mr. Ramoutar further submits that the last four years have effectively been a ban imposed upon him. He argues that the matter has hindered his employment opportunities because of his association to this Commission matter. He submits that he has a business administration degree and completed the Canadian Securities Course ("CSC"), which are designations that should provide someone with a decent job, but he is not able to get hired and currently works as a debt collector. Mr. Ramoutar submits that any market prohibition upon him from one year to five years will in essence be a lifetime ban because it will prevent him from pursuing the employment that he wants.

[29] With respect to costs, Mr. Ramoutar notes that Staff seeks $90,000 from the Rezwealth Respondents on a joint and several basis and again submits that he be considered separate and apart from his mother and Rezwealth for the purposes of the Commission's order.

[30] I note that a substantial portion of the written submissions made by Mr. Ramoutar and Ms. Ramoutar appeared to re-argue the merits of this matter and were neither relevant to nor of assistance in determining the appropriate sanctions.

C. Smith and 177 Inc.'s Submissions

[31] Smith submits that the $41,150 claimed to have gone to 177 Inc. was an amount paid onward by 177 Inc. to investors on behalf of Blackett and not commission received. However, Smith submits that he understands the request for disgorgement of $137,000 received by him personally.

[32] Smith submits that the sanctions sought for Tiffin are too lenient because Tiffin is the reason the Respondents were involved in the matter.

[33] Smith also submits that a $250,000 administrative penalty for Mr. Ramoutar is too harsh given that the conduct resulted from Mr. Ramoutar following his mother's instructions. Smith questions whether the Commission would have found that Mr. Ramoutar ought to have known about such conduct contrary to the Act if he had worked for another employer, rather than Rezwealth.

[34] Smith also requests that the Panel reconsider the $25,000 administrative penalties sought against him, but notes that he ultimately defers to the discretion of the Commission.

D. The Tiffin Respondents' Submissions

[35] Counsel for Tiffin relies primarily on the Simply Wealth Sanctions decision in support of his submissions. The Tiffin Respondents take the position that the five-year market prohibitions and director and officer prohibitions are largely appropriate. They do not take issue with the disgorgement and costs amounts. However, counsel for Tiffin submits that a $15,000 administrative penalty is more appropriate and suggests that a director and officer carve-out and payment mechanism should be incorporated in the Commission's order.

[36] The Tiffin Respondents also submit that prohibitions should not affect trading by them in insurance products and segregated funds regulated by the Financial Services Commission of Ontario ("FSCO"). In his oral submissions, counsel for the Tiffin Respondents states that buying and selling of insurance and segregated funds is not under the aegis of the Commission and thus the Commission's prohibition should not affect that activity. Further, counsel for Tiffin submits that notwithstanding the five year director and officer prohibitions, Tiffin should be permitted to continue to operate Tiffin Financial, which is Tiffin's private company and through which he offers products regulated by FSCO.

[37] In Simply Wealth Sanctions, a respondent named Persaud, who solicited and promoted investments for a forex trading program, was found to have been duped by promoters of a ponzi scheme and the Commission determined, as a result, that the need for deterrence was on the low end of the scale (Simply Wealth Sanctions, supra at paras. 1 and 42). Persaud made a voluntary acknowledgement that disgorgement should be ordered (Simply Wealth Sanctions, supra at para. 39). The Tiffin Respondents submit that their conduct is akin to that of Persuad and note that they take the same position on disgorgement in this matter. Specifically, counsel for the Tiffin Respondents submits that they were not proponents of a fraudulent scheme, but rather they were duped by Blackett, the ultimate promoter who spoke to the Ramoutars and Rezwealth, who was responsible for explaining the business to Tiffin. Counsel for the Tiffin Respondents relies on the findings in Simply Wealth Sanctions that while an administrative penalty should be of a magnitude to ensure effective specific and general deterrence, based on a perception that they were acting within the law, it is difficult to appreciate how like-minded persons could be dissuaded from similar conduct (Simply Wealth Sanctions, supra at paras. 49 and 51). Therefore, the Tiffin Respondents argue, when considering that the possibility of re-offending would be similarly on the low side, the loss of reputation is evident and given their acceptance of the disgorgement order, a $15,000 administrative penalty, like that ordered in Simply Wealth Sanctions, is more appropriate in the circumstances (Simply Wealth Sanctions, supra at para. 52).

[38] On the facts, the Tiffin Respondents argue that they only directly referred 8 investors and therefore are only responsible for half the funds received by Rezwealth referred to in the Agreed Facts. Their misconduct, the Tiffin Respondents submit, amounts to two emails, a statement on a website, meeting with investors, discussing features of the investment, assisting a few investors in completing agreements and facilitating some payments by delivering cheques to Rezwealth. This can be distinguished, they argue, from conduct of Smith and 177 Inc. who accepted money from investors through 177 Inc.'s account.

[39] The Tiffin Respondents propose that payment of amounts ordered by way of disgorgement, the administrative penalty and costs should be satisfied over time. According to their proposal, the payment of costs and the administrative penalty would be paid over the course of 4 years and the disgorgement amount over the course of 10 years. Under this payment plan, the Tiffin Respondents would pay $6,000 as a first installment of the administrative penalty and costs within 30 days of the Commission's order. On the first through fourth anniversary dates of any such order, $57,700 would be paid, representing the balance of the costs and administrative penalty and the first four payments of disgorgement order and on the fifth through tenth anniversary dates of the order $51,700 would be paid representing the balance of the disgorgement order. Tiffin argues that he would have to remain employed and working as an officer and director of Tiffin Financial in order to earn income to be able to pay for the proposed financial sanctions and costs. Counsel for the Tiffin Respondents also submits that double-counting is a concern and that a possible method to deal with that issue would be an order which states that amounts received from one of the Respondents might reduce the amounts owed by others.

[40] Mitigating factors, the Tiffin Respondents submit, include their cooperation with Staff in arriving at the Agreed Facts, their acknowledgement that the investment contracts were securities, distributions of those securities were made and they engaged in conduct contrary to the public interest and the fact that they appear to be the only respondents who have shown remorse for their conduct. Further, they reiterate the position that they were duped by proponents of the schemes and note that in Ms. Ramoutar's compelled examination she admitted it was her idea to make Tiffin a middleman (Merits Decision, supra at para. 147).

[41] Counsel for the Tiffin Respondents filed the Affidavit of Dan Tiffin, sworn on September 15, 2013 ("Tiffin's Affidavit"), attaching unaudited financial statements for Tiffin Financial and the 2013 OSC Annual Report, among other things. Tiffin notes that, according to the 2013 OSC Annual Report, 95 percent of assessed sanctions ordered by the Commission are uncollected in contested hearings. Counsel for the Tiffin Respondents submits that penalties do not meet deterrence objectives if they are not paid and argues that Tiffin wants to pay his sanctions, but asks for a realistic possibility of doing so through the proposed payment plan. Counsel for the Tiffin Respondents agrees that the Panel could add a term to extend market participation bans until payments are made in full.

E. Staff's Reply Submissions

[42] In response to the Tiffin Respondents' submissions, Staff does not oppose a carve-out for the sole purpose of Tiffin remaining a director and officer of Tiffin Financial in order to be able to contribute to payments made to the commission. Staff takes no position on the terms of payment and is amenable to any bans continuing until repayment in full until such time as repayment is completed in full. Staff also noted that Tiffin is 61 years old and for Tiffin to complete payments in 10 years it would require him to work until he is 71 years old.

