Blogs & Comment

Concrete Equities case exposes the limits of securities commissions’ power

Ultimately, only the RCMP and the courts can deliver white-collar criminals to justice

Varun Aurora

A photo of Varun (“Vinny”) Aurora circulated by the RCMP.

News of the RCMP’s pressing criminal charges against two of the principals of Concrete Equities Jan. 22 came as a small solace for the thousands who lost money in the doomed Calgary real estate promotion. Dave Humeniuk and Varun (Vinny) Aurora both face fraud and theft charges related to $23-million raised through the company purportedly to develop seaside vacation property in Mexico. The land was never purchased and the option to buy it expired, leaving investors with nothing.

Investors in five of Concrete’s Calgary-area office buildings and strip malls worth some $110 million, by contrast, were successful in wresting control from Concrete Equities, as detailed in a Canadian Business feature story from 2012. Their major unattained goal at the time was to see the four principals—Humeniuk, Aurora, Dave Jones and Vincenzo De Palma—criminally charged and sent to prison. This is now a possibility for the first two. Humeniuk, who now lives in the Edmonton area, has a court date set for Feb. 27. Aurora is the subject of a Canada-wide arrest warrant.

This case illustrates how, ultimately, it is only the RCMP and the courts that can deliver white-collar criminals their just desserts. In sanctioning all four principals in 2012, the Alberta Securities Commission handed down $5.6 million in fines, including its largest fine of an individual—$3.3 million—against Humeniuk. However most had declared personal bankruptcy by that time. According to ASC spokesman Mark Dickey, only “a small portion of the administrative penalties related to the Concrete Equities case has been collected by the ASC to date.” The Commission will “relentlessly pursue collection,” he added. “If there is a chance we may recover even a modest amount, we will pursue it.”

Nonetheless, the securities regulator’s role is primarily to protect the investing public, not punish the offenders. Dickey noted that “in addition to the monetary sanctions, Humeniuk and Jones both received lifetime market bans in this case.  De Palma was banned from trading in or purchasing securities and using exemptions for nine years, and from acting as a director or officer of any issuer for five years. Aurora was banned from trading in or purchasing securities and from using exemptions for five years, and from acting as a director or officer of any issuer for nine years.”

White-collar wrongdoers, Dickey noted, typically will have spent, hidden or lost money obtained through their schemes by the time the regulator passes judgment on them. Concrete Equities was placed in receivership and effectively ceased operations in 2009.

If it’s justice the victims want, then, they’d better put their faith in the Mounties. Better late than never.