Officer of Nevada companies owes $16M to Canadian investors
A former Canadian national who is listed as an officer of nearly two dozen Nevada companies defrauded investors in British Columbia and must repay more than $16 million, according to Canadian and Clark County court records.
The British Columbia Securities Commission found that Michael Patrick Lathigee collected $21.7 million in Canadian dollars — about $16.4 million in U.S. dollars at current exchange rates — for an investment in distressed properties and then used the money for other investments, the commission’s records show.
The commission also fined him the equivalent of $11.3 million.
Lathigee left Canada for Las Vegas before the commission collected the money so BCSC sued Lathigee in Clark County District Court and won a judgment in May requiring him to reimburse the investors. Lathigee is appealing.
“We are looking for assets wherever they are to collect whatever is owed,” said BCSC Director of Enforcement Doug Muir in a telephone interview.
Lathigee said his B.C. businesses failed around the collapse of the banking industry in 2008, and the BCSC made an example of him because of negative news reports and his criticism of the agency and the financial industry in Canada.
“I’m critical of them. I’m critical of how they handled the financial services industry,” he said. “There’s tens of thousands of companies that collapsed. Why is it that I’m one of the very, very, very, very few that they targeted?”
Court controversy
Lathigee’s attorney, Jay D. Adkisson, said the case is based on a questionable process in Canada.
“Their proceedings are about as close to a kangaroo court as possible. In fact it makes a mockery of a kangaroo court,” Adkisson said.
Muir said Lathigee received all the due process allowed by law and lost appeals in the Canadian courts.
Though the BCSC called Lathigee’s actions fraud, he was not charged criminally in Canada.
Muir declined to address the reasons.
“The commission concluded our proceeding,” he said. “Whether there are criminal charges in the future I can’t say.”
BCSC officials also disputed that they targeted Lathigee because he was critical of the commission.
“Mr. Lathigee committed a massive fraud on nearly 700 investors,” commission spokeswoman Elise Palmer wrote in an email exchange. “It is among the largest in British Columbia history. Money we collect could be returned to his victims, but he has refused to pay his fines, which requires the commission to take steps to collect them.”
Bad investment
In 2015, the BCSC found Lathigee “perpetrated a fraud” when he raised the money from about 700 investors and then used the money for unsecured loans to his other companies, the BCSC finding said.
Commissioners found Lathigee and his partners to be a “serious and ongoing risk to the capital markets.” The document bans Lathigee from investor relations positions in Canada.
Lathigee said he has been working hard to benefit investors in Nevada and pay back the people who invested in his Canadian deals.
“I want to have part of this that goes back to my investors from several years ago,” he said.
Adkisson concedes Lathigee probably should not have used the new investor money for the previous investments, but the Great Recession led to difficult decisions.
“What happened in Canada is what happened to a lot of people in Nevada,” he said. “When financially stretched, people do strange things.”
Nevada companies
The Nevada Secretary of State shows that Michael Lathigee is an officer in 23 companies. The secretary of state has revoked or put on hold the registrations of all but two of the companies because the organizers failed to file renewal documents.
The two active organizations, LVIC Las Vegas Fund LLC and Fitness Acquisitions Fund LLC, were both started this year. Lathigee is president of the Las Vegas Investment Club, which notes on its website that Lathigee has “spent the last ten years rebuilding his reputation after the collapse of his last company.”
The BCSC filing said the club’s mandate is similar to the British Columbia investments, dealing with tax lien and tax deed investments.
But Muir said he did not know if Nevada investors are at risk.
“The activity sounds similar but I’m not suggesting what he’s doing (in Nevada) is fraudulent,” he said. “I don’t know what he’s doing there.”
Lathigee declined to discuss his current companies at Adkisson’s counsel, but he said the last time he was involved in tax liens was in 2004 in Oklahoma.
Adkisson said the BCSC reported Lathigee to the U.S. Securities and Exchange Commission, which investigated him several times and found no wrongdoing in Nevada. Muir and SEC spokeswoman Judith Burns declined comment about whether U.S. regulators investigated Lathigee’s U.S. businesses.
Nevada case
Clark County District Judge Adriana Escobar in May allowed the BCSC to collect the $16.4 million in restitution. The agency couldn’t enforce BCSC’s $11.3 million fine because the United States doesn’t recognize foreign penalties.
“If we fail to uphold Canada’s Provinces security judgments … then they may very likely refuse to uphold ours, and in that situation citizens of both countries are worse off,” Escobar wrote. “U.S. and Nevada citizens who are victimized by securities fraud would be less likely to receive any recompense.”
Lathigee said he is confident he’ll win on appeal because Nevada law is on his side, and he hopes to get the British Columbia failures behind him.
“I’ve contributed more to this community and I’m a proud American,” said Lathigee, who said he was a naturalized citizen. “I lost more personal money than anyone else and my shares and everything became worthless.”
Contact Arthur Kane at akane@reviewjournal.com. Follow @ArthurMKane on Twitter.