[43] Staff does, however, distinguish between Tiffin and Persaud. Staff submits that in the Simply Wealth Sanctions decision, the Commission considered that Persaud was 19 years old, had no experience in the market, received only $90,000 in commissions, was genuinely remorseful and appeared with a $15,000 cheque in anticipation of paying the Commission's order on disgorgement (Simply Wealth Sanctions, supra paras. 4, 20 and 39). By comparison, Staff submits that Tiffin is 61 year-old former registrant, who received $517,000 in commissions on all 19 investors who were referred directly by him and indirectly through him. Staff submits that if Tiffin collected those commissions he should also be held responsible for them. Therefore, Staff submits that a $25,000 administrative penalty is reasonable.

[44] With respect to Mr. Ramoutar's submission that he only received $35,000 in commissions, Staff argues that the Panel found that Mr. Ramoutar received $51,158 in payments during the 2009 Period (Merits Decision, supra at para. 267). Staff also submits that Mr. Ramoutar's ability to pay is relevant, but not determinative (Sabourin Sanctions, supra at para. 60) and the factor has been afforded limited weight without evidence of income (Maple Leaf Sanctions, supra at para. 18). Further, Staff argues that, despite his submissions with respect to obtaining his securities designation and participating in the capital markets, Mr. Ramoutar's fraudulent conduct warrants a permanent ban from the industry.

V. THE LAW ON SANCTIONS

[45] The Commission's mandate is to: (i) provide protection to investors from unfair, improper or fraudulent practices; and (ii) foster fair and efficient capital markets and confidence in capital markets (section 1.1 of the Act).

[46] The Commission has a public interest jurisdiction to order sanctions restricting respondents from participating in the Ontario capital markets in the future (Committee for the Equal Treatment of Asbestos Minority Shareholders v. Ontario (Securities Commission), [2001] 2 S.C.R. 132 at para. 43). The Commission's role when imposing sanctions is not to punish past conduct, but to restrain "future conduct that is likely to be prejudicial to the public interest in having capital markets that are both fair and efficient" (Mithras Management Ltd. (1990), 13 O.S.C.B. 1600 at p. 1611).

[47] The Commission must ensure that the sanctions imposed are proportionate to the circumstances of the case and the conduct of each respondent. Factors that the Commission has considered in determining appropriate sanctions include:

(a) the seriousness of the allegations;

(b) the respondent's experience in the marketplace;

(c) the level of a respondent's activity in the marketplace;

(d) whether or not there has been recognition of the seriousness of the improprieties;

(e) whether or not the sanctions imposed may serve to deter not only those involved in the case being considered, but any like-minded people from engaging in similar abuses of the capital markets;

(f) any mitigating factors;

(g) the size of any profit made or loss avoided from the illegal conduct;

(h) the size of any financial sanctions or voluntary payment when considering other factors;

(i) the effect any sanction might have on the livelihood of a respondent;

(j) the restraint any sanctions may have on the ability of a respondent to participate without check in the capital markets;

(k) the reputation and prestige of the respondent;

(l) the shame or financial pain that any sanction would reasonably cause to the respondent; and

(m) the remorse of the respondent.

(Re Belteco Holdings Inc. (1998), 21 O.S.C.B. 7743 ("Belteco") at paras. 23-26; Re M.C.J.C. Holdings Inc. (2002), 25 O.S.C.B. 1133 ("M.C.J.C. Holdings") at p. 5)

[48] Deterrence is an important factor that the Commission may consider when determining appropriate sanctions. In Cartaway, the Supreme Court of Canada stated that: "...it is reasonable to view general deterrence as an appropriate, and perhaps necessary, consideration in making orders that are both protective and preventative" (Re Cartaway Resources Corp., [2004] 1 S.C.R. 672 at para. 60).

[49] The panel in Limelight Sanctions considered the deterrent purpose of administrative penalties. Specifically, the Commission stated:

The purpose of an administrative penalty is to deter the particular respondents from engaging in the same or similar conduct in the future and to send a clear deterrent message to other market participants that the conduct in question will not be tolerated in Ontario capital markets.

(Re Limelight Entertainment Inc. (2008), 31 O.S.C.B. 12030 ("Limelight Sanctions") at para. 67)

[50] There is no formula for determining an administrative penalty. Factors to be considered in determining an appropriate administrative penalty include: the seriousness of the misconduct; whether there were multiple and/or repeated breaches of the Act; the amount of money raised from investors; and the level of administrative penalties imposed in other cases (Limelight Sanctions, supra at paras. 71 and 78).

[51] Subsection 127(1)10 of the Act provides that a person or company that has not complied with Ontario securities law can be ordered to disgorge to the Commission "any amounts obtained" as a result of the non-compliance. When determining the appropriate disgorgement orders, the Commission is guided by a non-exhaustive list of factors set out in Limelight Sanctions at para. 52, including:

(a) whether an amount was obtained by a respondent as a result of non-compliance with the Act;

(b) the seriousness of the misconduct and the breaches of the Act and whether investors were seriously harmed;

(c) whether the amount that a respondent obtained as a result of non-compliance with the Act is reasonably ascertainable;

(d) whether the individuals who suffered losses are likely to be able to obtain redress; and

(e) the deterrent effect of a disgorgement order on the respondents and other market participants.

VI. SPECIFIC SANCTIONING FACTORS

[52] In determining appropriate sanctions, the Commission is guided by the factors set out in Belteco and M.C.J.C. Holdings. I have considered the factors summarized in the following paragraphs to be applicable in this matter.

A. Seriousness of Misconduct and Breaches of the Act

[53] Registration is a cornerstone of securities law which serves as a gate-keeping function to ensure only properly qualified individuals are permitted to trade with, or on behalf of, the public (Limelight, supra at para. 135). The prospectus fulfills an important disclosure requirement to ensure that investors are able to make informed decisions (Simply Wealth Sanctions, supra at para. 30). All of the Respondents violated sections 25 and 53 of the Act relating to registration and disclosure, core elements of the securities regulatory regime.

[54] Further, Blackett, 215 Inc. and the Rezwealth Respondents engaged in fraud, which has been found to be one of the most egregious violations of securities law (Al-Tar, supra at para. 214). In essence, Blackett and 215 Inc. formulated a fraudulent ponzi scheme cultivated through misrepresentations and involving payments to early investors out of funds received from later investors (Merits Decision, supra at para. 263). During the 2009 Period, the Rezwealth Respondents caused new investor funds to be paid to other investors under the guise that payments were returns on the Rezwealth Investments and repapered existing investment contracts that failed to comply with Ontario securities law (Merits Decision, supra at para. 265). These combined breaches of the five respondents who violated subsection 126.1(b) of the Act, demonstrate a serious pattern of non-compliance and blatant disregard for securities law. The situation is aggravated further for Blackett and Ms. Ramoutar, as the directing minds of 215 Inc. and Rezwealth, respectively, who created and are responsible for the Blackett Investments and the Rezwealth Investments, respectively.

B. The Respondents' Experience in the Marketplace

[55] Ms. Ramoutar was previously registered with the Commission as a mutual fund dealer from March 2002 to December 2004 (Merits Decision, supra at para. 15). Smith was also previously registered with the Commission as a mutual fund dealer from May 2002 to September 2005, as was Tiffin for a period until 1999 (Merits Decision, supra at paras. 14 and 16). Each of them should have been aware of the registration requirements. Their prior experience in the capital markets is an aggravating factor for each, which is not present for the other Respondents.

[56] I accept that Mr. Ramoutar was 23 years old at the time of the impugned conduct and relied, to some extent, on the expertise and instructions of others including those respondents who were previously registered. Although his inexperience is a mitigating factor for Mr. Ramoutar, it does not exculpate him because he was well-educated and reasonably ought to have known that he was undertaking dishonest acts, which could and did put investors' financial interests at risk.

