Vancouver Island man defrauded $1M from investor, BCSC rules

The Sooke Harbour House sign is shown in this file photo. (CTV News)

The British Columbia Securities Commission (BCSC) has concluded that a Sooke, B.C., man defrauded an investor of $1 million by lying to them about the ownership of a well-known hotel.

In a ruling released Tuesday, the BCSC said Timothy Craig Durkin mislead the investor by saying his company, SSH Holdings Limited, owned 100 per cent of the shares for the Sooke Harbour House hotel in late 2015 when, in fact, it did not own any percentage of the property.

Durkin then told the investor that they would own 40 per cent of the hotel if they bought 40 per cent of its shares for $2 million from SSH.

Based on misleading information, the investor provided SSH with a $1-million advance for the shares, which was later spent and never recovered by the investor, according to the BCSC.

From December 2015 to March 2016, the BCSC found, Durkin – acting as the director of SSH – made false statements about the hotel's ownership on three separate occasions to mislead the investor.

Durkin argued that he believed the investor and her advisors were aware that SSH was in the process of trying to purchase the hotel, and were not yet the owners when Durkin was trying to raise funding.

But, the BCSC found that Durkin "chose not to correct erroneous information and misunderstandings about the ownership of the hotel’s shares" in emails with the investor's accountant.

The BCSC panel pointed to one email from 2015 as the most prominent piece of evidence in its decision.

When the investor's lawyer asked if SHH already owned the Sooke Harbour House hotel, Durkin said his company did.

"Is Holdco already the sole shareholder of Opco, or will it be acquiring all of Opco's shares concurrently with GB's purchase of Holdco's shares?" reads an excerpt from an email between the investor's lawyer and Durkin.

"Already acquired," responded Durkin.

Ultimately, the BCSC panel found that Durkin was "deceitful" and that he misled the investor. The securities commission has now directed all parties to make submissions on sanctions.

The Sooke Harbour House has had a tumultuous legal history in recent years. The property has been at the centre of a legal dispute between the couple that originally purchased the property decades ago, alongside prospective buyers, including Durkin.

Civil court documents dating back to March 2020 show that a judge ruled that Durkin, alongside SHH Holdings Limited and other partners, owed the original owners of the hotel more than $760,000.