The son of 100 Huntley Street founder David Mainse and his cousin have been ordered to pay nearly $450,000 in restitution and penalties to the Ontario Securities Commission for their roles in an alleged Ponzi scheme created by a Freelton man.
Ron Mainse, an ordained minister and a leader of Burlington’s Crossroads Christian Communications, was ordered to repay about $138,000 in commissions he received from Gordon Driver, who is alleged by the U.S. Securities and Exchange Commission to be the mastermind of a $14-million US Ponzi scheme involving nearly 200 North American investors.
Mainse was also ordered to pay a $10,000 penalty and refrain from trading securities or becoming a director or officer of a company that reports to the OSC for eight years. Mainse’s lawyer, Jay Naster, turned over cheques for the entire amounts to the OSC at yesterday’s hearing.
David Rutledge of Ancaster, Mainse’s cousin and also an ordained minister, was ordered to pay back nearly $263,000 in commissions he received from Driver, pay a $35,000 penalty, and refrain from trading securities or becoming a director or officer of a reporting company for a period of 15 years.
Rutledge turned over a cheque for $90,000, has agreed to sell his Ancaster home to finance another $120,000 in restitution and will sign an undertaking with the OSC to repay the remaining $88,000.
The OSC’s lawyer pointed out there was no evidence that Mainse or Rutledge perpetrated any fraud themselves or were even aware that a fraud was being carried out.
The OSC also noted Mainse and Rutledge co-operated fully, voluntarily agreed to be interviewed and provided all documents requested. They will also appear as witnesses in the OSC’s ongoing case against Driver, an associate of his and several of their companies.
…A settlement has not yet been reached with Reynold Mainse, another son of David Mainse, who is also part of the OSC’s investigation into Driver’s investment scheme.
The OSC has indicated that Reynold Mainse, like his brother and Rutledge, is not considered a party to the alleged fraud.
Ron Mainse, former Crossroads Christian Communications Inc. President is now Crossroads Spiritual Director and Executive Producer of 100 Huntley Street.
Reynold Mainse has subsequently appeared on 100 Huntley Street reporting on Crossroads missions.
Ron and Reynold Mainse were yanked off the air as hosts of Crossroads flagship show 100 Huntley Street in June of last year. Ron was re-instated as a 100 Huntley Street host in November. He stated in a televised interview his brother Reynold and wife Kathy had not been employees of Crossroads for about a year and a half.
A US reader asked a few weeks ago if rumours of restitution were true. The OSC hearing was held Friday. David Rutledge was the former Crossroads Christian Communications Inc. Director of Ministries. Reynold Mainse was Crossroads Vice-President of Missions. Ron Mainse said he drew about 50 or 60 people into the scam, Reynold says he involved 15. The OSC says Reynold and Kathy Mainse drew 22 investors in (at 250 thousand dollars a unit). The OSC settlement agreement with Ron Mainse states 45 investors were taken in. Mainse learned in 2008 a lawyer was concerned about the Axcess commissions. He took another 30 thousand dollars and stopped being a finder. He told the OSC he gave most of his finders fees to charities.
Rutledge and the Mainse brothers are ordained ministers with The Pentecostal Assemblies of Canada. Gordon Driver of Axcess Automation is from Freelton Ontario and Las Vegas.
Ontario Securities Commission August 13, 2010 David Rutledge/Anesis Investments
Ontario Securities Commission August 13, 2010 Ronald Mainse
Ontario Securities Commission August 12, 2010 Statement of Allegations (.pdf)
From the OSC Statement of Allegations:
Rutledge, Reynold Mainse and Ronald Mainse
30. Between July 2007 and March 2009, Rutledge’s trading in the Axcess Automation Investment resulted in investments by about 45 investors totalling approximately USD 2,051,199.39. Of this amount, Driver paid back about USD 746,507.00 to these investors, which Driver characterized as returns on investments.
31. Rutledge provided prospective investors with copies of the Private Offering Memorandum which described the Axcess Fund Investment.