C. Level of Activity in the Marketplace

[57] Over a prolonged period of three years Blackett and 215 Inc. raised $3,018,649 from at least 56 investors for a ponzi scheme perpetrated by them (Merits Decision, supra at paras. 37, 223 and 263). The Rezwealth Respondents raised $2,910,305 from at least 45 investors over a period of two years, of which $970,940 was received in the 2009 Period (Merits Decision, supra at paras. 79, 195 and 232). Smith referred at least 48 investors who invested approximately $1.2 million in the Blackett Investments and the Tiffin Respondents referred at least 19 investors who invested approximately $2 million in the Rezwealth Investments (Merits Decision, supra at paras. 227 and 238). 177 Inc. facilitated Blackett's payments to investors (Merits Decision, supra at para. 227). Taken as a whole, the Respondents committed multiple breaches over a sustained period and their level of activity in the marketplace was significant.

D. Respondents' Recognition of the Seriousness of their Conduct and Remorse

[58] I find that the Tiffin Respondents' admissions, by way of the Agreed Facts, are a recognition of the seriousness of their conduct and, therefore, a mitigating factor for them.

[59] Smith accepted that the amounts received as commissions by him ought to be disgorged. I accept this as an acknowledgment of a degree of responsibility for his conduct and a minor mitigating factor for him.

[60] Blackett did not attend the Merits Hearing or the Sanctions and Costs Hearing. Neither Blackett nor 215 Inc. has expressed any remorse or shown any recognition of the seriousness of their misconduct.

[61] In their submissions, the Rezwealth Respondents repeatedly blamed others for conduct resulting in losses to investors. However, Mr. Ramoutar and Ms. Ramoutar did express remorse. In written submissions, Ms. Ramoutar states that the Rezwealth Respondents are "extremely sorry". Both Mr. Ramoutar and Ms. Ramoutar submit that they intend to try to pay back investors, who were family and friends. I consider this to be a mitigating factor, but it is, at the time of the Sanctions and Costs Hearing, a mere statement of intention, without any evidence of any steps proposed to fulfill the stated intentions; as such their expression of remorse is a minor mitigating factor for them.

E. Specific and General Deterrence

[62] Given the seriousness of the conduct, particularly fraudulent activities, it is important that the Respondents and like-minded individuals should be deterred from doing so in the future by imposing appropriate sanctions, which reflect the harm done to investors. I find that specific deterrence is necessary for all the Respondents in this case. In the circumstances of this matter, I am sympathetic to the view ascribed to in Simply Wealth Sanctions that respondents such as Smith, 177 Inc. and the Tiffin Respondents were not proponents of fraudulent schemes and, therefore, did not necessarily appreciate that their conduct might cause harm to investors. However, there are additional circumstances in this matter, Smith and 177 Inc. were actively involved in introducing Ms. Ramoutar and Rezwealth to Blackett and 215 Inc. as well as soliciting 48 investors for the Blackett Investments in the amount of $1.2 million and facilitating payments by Blackett and 215 Inc. (Merits Decision, supra at para. 227). Also, the Tiffin Respondents were actively involved in soliciting and referring 19 investors for the Rezwealth Investments in the amount of approximately $2 million (Merits Decision, supra at para. 238).

F. Size of Profit Gained or Loss Avoided from Illegal Conduct

[63] I find that Blackett and 215 Inc. obtained from investors as a result of non-compliance with Ontario securities law the amount of $1,635,527, which represents the difference between $3,018,649 obtained by Blackett and 215 Inc. from investors and $1,383,122 paid by Blackett and 215 Inc. to investors (Merits Decision, supra at paras. 223 and 261). In the Merits Decision, I found that Blackett used at least $1,025,955 of investor funds raised through the sale of the Blackett Investments for personal purposes (Merits Decision, supra at para. 262). Further, I found that Blackett paid Smith commissions of at least $120,000 and paid 177 Inc. services fees of $41,150(Merits Decision, supra at para. 227). I find that those payments left Blackett with a net amount of $1,474,377 illegally obtained.

[64] Smith admittedly received a 10 percent referral fee, totalling at least $120,000, from the sales of the Blackett Investments and 177 Inc. received $ 41,150 in services fees for facilitating payments to investors (Merits Decision, supra at para. 227). I do not accept Smith's submission that the $41,150 paid to 177 Inc. was an amount that went to repay investors. His submission on this point appears to revisit the merits and I find no reason to depart from findings that I have made in respect of that amount, received by 177 Inc. for non-compliance with the Act.

[65] I found that the conduct of the Rezwealth Respondents resulted in actual losses of $2,239,111 to investors representing the difference between $2,910,305 obtained by the Rezwealth Respondents from investors and $671,194 paid by the Rezwealth Respondents to investors (Merits Decision, supra at paras. 197, 232 and 265). However, of the investor funds raised by the Rezwealth Respondents, $575,175 was paid to Blackett and Tiffin Respondents received at least $517,000 as commissions (Merits Decision, supra at paras. 197 and 238). I find that those payments left the Rezwealth Respondents with a net amount of $1,146,936 illegally obtained. The Rezwealth Respondents and their family received $565,861 from Rezwealth's bank account (Merits Decision, supra at para. 197).

[66] I accept that Mr. Ramoutar personally received at least $51,158 in payments from the Rezwealth Account during the 2009 Period for his conduct contrary to the Act (Merits Decision, supra at para. 267).

[67] By their own admission, the Tiffin Respondents received $517,000 from referrals that resulted in sales of the Rezwealth Investments (Merits Decision, supra at para. 238).

[68] None of the Respondents should be permitted to profit from amounts obtained by them as a result of their non-compliance with Ontario securities law.

G. Respondent's Ability to Pay

[69] Ability to pay is one factor to consider in determining the appropriate sanctions, but it is well established that it is not a determinative factor (Sabourin Sanctions, supra at para. 60). I have considered the submissions with respect to Mr. Ramoutar's financial position, particularly his representations that he only has income of $30,000 and that it would take him 25 years to pay back the administrative penalty sought by Staff. Mr. Ramoutar did not provide me with evidence in support of his submissions on inability to pay. In the absence of such evidence, I am unable to give weight to the submission in determining the appropriate sanctions for Mr. Ramoutar.

H. Effect of Sanctions on Livelihood of Respondents

[70] Mr. Ramoutar submits that his employment opportunities have already been affected and that further bans would prevent him from pursuing a career in capital markets:

I have a business admin degree; I also have my CSC, my securities licence. Anybody with those designations would have a decent job at this point. I just simply can't get it.

[...]

[A]s far as a ban in the industry or any judgment again [sic] my name will, in essence, be a lifetime ban for me, whether it be one year, five years or anything further than that. It will prevent me from doing anything that I want to do at all as far as employment is concerned.

(Hearing Transcript of September 17, 2013 at pp. 61-62)

[71] I have taken into account Mr. Ramoutar's submission in this regard. However, I am also mindful that Mr. Ramoutar made a choice to engage in conduct that was harmful to investors and to the integrity of Ontario's capital markets. I agree with the Divisional Court's decision that participation in the capital markets is a privilege and not a right (Erikson v. Ontario (Securities Commission), [2003] O.J. No. 593 at para. 55 ("Erikson")).

[72] While Ms. Ramoutar, Smith and Tiffin were former registrants with the Commission, there were no submissions from any of them that they wished to pursue a career as a registrant going forward.

I. Shame that Sanctions Would Reasonably Cause to the Respondents

[73] Mr. Ramoutar made submissions on loss of reputation, including that he is "unable to gain any kind of decent employment because of [his] name on the internet in this case" (Hearing Transcript of September 17, 2013 at p. 61). I have considered the reputational damage caused to the Rezwealth Respondents, but do not find it to be determinative; particularly, in light of the findings of fraud made in the Merits Decision.

