THUNDER BAY – A former 30-year financial services advisor in Thunder Bay has been fined $500,000 and been permanently banned from working in any investment capacity for misappropriating funds from at least 14 clients, some who were noted to be “unsophisticated and vulnerable,” over an 11-year period.
The Investment Industry Regulatory Organization of Canada (IIROC), the national watchdog that oversees all investment dealers and their trading activity, levied the penalty against Vance Virgil Hoshizaki earlier this month.
The IIROC had alleged starting in 2002 and continuing to 2013, Hoshizaki raised $413,000 from 14 clients to operate an automotive service business but transferred the proceeds into a private company he controlled.
Then, the IIROC alleged in 2012 and 2013 Hoshizaki amassed a further $123,000 from three clients into his personal online trading business and he used some or all of this money to pay personal debts and expenses. Counsel for the IIROC described the “ponziesque nature” of the scheme, where he needed the money from those three clients to pay off two previous investors.
The industry regulator accused Hoshizaki of targeting “unsophisticated and vulnerable” clients, in particular a 79-year-old woman who invested in both schemes.
The investigation, which was initiated in 2013, accounted for a total of $536,000 that were not recorded by the investment firm where he was employed. That money has not been returned or accounted for, according to IIROC documents.
The $500,000 fine is consistent with other cases brought before the IIROC, the decision panel noted.
“This will provide a measure of general deterrence. We do not expect that (Hoshizaki) will ever be able to pay this fine. In his comments to us, he made it clear that he is in no position to pay almost any fine,” the decision reads.
The decision panel acknowledged that IIROC guidelines state the ability to pay should not be considered a predominant or determining factor and “the more egregious the conduct, the less it should be taken into account.”
In addition, an order to pay costs of $20,000 was levied.
Hoshizaki, who most recently worked at the Thunder Bay branch of Assante Capital Management Ltd. before he was terminated in June 2013, is also barred from approval in any capacity with the IIROC.
“He is a person who should clearly not be in the securities industry,” the decision reads. “In his comments at the penalty hearing, he did not argue that he should be barred from the industry.”