32. Rutledge received commissions directly, and through 6845941, of about CAD 262,818.92.
33. Between July 2007 and March 2009, Reynold Mainse’s trading in the Axcess Automation Investment resulted in investments by about 22 investors of about USD 4,100,000.00. Of this amount, Driver paid back about USD 2,875,054.00 to these investors, which Driver characterized as returns on investments.
34. Reynold Mainse identified and corresponded with prospective investors and provided them with copies of the Private Offering Memorandum which described the Axcess Fund Investment.
35. Reynold Mainse received commissions directly, and through WCC, of about CAD 210,219.50.
36. Between July 2007 and March 2009, persons introduced by Ronald Mainse to the Axcess Automation Investment invested about USD 86,200.00. Ronald Mainse received commissions of about CAD 138,176.88, most of which were derived from investors in Rutledge’s group.
The document is a sobering read – conduct contrary to the public interest indeed. I’m counting 9 companies involved. Over 100 investors were scammed, most were Canadians. For background on the Axcess Automation/Funds ponzi scheme follow the tags at the bottom of the post. Prior posts include US regulatory body and court documents. Crossroads CEO Donald Simmonds who was quietly brought in late last year reiterated that David Mainse sons were Gordon Driver’s victims, a position taken by the religious broadcaster since the story broke last April.
“One of our strong points in the Christian community is that we’re known for trust, but that trust can be taken advantage of or turn into naiveté at times. They were trusting, perhaps to a fault at that point.”
The OSC alleges
- David Rutledge made commissions of 262,818.92.
- Reynold Mainse made commissions of 210,219.50.
- Ron Mainse made commissions of 138,176.88.
Who gets the restitution money? Lawyers? The government? Investors? (called third parties)
Even a New York Times blog is reporting the Axcess Automation/Funds Mainse brothers involvement. I’m posting the Crossroads Christian Communications Inc. statement below the fold in full because it’s been my experience Crossroads posted information has a habit of becoming disappeared.
Crossroads Pleased OSC Hearing Brings Closure to 15-Month Ordeal
Regulator Concludes Mainse Brothers “Not party to the fraud”
BURLINGTON, ONTARIO – August 13, 2010. – Yesterday, the Ontario Securities Commission issued a notice of hearing and statement of allegations relating to a fraudulent investment fund scheme targeting the Canadian faith community, orchestrated by Gordon Driver, which was exposed by the security regulators in May, 2009.
Ron Mainse, currently on the leadership team at Crossroads, and Reynold Mainse and David Rutledge, formerly associated with Crossroads had, on a personal basis, invested in the fund, informed family and friends about the fund and were offered a share of Mr. Driver’s profits. They were unaware that the enhanced returns Mr. Driver claimed to realize were, in fact, based on the alleged fraudulent investment scheme. In yesterday’s statement the OSC clearly concluded that they “were not party to the fraud”.
During the summer of 2009 a thorough, independent financial audit initiated by the Crossroads Board of Directors confirmed that no Crossroads ministry activity nor any of its funds were in any way involved.
In a nationally televised interview last October on 100 Huntley Street, Ron Mainse openly talked of how he had naively placed his trust in Mr. Driver, whom he had considered a family friend, and did not exercise sufficient due diligence about the supposed investment. Further, he had not appreciated that the receipt in any form of compensation from Mr. Driver was a breach of the Securities Act.
Ron has cooperated fully with staff of the Ontario Securities Commission and has entered into an agreement that was approved at a hearing today, bringing appropriate closure to the matter. The agreement immediately resolves the Commission’s allegations by acknowledging Ron’s mistake, abiding by an appropriate sanction and completely reimbursing any compensation received.
Unfortunately, the faith community can be easily taken advantage of because it highly values trust in relationships. This situation underscores the need for greater awareness and diligence to avoid vulnerability. Crossroads hopes this terrible experience, now concluded, can be used as a caution to others.