VII. APPROPRIATE SANCTIONS IN THIS MATTER

[74] In determining the appropriate sanctions, I have remained cognizant of the role and conduct of each of the Respondents. I have also taken into account the Merits Decision findings of contraventions of the Act, which differ between certain of the Respondents, the submissions of the parties, the evidence before me and the sanctioning factors discussed above.

A. Trading, Acquisition and Exemption Prohibitions

[75] I agree that the conduct of the Respondents warrants the imposition of certain trading, acquisition and exemption prohibitions that are commensurate with each one's conduct. I am guided by the Divisional Court's view that participation in the capital markets is a privilege and not a right (Erikson, supra).

[76] I have considered decisions in which the Commission ordered permanent cease trade bans, acquisition bans and exemption application bans, without exception, in circumstances where respondents were found to have engaged in fraud. In Al-Tar Sanctions andGoldpoint Sanctions, the Commission ordered similar sanctions where securities were sold to investors through salespersons who were found to have contravened sections 25, 53 and 126.1(b) of the Act, among others (Al-Tar Sanctions, supra at paras. 10 and 33;Goldpoint Sanctions, supra at paras. 5, 33 and 90). In Lyndz Sanctions, the Commission ordered permanent bans for respondents who breached sections 53 and 126.1(b) of the Act (Lyndz Sanctions, supra at paras. 26 and 110). In Maple Leaf Sanctions, the Commission found that all respondents ought to be permanently prohibited from trading, acquiring and having exemptions apply to them, despite the fact that two of the respondents were not found to have engaged in fraudulent conduct (Maple Leaf Sanctions, supra at para. 6-10 and 55).

[77] The activity of Blackett, 215 Inc. and the Rezwealth Respondents involved multiple serious contraventions of the Act. Their unlawful activity was prolonged, occurring over a three-year period, in the case of Blackett and 215 Inc., and over a two year period, in the case of the Rezwealth Respondents, and affected many investors and raised significant amounts of money.

[78] I find that Blackett and Ms. Ramoutar were the principal actors and the responsible directing minds of 215 Inc. and Rezwealth, respectively, through which they directly participated in acts and engaged in a course of conduct relating to securities, that they knew or reasonably ought to have known perpetrated a fraud in investors (Merits Decision, supra at paras. 262-263, 266 and 268). Blackett was also the beneficiary of a large proportion of investor funds directed to him and 215 Inc. for the purpose of forex trading (Merits Decision, supra at para. 262).

[79] I do not accept Mr. Ramoutar's submission that it is disproportionate for lifetime bans be imposed upon him, if Tiffin is subjected to only five-year bans. Although Tiffin is an experienced market participant, he was not found to have engaged in conduct that he ought to have known perpetrated a fraud on investors. Despite knowing that Rezwealth was not receiving payments from Blackett during the 2009 Period, Mr. Ramoutar continued to accept new investor funds and personally received at least $51,158 in payments from Rezwealth's bank account during that time (Merits Decision, supra at para. 267). I have found that Mr. Ramoutar reasonably ought to have known that by such conduct he was undertaking dishonest acts, which could and did put investors' financial interest at risk (Merits Decision, supra at para. 267). There is no evidence that Tiffin engaged in or otherwise had knowledge of the fraudulent conduct perpetrated by Blackett, 215 Inc. or the Rezwealth Respondents.

[80] Mr. Ramoutar also submits that any market prohibition upon him from one year to five will in essence be a lifetime ban because it will prevent him from pursuing employment of his choice. It is precisely Mr. Ramoutar's desire to remain an active participant in the capital markets, in circumstances where he either denies or does not appreciate that he ought to have known that he engaged in fraudulent conduct, which leads me to the conclusion that he should not be permitted to trade in or acquire securities or seek exemption application permanently. As noted above, participation in the capital markets is a privilege, not a right (Erikson, supra).

[81] I am not confident that Blackett, 215 Inc. or the Rezwealth Respondents can be trusted to participate in the capital markets, even in a limited capacity and I find that the public interest is served by ordering that none of them be permitted to trade in or acquire securities and that exemptions contained in Ontario securities law do not apply to them on a permanent basis. I agree that no carve-outs for personal trading should be granted for any of these respondents.

[82] In Simply Wealth Sanctions, the Commission considered circumstances much like those of Smith, 177 Inc. and the Tiffin Respondents, where respondents solicited and promoted investments for a forex trading program that, in reality, was a ponzi scheme (Simply Wealth Sanctions, supra at paras. 1-2). In that matter, the Commission ordered five-year prohibitions on trading in or acquisition of securities and exemption application, in circumstances where respondents were found to have violated sections 25 and 53 of the Act (Simply Wealth Sanctions, supra at paras. 3 and 54). The panel also permitted the individual respondents to have a trading, acquisition and exemption application carve-out for Registered Retirement Savings Plans ("RRSPs") after they fully satisfy orders for administrative penalties and disgorgement (Simply Wealth Sanctions, supra at paras. 47 and 54).

[83] Smith, 177 Inc. and the Tiffin Respondents engaged in acts in furtherance of trades, without being registered to do so, over a sustained period of time and resulting in a distribution of securities, contrary to sections 25 and 53 of the Act. In this matter there are additional aggravating circumstances, which I have described in paragraph [62] above. As noted above, Smith, 177 Inc. and the Tiffin Respondents acted in furtherance of trades by referring investors to Blackett, 215 Inc. and Rezwealth (Merits Decision, supra at paras. 227 and 238). I acknowledge that these respondents were not the principal proponents of fraudulent schemes, but nonetheless were engaged in illegal activities, which promoted the fraudulent scheme and, therefore, I find that it is in the public interest to order that they cease trading in securities, be prohibited from acquiring securities and that exemptions contained in Ontario securities law not apply to them for a period of five years.

[84] I find that Smith, 177 Inc. and the Tiffin Respondents should be granted an exception for personal trading upon full satisfaction of payments ordered in respect of administrative penalties and disgorgement for each.

[85] I also note that counsel for Tiffin made reference to FSCO, but also stated that Commission's prohibitions should not affect activity regulated by FSCO in any event. Counsel for Tiffin provided no context or explanation for how the Commission's order would impact those activities nor did he request a specific exemption for certain conduct. Therefore, I make no findings in this respect, except to note that, if Tiffin's future conduct falls within the Commission's jurisdiction, this decision and accompanying order is not intended to preclude the exercise of such public interest jurisdiction.

B. Other Market Prohibitions

[86] Given their misconduct, I agree that none of Blackett, Ms. Ramoutar, Mr. Ramoutar, Smith or Tiffin (the "Individual Respondents") should be entitled to become or act as registrants, investment fund managers or as promoters. As stated above, I have no confidence in the future conduct of Blackett, Ms. Ramoutar or Mr. Ramoutar, having found that they engaged in fraudulent conduct resulting in significant losses to investors (Merits Decision, supra at paras. 261 and 265). Ms. Ramoutar, Smith and Tiffin were also former registrants with the Commission (Merits Decision, supra at paras. 14-16). Smith and Tiffin were not creators of the Blackett Investments or the Rezwealth Investments, although Smith did introduce Ms. Ramoutar to Blackett and 215 Inc., Smith and Tiffin each solicited and referred numerous investors in the Blackett Investments and Rezwealth Investments, respectively, and the prohibitions ordered against them must be placed into context with the overall conduct of the Respondents. To protect the public, I find that it is appropriate to impose permanent market prohibitions on Blackett, Ms. Ramoutar and Mr. Ramoutar and to impose market prohibitions on Smith and Tiffin for five years each, to ensure that they do not become or act as registrants, investment fund managers or as promoters for the respective amounts of time.

