The British Columbia provincial court has handed a retired RCMP officer a suspended sentence, saying the man was "reckless" but not deceitful when he convinced a neighbour to invest in his failing cannabis company.
The court ruling says six years after Jasvindar Singh Basi retired from the RCMP he incorporated a cannabis company called GrowX Global Corp., and its business plan was "centred" on building a production facility in Mission, B.C.
The ruling posted online this week says Basi promoted investing in the business to his neighbour, who along with a friend each invested $75,000 that they lost when the company failed.
The court decision says Basi didn't file a prospectus as required by provincial securities regulations, and "recklessly assured" his neighbour that the investment was safe and profitable, while failing to reveal that the company "was in significant financial distress."
It says Basi did not tell the two investors that the company didn't have money to pay contractors, was being sued for unpaid debts and that the Mission property was mortgaged for $2.4 million.
The ruling says Basi committed a "serious" offence under the Securities Act but not a criminal one, handing him a suspended sentence, 50 hours of community service, two years probation and ordered him to pay back $147,000 to the investors.
"Basi’s conduct was not motivated by malevolence, greed, or an intention to deceive or defraud," the ruling says. "Basi genuinely believed the business would succeed and invested his own life savings into it."
The victims both told the court that losing their money was "devastating," and that they both trusted Basi because he was a retired police officer.
The court found Basi "created a false sense of urgency" about the investment being time-sensitive by claiming the company was on the verge of going public.
The Crown had sought a three-month prison sentence for Basi, but the judge found that his guilty plea and his genuine remorse were mitigating factors, and that he was of "good character with a long history of pro-social contributions to the community."
The ruling says the offences carried a maximum penalty of $1 million and up to three-years in prison at the time of Basi's violations, but they have since been increased to $5 million and up to five years imprisonment.
The judge's ruling says Basi's offence will not result in a criminal record.
"Accordingly, I must take care not to sentence Mr. Basi as though he were charged with, or convicted of, the criminal offence of fraud," the ruling says. "As a retired police officer, he ought to have known the importance of complying with the regulatory framework set out in the Securities Act."
Picture Courtesy: THE CANADIAN PRESS/Jason Franson
