Hamilton man charged with fraud in alleged $31-million investor venture

A Hamilton man is facing several charges for his alleged involvement in a venture that saw dozens of investors defrauded of approximately $31 million over the course of more than seven years.

In a press release Monday, the Ontario Securities Commission (OSC) announced that Kevin Carmichael of Hamilton and Michael Aonso of Mississauga have been charged with fraud, unregistered trading and other offences under the Ontario Securities Act.

The Spectator could not reach Carmichael or Aonso for comment.

The OSC is an independent Crown corporation that oversees the province's business markets and has the ability to lay quasi-criminal charges in Ontario court for alleged violations of securities law.

In an email to The Spectator, spokesperson JP Vecsi said the OSC enforces compliance with the provisions" of Ontario's Securities Act and Commodity Futures Act.

The OSC said that from April 30, 2012 to June 30, 2019, Carmichael and Aonso allegedly defrauded nearly 60 investors, including Ontario residents, by collecting approximately $31 million through Strike Holdings Inc., based on claims they would use the money to trade with an advanced algorithm."

According to a LinkedIn profile under Carmichael's name, Strike Holdings Inc. is described as a company involved in the development and testing of propriety algorithms" for the trading of exchange-traded funds (EFTs).

ETFs, once called index products, are low fee investments for do-it-yourselfers and those with appropriately licensed advisers.

The OSC said Carmichael and Aonso allegedly grossly misled" their investors by producing falsified trading account statements that showed highly profitable returns.

The pair are also alleged to have taken more than $11 million from the venture personally, while the rest of the funds were exhausted through expenses, fees and investor returns, according to a release.

Then, the OSC alleged that from Aug. 1, 2020 until March 31, 2021, Carmichael and Aonso revictimized" their investors. At that time, they are alleged to have falsely told their investors that $97 million (U.S.) had gone missing from the company's TD Bank accounts.

Based on this, the OSC said the pair allegedly raised more than $900,000 (Canadian) by selling debentures - a type of investment used by businesses to raise money - to 20 existing Strike shareholders for the purpose of pursuing legal action to recover the missing funds."

Instead, those funds were then allegedly drained through trading and commission until the OSC intervened. According to the OSC, enforcement staff then froze cash and securities valued at more than $730,000 - with those funds returned to investors.

Carmichael and Aonso are also alleged to have made misleading statements by issuing falsified forged trading account statements to their investors as well as TD Bank in pursuing their claim that $97 million had gone missing from their account.

The allegations have not been proven in court.

Carmichael and Aonso have both been charged with:

• Two counts each of engaging in an act, practice or course of conduct related to securities that they knew or reasonably ought to have known perpetrated a fraud on investors;

• Two counts each of illegal distribution of securities;

• Two counts each of unregistered trading in securities;

• One count of making a statement that they knew or reasonably ought to have known was misleading or untrue and would reasonably be expected to have a significant effect on the market price or value of a security.

Vecsi said charges laid under the securities act are then prosecuted by the OSC.

He noted that each offence could result in imprisonment of up to five years less a day, a fine of up to $5 million or both.

According to the OSC, the investigation was conducted by their enforcement branch, which probes the most serious" breaches of Ontario securities law, with the help of the Halton Regional Police fraud unit.

In a statement to The Spectator, Halton Regional Police media relations officer Const. Steve Elms said the force assisted in the investigation as the company as well as their accounts were based in Oakville.

Elms confirmed that police would not be laying any additional charges in relation to the investigation as charges under the criminal code are similar and would be somewhat redundant."

Aonso and Carmichael are set to appear in a Milton courtroom on April 5.

Fallon Hewitt is a reporter at The Spectator. fhewitt@thespec.com