[87] As noted above, Mr. Ramoutar submits that the last four years have effectively been a ban imposed upon him and that any market prohibition will prevent him from pursuing employment of his choice. Despite having represented that he had completed his Canadian Securities Course, Mr. Ramoutar states the following in his closing submissions:

From what I was told "promissory notes", "debentures", and "participation agreement" were all forms of borrowing money and we didn't need a license to be able to do that. People are allowed to lend money to organizations to help them grow and produce a profit and in return people can benefit from that as well.

(Closing Submissions of Justin Ramoutar at p. 3)

It is not clear from this submission that Mr. Ramoutar has an adequate understanding of the broad definition of "security" or the securities regulatory framework which governs the capital markets. This combined with the egregious fraudulent conduct noted above leads me to conclude that he ought to be permanently prohibited from becoming or acting as a registrant, investment fund manager or as a promoter.

[88] As Staff did not seek orders prohibiting any of the corporate respondents from becoming or acting as a registrant, as an investment fund manager or as a promoter, I make no findings in that regard.

C. Director and Officer Bans

[89] Having reviewed the above noted cases, I am guided by previous findings of the Commission that permanent director and officer bans, coupled with permanent trading, acquisition and exemption prohibitions, are found to be appropriate in matters involving unregistered trading, the illegal distribution of securities and fraud (Al-Tar Sanctions, supra at paras. 10 and 37; Goldpoint Sanctions, supra at paras. 5, 33 and 90; Lyndz Sanctions, supra at paras. 26 and 110; Maple Leaf Sanctions, supra at paras. 6-10 and 55).

[90] All of the Individual Respondents were officers, directors and/or directing minds of corporate respondents in this matter (Merits Decision, supra at paras. 275-278). The Individual Respondents used their positions of control over the corporate respondents to cause those entities to breach Ontario securities laws. With the exception of Mr. Ramoutar, the Individual Respondents were found to have authorized, permitted or acquiesced in non-compliance with Ontario securities law by the corporate respondents and Mr. Ramoutar was found to have permitted or acquiesced in non-compliance with Ontario securities law by Rezwealth (Merits Decision, supra at para. 279).

[91] The fact that the Individual Respondents used their positions to further conduct contrary to the Act and contrary to the public interest reinforces my decision that they should resign all positions as directors or officers of an issuer. Having considered their level of participation, I find that proportionate sanctions would be for Blackett, Ms. Ramoutar and Mr. Ramoutar to be permanently prohibited and for Smith and Tiffin each to be prohibited for five years from becoming or acting as officers or directors of any issuer, registrant or investment fund manager. The latter period reflects my agreement with the similar directors and officers sanctions recently imposed on individual respondents by the Commission in Simply Wealth Sanctions, supra at para. 54.

[92] Having heard and considered the submissions of Tiffin's counsel, I am prepared to allow that Tiffin be granted a carve-out to act as a director or officer of Tiffin Financial, for the purpose of engaging in non-securities regulated business I was persuaded that Tiffin's director and officer exception request is part and parcel of his genuine attempt to pay amounts ordered by the Commission as disgorgement, an administrative penalty and costs, despite the fact that he will have to work until the age of 71 to full satisfy payments under the proposed plan.

[93] In my view, the orders for resignation and imposition of varying director and officer bans will ensure that the Individual Respondents will not be placed in a position of control or trust with respect to issuers, registrants or investment fund managers in the near future. These orders serve to ensure general and specific deterrence for the Individual Respondents and like-minded individuals. In the case of Smith and Tiffin, I agree that the need for deterrence was not at the same end of the scale as they were not the principal proponents of the fraudulent schemes (Simply Wealth Sanctions, supra at para. 42).

D. Disgorgement

[94] I have considered the non-exhaustive list of factors set out in Limelight Sanctions in determining appropriate disgorgement orders (Limelight Sanctions, supra at para. 52).

[95] Blackett and 215 Inc. raised $3,018,649 from at least 56 investors for a ponzi scheme perpetrated by them (Merits Decision, supra at paras. 37, 223 and 263), while, an amount of $1,383,122 was returned to investors by Blackett and 215 Inc. during the same period; accordingly, their fraudulent conduct resulted in actual losses of $1,635,527 for the investors (Merits Decision, supra at paras. 223 and 261). Blackett and/or 215 Inc. paid at least $120,000 of the investor funds to Smith as commissions for Smith's referrals of investors in furtherance of the ponzi scheme and paid $41,150 to 177 Inc. as services fees (Merits Decision, supra at paras. 227). I find that $1,474,377 was obtained by Blackett and 215 Inc. as a result of their non-compliance with the Act, representing the amount of investor funds not returned to investors less the amounts paid to Smith and 177 Inc. and to be disgorged by them. There is no question that investors were seriously harmed by Blackett and 215 Inc.'s fraudulent conduct, which is amongst the most egregious violations of securities law (Al-Tar, supra at para. 214). The amount of $1,474,377 is reasonably ascertainable based on the findings in the Merits Decision. In my view, investors who suffered losses are unlikely to be able to obtain redress and a strong deterrent message is warranted, particularly since Blackett and 215 Inc. formulated the fraudulent ponzi scheme that was at the core of the misconduct of all the Respondents. Blackett and 215 Inc. must not be permitted to profit from their conduct contrary to the Act.

[96] In the Merits Decision, I found that the conduct of the Rezwealth Respondents resulted in actual losses of $2,239,111 to investors (Merits Decision, supra at para. 265). However, of the investor funds raised by the Rezwealth Respondents, $575,175 was paid to Blackett and the Tiffin Respondents received at least $517,000 as commissions (Merits Decision, supra at paras. 197 and 238). I find that as a result of its non-compliance with the Act, Rezwealth, under the direction of Ms. Ramoutar, obtained $1,146,936, representing the amount of investor funds not returned to investors less the amounts paid to Blackett and the Tiffin Respondents and to be disgorged by them. I do not accept Mr. Ramoutar's written argument that monies "shown as withdrawals or payments should be considered as profit and nothing more" (Closing Submissions of Justin Ramoutar at p. 4). The very purpose of disgorgement is to ensure respondents do not retain financial gain from their non-compliance with the Act (Sabourin Sanctions, supra at para. 65). The Rezwealth Respondents should not be permitted to profit from their conduct contrary to the Act.

[97] I accept that Mr. Ramoutar personally received at least $51,158 in payments from the Rezwealth Account during the 2009 Period for his conduct contrary to the Act (Merits Decision, supra at para. 267). I am persuaded to order Mr. Ramoutar to disgorge this amount separately from disgorgement ordered of the Rezwealth Respondents. The Rezwealth Respondents should not be permitted to profit from their conduct contrary to the Act.

[98] As with the Blackett Investments, investors were seriously harmed by the Rezwealth Respondents' fraudulent conduct, unregistered trading and illegal distribution of securities. I find that the amount of $1,146,936 is reasonably ascertainable based on the findings in the Merits Decision. I am not persuaded that investors who suffered losses are likely to obtain redress from the Rezwealth Respondents. Mr. Ramoutar himself submits that any amount ordered to be paid by the Commission will hinder their ability to pay back investors. Although it does not appear that the Rezwealth Respondents created a fraudulent scheme as Blackett did, their conduct nonetheless resulted in deprivation to investors because of activities that they either knew or ought to have known perpetrated a fraud. Therefore, a strong deterrent message for the Rezwealth Respondents and other like-minded market participants who engage in similar conduct, is necessary. The separate order for disgorgement by Mr. Ramoutar reduces the amount to be ordered disgorged by the Rezwealth Respondents to $1,095,778.

[99] Smith admittedly received a 10 percent referral fee, totalling at least $120,000, from the sales of the Blackett Investments and 177 Inc. received $ 41,150 in services fees for facilitating payments to investors (Merits Decision, supra at para. 227). Absent clear and cogent evidence that Smith received amounts above $120,000 for his non-compliance with the Act, as opposed to returns on his investments with Blackett, I am not prepared to accept Staff's submission that he ought to be ordered to disgorge $137,383. I find that Smith obtained $120,000 and 177 Inc. obtained $41,150 for their non-compliance with Ontario securities law and that these amounts are reasonably ascertainable on the basis of the Merits Decision. As stated above, I do not accept Smith's submission that the $41,150 paid to 177 Inc. was an amount that went to repay investors.

[100] By their own admission, the Tiffin Respondents received $517,000 in referral fees, which amounts to commission, from the sales of the Rezwealth Investments (Merits Decision, supra at paras. 227 and 238). I note that the Commission received evidence that the Tiffin Respondents received $577,000 in commissions from Rezwealth, but ultimately accepted the Agreed Facts, wherein it was agreed that the Tiffin Respondents received $517,000 in commissions (Merits Decision, supra at para. 201). I accept that the Tiffin Respondents obtained $517,000 by virtue of their non-compliance with Ontario securities law and that this amount is reasonably ascertainable based on the Merits Decision.

[101] Smith, 177 Inc. and the Tiffin Respondents engaged in unregistered trading and a non-exempt distribution of a significant amount of securities. Such conduct disregards the importance of the gate-keeping function of registration and the need for disclosure to ensure that investors are able to make informed decisions (Limelight, supra at para. 135; Simply Wealth Sanctions, supra at para. 30). Their activities were harmful to investors, who suffered losses that I find they are unlikely to recuperate. While Smith did not play a leading role in the fraudulent scheme perpetrated by Blackett, having previously been a registrant, I find Smith should have been more cautious in assessing whether he and 177 Inc. were engaging in registrable activity. Furthermore, Smith introduced Ms. Ramoutar to Blackett and 215 Inc. and the fraudulent ponzi scheme formulated by them. Likewise, Tiffin, also having previously been a registrant, ought to have been more cautious in assessing whether he and Tiffin Financial were engaging in registrable activity. Therefore, some specific and general deterrence is needed in these circumstances.

[102] In Sabourin Sanctions, the panel ordered joint and several disgorgement of the $33.9 million obtained from investors less $6 million that appeared to have been returned to investors (Sabourin Sanctions, supra at para. 70). The panel in that matter found that joint and several liability of Sabourin and the corporate respondents was appropriate because as the directing and controlling mind of the companies it would be impossible to treat them differently (Sabourin Sanctions, supra at para. 70). Staff submits that joint and several liability could be ordered in this matter for the corporate respondents and their principals. I agree that the conduct of 215 Inc., Rezwealth and Tiffin Financial was so interwoven and directed by Blackett, Ms. Ramoutar, Mr. Ramoutar and Tiffin, respectively as their principal officers and directors that those Individual Respondents, should be jointly and severally responsible with their respective corporate entities for amounts obtained as a result of their non-compliance. Although, I did not find that Mr. Ramoutar was the directing mind of Rezwealth, I did conclude that he was a director and officer, who authorized Rezwealth's promotional materials, provided direction to Rezwealth's consultant and met with investors on behalf of Rezwealth (Merits Decision, supra at paras. 232 and 277). Insofar as Mr. Ramoutar's involvement was not as great as Ms. Ramoutar's, he should be jointly and severally liable with Rezwealth and Ms. Ramoutar to the extent of one-half the amount of $1,095,778.

[103] Counsel for the Tiffin Respondents submits that double counting is a concern and proposes an order which states that amounts received from one of the Respondents might reduce the amounts owed by others. To the extent reasonable, I have endeavoured to avoid or overcome double-counting in respect of disgorgement orders.

[104] In respect of disgorgement to be ordered against the Rezwealth Respondents, Staff conceded that funds directed by Rezwealth to Blackett may be a part of the funds for which Staff seeks disgorgement from Blackett and 215 Inc., which could result in double counting. I agree with Mr. Ramoutar's submission that amounts paid from Rezwealth bank account to Blackett and Tiffin, and ordered to be disgorged by them, ought to be deducted from the disgorgement ordered against any of the Rezwealth Respondents. Further, the amount of $51,158 ordered to be disgorged by Mr. Ramoutar alone ought to be deducted from other disgorgement orders against the Rezwealth Respondents. I also agree that the amount paid by Blackett and/or 215 Inc. to Smith and 177 Inc., and ordered to be disgorged by them, ought to be deducted from the disgorgement ordered against Blackett and/or 215 Inc. in this case.

[105] The conduct of the Respondents, particularly the fraudulent activities of Blackett, 215 Inc. and the Rezwealth Respondents, was serious and resulted in substantial harm to investors. I find it unlikely that investors in the Blackett Investments and/or the Rezwealth Investments who suffered losses will be able to obtain redress. Under the circumstances, I find that it is appropriate to order Blackett and 215 Inc. to jointly and severally disgorge $1,474,377, the Rezwealth Respondents to jointly and severally disgorge $547,889, Ms. Ramoutar and Rezwealth to jointly and severally disgorge $547,889, Mr. Ramoutar to disgorge $51,158, Smith to disgorge $120,000, 177 Inc. to disgorge $41,150 and the Tiffin Respondents to jointly and severally disgorge $517,000, obtained by each as a result of their non-compliance with the Act.

E. Administrative Penalties

[106] I have considered the factors noted above to be considered in determining an appropriate administrative penalty (Limelight Sanctions, supra at paras. 71 and 78).

[107] I find that orders for administrative penalties against Blackett in the amount of $500,000 Ms. Ramoutar in the amount of $250,000 and Mr. Ramoutar in the amount of $150,000 are appropriate in the circumstances. Each committed multiple and repeated violations of the Act, which caused serious harm to investors. Blackett and 215 Inc.'s fraudulent ponzi scheme occurred over a longer period of time than the 2009 Period, the sales of Blackett Investments raised $3,018,649 from at least 56 investors and Blackett used over $1 million of investor funds for personal purposes (Merits Decision, supra at paras. 37, 223, 261 and 263). Rezwealth Respondents raised $2,910,305 from at least 45 investors over a period of two years, of which $970,940 was received in the 2009 Period, and Ms. Ramoutar, Mr. Ramoutar and their family members received and cash withdrawals were made of approximately $200,000 from the Rezwealth Account during the 2009 Period (Merits Decision, supra at paras. 79, 195, 232 and 265).

[108] I distinguish between Blackett and the Rezwealth principals on the basis that Blackett created and operated a fraudulent ponzi scheme from its inception. Ms. Ramoutar and Mr. Ramoutar were initially in a position more akin to Smith's relationship with Blackett, but later engaged in fraudulent activities in the 2009 Period, including: (i) continued solicitation and/or acceptance of new investments after Blackett had stopped making payments to Rezwealth; (ii) using new investor funds to pay other investors; and (iii) receiving payments from the Rezwealth bank account, despite the fact that Rezwealth had no significant sources of income, other than investor funds (Merits Decision, supra at para. 265). Mr. Ramoutar's participation is further distinguishable because, unlike Ms. Ramoutar, he was not found to have made decisions to accept or refuse investors or control the Rezwealth bank account (Merits Decision, supra at paras. 266-267). In my view, by virtue of his involvement, Mr. Ramoutar participated in acts and engaged in a course of conduct relating to securities, which he reasonably ought to have known perpetrated a fraud (Merits Decision, supra at paras. 269).

[109] In the case of Blackett, an administrative penalty of $500,000 is similar to those ordered in Lyndz Sanctions and Al-Tar Sanctions. In those matters, the Commission ordered administrative penalties of $500,000-$600,000 and $500,000-$750,000, respectively, in circumstances where the respondents played integral and leading roles and engaged in fraudulent activities (Lyndz Sanctions supra at paras. 26 and 110; Al-Tar Sanctions, supra at paras. 48, 50 and 53). For Ms. Ramoutar and Mr. Ramoutar, Staff argues that the proposed administrative penalties were proportionate and similar to those ordered against officers, directors or de facto directors or officers and in other matters involving findings of fraud, including Maple Leaf, in which the Commission ordered a $450,000 administrative penalty, and Goldpoint, in which the Commission ordered a $300,000 administrative penalty (Maple Leaf Sanctions, supra at paras. 10 and 55; and Goldpoint, supra at paras. 5 and 90). However, in the circumstances of this matter, Blackett was the origin of the fraudulent scheme and, as I noted above, Ms. Ramoutar and Mr. Ramoutar were initially in a position more akin to Smith's relationship with Blackett. Therefore, I find that more proportionate administrative penalties would be $250,000 in the case of Ms. Ramoutar and $150,000 in the case of Mr. Ramoutar, whose conduct spanned shorter period and for whom the majority of funds were raised by Tiffin.

[110] I am not persuaded Mr. Ramoutar's submission that Tiffin alone is responsible for the $2.9 million raised by Rezwealth from investors and that to order Mr. Ramoutar to pay much higher an administrative penalty would be unjust because he made less in commissions.

[111] I find that orders for administrative penalties against Smith and Tiffin in the amount of $25,000 each are also appropriate in the circumstances. Each committed multiple and repeated violations of the Act, albeit not fraud, which resulted in substantial losses to investors. While Tiffin's breaches affected fewer investors and occurred over a shorter period, as compared to Smith, Tiffin also realized much higher commissions than Smith or any of the respondents in Simply Wealth Sanctions (Merits Decision, supra at paras. 227 and 238; Simply Wealth Sanctions, supra at paras. 48 and 54).

[112] I do not accept Tiffin's submission that he is only responsible for half the funds for which he received commissions on the basis that he only "directly referred" 8 investors. Tiffin accepted commissions for all 19 investors and ought to be held responsible for such (Merits Decision, supra at para. 238). In fact, Tiffin is responsible for raising far more money from investors, approximately $2 million, than Smith, who is responsible for raising approximately $1.2 million (Merits Decision, supra at para. 227 and 238). However, the fact that Smith impacted many more investors, having referred approximately 48 to Blackett and 215 Inc. and having introduced Ms. Ramoutar and Rezwealth to Blackett and 215 Inc., places these respondents, on balance, in a similar position in my view (Merits Decision, supra at paras. 227 and 238).

[113] In Simply Wealth Sanctions, the Commission imposed administrative penalties of $15,000 against each of the individual respondents who promoted investments for a forex investment scheme, including unregistered trading (Simply Wealth Sanctions, supra at paras. 1 and 4). I accept that the circumstances of this matter are more similar to the facts in Simply Wealth Sanctions and that administrative penalties imposed upon Smith and Tiffin should be proportionate to their conduct and considerate of the level of administrative penalties imposed in other similar cases.

[114] I also accept Staff's distinction between Tiffin and Persaud, one of the respondents in theSimply Wealth Sanctions matter. Persaud was 19 years old, had no experience in the market, received only $90,000 in commissions, was genuinely remorseful and appeared with a $15,000 cheque in anticipation of paying the Commission's disgorgement order (Simply Wealth Sanctions, supra paras. 4, 20, 39 and 40). The misconduct of Smith occurred over a longer period and Tiffin received higher commissions, as compared to the respondents in Simply Wealth Sanctions (Merits Decision, supra at paras. 72 and 238; Simply Wealth Sanctions, supra paras. 1 and 4).

[115] The scope and seriousness of Blackett, Ms. Ramoutar and Mr. Ramoutar's misconduct warrants strong deterrence for each of them. Further, as stated above, in case of Smith and Tiffin, I agree that the need for deterrence was for them is not as great as for the principal proponents of the fraudulent schemes (Simply Wealth Sanctions, supra at para. 42). Nevertheless, having been previously registered market participants and engaging in non-compliance that affected many and raised a significant amount from investors, some deterrence is warranted.

[116] Under the circumstances, I find that it would be appropriate to order Blackett to pay $500,000, Ms. Ramoutar to pay $250,000, Mr. Ramoutar to pay $150,000, Smith to pay $25,000 and Tiffin to pay $25,000 as administrative penalties which, in my view, are commensurate with each respondent's failures to comply with Ontario securities law. As Staff did not seek the imposition of any administrative orders upon the corporate respondents, I make no findings in that regard.

VIII. COSTS

[117] The Commission has discretion to order a person or company to pay the costs of an investigation and hearing if the Commission is satisfied that the person or company has not complied with the Act or has not acted in the public interest (section 127.1 of the Act). I have considered the factors at Rule 18.2 of the Commission's Rules of Procedure and the factors cited in the Ochnik decision (Ochnik, supra at para. 29) in exercising my discretion to order costs.

[118] I find that the costs sought and apportioned by Staff to be generally reasonable and conservative. Staff does not claim time of counsel during the investigation and discounted the cost of its forensic accountant by 25 percent. Staff also did not include in its costs calculation the time of one senior litigation counsel, law clerks or any work related to the Sanctions and Costs Hearing. Further, Staff does not seek disbursements.

[119] In support of this request, Staff provided written submissions, Affidavit of Michelle Spain, sworn on July 26, 2013, which attaches a bill of costs, supported by a summary statement of hours and fees and dockets of time incurred in the investigation and litigation phases of the proceeding, as required by Rule 18.1(2)(b) of the Rules of Procedure. The bill of costs appends numbers of hours worked and details of the tasks performed by each of the Staff members listed. I am satisfied that the evidence supports an adequate record of costs as a whole.

[120] I also accept that greater costs in the amount of $110,000 should be attributable to Blackett and 215 Inc., in view of the fact that a great deal of time was spent at the Merits Hearing proving allegations against them and it is not disputed that they failed to cooperate with Staff's requests for documentation. I also agree that the focus of the Merits Hearing dealt primarily with conduct of the Rezwealth Respondents, but their cooperation with Staff in providing documentation and contribution at the Merits Hearing supports an order of lesser costs. Therefore, the Rezwealth Respondents should pay $90,000 of the costs incurred by the Commission.

[121] Staff also spent some time at the Merits Hearing proving allegations against Smith and 177 Inc., albeit far less than for the respondents found to have engaged in fraud. I accept that Smith and 177 Inc. should pay costs of $37,658.18. Further, the Tiffin Respondents contributed greatly to the efficiency of the hearing by cooperating with Staff in jointly tendering the Agreed Facts and, therefore, should only pay costs of $15,000 for investigative costs leading up to the beginning of the Merits Hearing.

[122] I reject the submissions Mr. Ramoutar that he should be severed from a costs order. He was deeply involved in the Rezwealth business.

[123] In sum, I conclude that Staff's estimate of costs is generally reasonable in the circumstances and that the allocation is appropriate. I will order Blackett and 215 Inc. to jointly and severally pay $110,000, the Rezwealth Respondents to jointly and severally pay $90,000, Smith and 177 Inc. to jointly and severally pay $37,658.18, and the Tiffin Respondents to jointly and severally pay $15,000 for the investigation and/or hearing costs incurred by the Commission, pursuant to section 127.1 of the Act.

IX. TIFFIN'S PAYMENT PLAN

[124] The Tiffin Respondents propose that payment of disgorgement, the administrative penalty and costs be imposed over time. The payment of costs and the administrative penalty would be paid over the course of 4 years and the disgorgement amount over the course of 10 years. Under this payment plan, I find that the Tiffin Respondents would pay $8,000 as a first installment of the administrative penalty of $25,000 and costs of $15,000 within 30 days of the Commission's order. On the first through fourth anniversary of any such order, $59,700 would be paid, representing the balance of the costs and administrative penalty and the first four payments of disgorgement order and on the fifth through tenth anniversaries of the order $51,700 would be paid representing the balance of the disgorgement order.

[125] I will further order that in the event that any payment is not made by Tiffin and Tiffin Financial on the due date, then the entire unpaid balance of the amounts ordered in respect of disgorgement, the administrative penalty and costs shall become immediately due and payable.

X. CONCLUSION

[126] I consider that it is important in this case to impose sanctions that reflect the seriousness of the securities law violations that occurred in this matter and that will deter the Respondents and like-minded individuals from engaging in future conduct that violates securities law. Accordingly, I conclude that following sanctions are proportionate to the circumstances and conduct of each of the Respondents and that it is in the public interest to make these orders:

1. With respect to Blackett, 215 Inc. and the Rezwealth Respondents that:

(a) pursuant to clause 2 of subsection 127(1) of the Act, trading in any securities by each of Blackett, 215 Inc., Rezwealth, Ms. Ramoutar and Mr. Ramoutar shall cease permanently;

(b) pursuant to clause 2.1 of subsection 127(1) of the Act, the acquisition of any securities by each of Blackett, 215 Inc., Rezwealth, Ms. Ramoutar and Mr. Ramoutar is prohibited permanently;

(c) pursuant to clause 3 of subsection 127(1) of the Act, that any exemptions contained in Ontario securities law do not apply to each of Blackett, 215 Inc., Rezwealth, Ms. Ramoutar and Mr. Ramoutar permanently;

(d) pursuant to clause 7 of subsection 127(1) of the Act, each of Blackett, Ms. Ramoutar and Mr. Ramoutar shall resign any position that he or she holds as a director or an officer of an issuer;

(e) pursuant to clauses 8, 8.2 and 8.4 of subsection 127(1) of the Act, each of Blackett, Ms. Ramoutar and Mr. Ramoutar is prohibited permanently from becoming or acting as a director or an officer of any issuer, registrant or investment fund manager;

(f) pursuant to clause 8.5 of subsection 127(1) of the Act, each of Blackett, Ms. Ramoutar and Mr. Ramoutar is prohibited permanently from becoming or acting as a registrant, as an investment fund manager or as a promoter;

(g) pursuant to clause 9 of subsection 127(1) of the Act, Blackett shall pay an administrative penalty of $500,000, Ms. Ramoutar shall pay an administrative penalty of $250,000 and Mr. Ramoutar shall pay an administrative penalty of $150,000, designated for allocation or use by the Commission in accordance with subsection 3.4(2)(b) of the Act;

(h) pursuant to clause 10 of subsection 127(1) of the Act, Blackett and 215 Inc. shall jointly and severally disgorge $1,474,377, the Rezwealth Respondents shall jointly and severally disgorge $547,889, Rezwealth and Ms. Ramoutar shall jointly and severally disgorge $547,889 and Mr. Ramoutar shall disgorge $51,158 to the Commission, designated for allocation or use by the Commission in accordance with subsection 3.4(2)(b) of the Act; and

(i) pursuant to section 127.1 of the Act, Blackett and 215 Inc. shall jointly and severally pay $110,000 and Rezwealth, Ms. Ramoutar and Mr. Ramoutar shall jointly and severally pay $90,000 of the costs of the investigation and hearing.

2. With respect to Smith, 177 Inc. and the Tiffin Respondents that:

(a) pursuant to clause 2 of subsection 127(1), trading in any securities by each of Smith,177 Inc., Tiffin and Tiffin Financial shall cease for a period of 5 years;

(b) pursuant to clause 2.1 of subsection 127(1) of the Act, the acquisition of any securities by each of Smith,177 Inc., Tiffin and Tiffin Financial is prohibited for a period of 5 years;

(c) pursuant to clause 3 of subsection 127(1) of the Act, any exemptions contained in Ontario securities law do not apply to each of Smith,177 Inc., Tiffin and Tiffin Financial for a period of 5 years;

(d) pursuant to clause 7 of subsection 127(1) of the Act, each of Smith and Tiffin shall resign any positions that he holds as a director or an officer of an issuer, save and except for Tiffin in respect of Tiffin Financial, provided and so long as Tiffin Financial is not a reporting issuer and does not engage in any business that is subject to regulation under the Act;

(e) pursuant to clauses 8, 8.2 and 8.4 of subsection 127(1) of the Act, each of Smith and Tiffin is prohibited for a period of 5 years from becoming or acting as a director or an officer of any issuer, registrant or investment fund manager, save and except for Tiffin in respect of Tiffin Financial, provided and so long as Tiffin Financial is not a reporting issuer and does not engage in any business that is subject to regulation under the Act;

(f) pursuant to clause 8.5 of subsection 127(1) of the Act, each of Smith and Tiffin is prohibited for a period of 5 years from becoming or acting as a registrant, as an investment fund manager or as a promoter;

(g) pursuant to clause 9 of subsection 127(1) of the Act, Smith and Tiffin shall each pay an administrative penalty of $25,000, designated for allocation or use by the Commission in accordance with subsection 3.4(2)(b) of the Act;

(h) pursuant to clause 10 of subsection 127(1) of the Act, Smith shall disgorge $120,000, 177 Inc. shall disgorge $41,150 and Tiffin and Tiffin Financial shall jointly and severally disgorge $517,000 to the Commission, designated for allocation or use by the Commission in accordance with subsection 3.4(2)(b) of the Act;

(i) pursuant to section 127.1 of the Act, Smith and 177 Inc. shall pay $37,658.18 of the costs of the investigation and hearing, for which they are jointly and severally liable;

(j) pursuant to subsection 127.1(1) of the Act, Tiffin and Tiffin Financial shall pay $15,000 of the costs of the investigation, for which they shall be jointly and severally liable;

(k) in regard to the payments ordered above in subparagraphs [126](2)(g), (h) and (j) above, Tiffin and/or Tiffin Financial shall make payments as follows:

(i) $8,000 payable within 30 days of this order;

(ii) a further $59,700 payable on or before July 8, 2015;

(iii) a further $59,700 payable on or before July 8, 2016;

(iv) a further $59,700 payable on or before July 8, 2017;

(v) a further $59,700 payable on or before July 8, 2018;

and thereafter, in regard to payments ordered above in subparagraph [126](2)(h) Tiffin and/or Tiffin Financial shall make payments as follows:

(vi) a further $51,700 payable on or before July 8, 2019;

(vii) a further $51,700 payable on or before July 8, 2020;

(viii) a further $51,700 payable on or before July 8, 2021;

(ix) a further $51,700 payable on or before July 8, 2022;

(x) a further $51,700 payable on or before July 8, 2023;

(xi) the balance of $51,700 payable on or before July 8, 2024;

(the "Payment Plan"); and

(l) Notwithstanding the Payment Plan set out in subparagraph [126](2)(k) above, in the event that Tiffin and/or Tiffin Financial fail to comply with any of the terms of the Payment Plan, the unpaid balance of all of the amounts set out in subparagraphs [126](2)(g), (h) and (j) above shall become payable and enforceable immediately, along with postjudgment interest from the date of this Order in accordance with section 129 of the Courts of Justice Act R.S.O. 1990 c. C-43, as amended.

[127] I will issue a separate order giving effect to my decision on sanctions and costs.

Dated this 8th day of July, 2014.