I’ve fallen behind a bit in updating the Axcess Automation/Funds saga. A lot has happened lately, with a couple of the key players in the ponzi scheme which saw investors lose millions.
The Ontario Securities Commission has put up “Reasons and Decisions”, the findings of a hearing held in April 2011 involving Reynold Mainse, Steven Taylor and Gordon Driver.
Former 100 Huntley Street host Reynold Mainse has acknowledged violating sections of The Ontario Securities Act (OSA) and being a point man in the Axcess scheme. Mainse and his now defunct company World Class Communications Inc. were found to have traded securities without a licence. The OSC determined (as they had with his brother Ron Mainse and cousin David Rutledge) that he was not party to the fraud.
The OSC ruled that he had improperly traded securities without being registered, by recruiting more than a dozen family and friends to participate in Driver’s scheme.
Ron Mainse, Reynold’s brother, and their cousin, David Rutledge, were ordered to pay a combined total of nearly $450,000 in restitution and penalties to the OSC in August 2010 for similar roles as recruiters.
The OSC has described Reynold Mainse, Ron Mainse and Rutledge as unwitting dupes who didn’t perpetrate any fraud themselves.
Driver had been a longtime family friend.
“I feel absolutely sick about it,” said Reynold Mainse. “It’s just a huge, unfortunate situation for me and my family.”
Mainse said he attracted five family members and 10 friends to invest in what he thought was “a great opportunity, which obviously wasn’t,” he said.
“I’ve apologized to them,” Mainse said. “They’re still my family, they’re still my friends.”
Reynold Mainse will be back before the OSC November 7th. He now runs a photography business out of the Hamilton area.
Pertinent paragraphs in the OSC decision regarding Reynold Mainse.
 Reynold and WCC, who were represented by counsel, admitted all of the allegations relevant to them. As Reynold admitted the allegations against him in this matter and was not contesting the evidence presented by Staff, he and his counsel only attended certain portions of the hearing. Reynold appeared on April 11, 15, 19 and 20, 2011, and his counsel appeared on April 11, 13, 15, 19 and 20, 2011.
 WCC was incorporated in Ontario in September 1998. According to Reynold, he stopped doing business through WCC in 2000 or 2001, but later re-activated WCC which
contracted with a Christian non-profit charitable organization to lead and promote international humanitarian aid missions. In December 2008, WCC’s registration was cancelled for failure to comply with the Corporations Tax Act, R.S.O. 1990, c. C.40, as amended.
The OSC states that Reynold Mainse was the sole director of World Class Communications Inc. Pages 14 to 17 outline the allegations Mainse admitted to.
 Reynold, who was interviewed voluntarily by Staff and voluntarily provided Staff with documents relating to the Axcess Investments, made admissions on the first day of the hearing on the merits. His counsel explained that, but for Reynold’s personal financial situation, he would have settled with the Commission. His counsel further explained that Reynold does not have the means to disgorge to the Commission the funds he received through his and WCC’s involvement in the Axcess Investments given the nature of his career and the dedication of his time and resources, including the money that he received from Driver, to Christian not-for-profit charitable organizations. As a result, he elected to participate in the the hearing on the merits and testified to provide a full factual record to the Commission.
 From July 2007 to the end of 2008, Reynold acted as a point person between Driver and investors who were identified by Reynold at the hearing as being his family and friends. The Reynold Group, comprised of 23 people, invested a total of US$4,131,400.96 and subsequently received payments from Driver totaling US$2,875,054.87.
 The evidence shows that Driver had occasionally met or directly communicated with investors about the Axcess Investments. Ronald and Rutledge gave consistent and
credible testimony that they facilitated meetings between small groups of investors and Driver. According to Ronald, two such meetings took place in Burlington, the first in early to mid-July 2007 and, the second, at Ronald’s home in late July 2007. Rutledge testified that he arranged for investors to meet Driver at Ronald’s house in July 2007 and in Las Vegas in February 2009 and personally attended these meetings. Reynold also
testified that he arranged meetings between Driver and investors and that he attended some of these meetings.
 For example, Rutledge and Ronald understood that they would receive 5% of “[Driver’s] company’s growth” as commissions which were to be shared between them
(Hearing Transcript dated April 15, 2011 at p. 44). Reynold also understood that he would be paid “five percent of the money that [he brought] to [Driver]” (Hearing Transcript dated April 19, 2011 at p. 125). More specifically, Reynold explained that the
commissions would be 5% of the trading profits that Driver retained, or 3.75% of the total profits generated by Driver’s trading activities.
 We accept Staff’s flow of funds analysis which shows that both Taylor and Reynold received funds from Driver. Driver transferred US$1,430,216 to Taylor and the Taylor Companies, and $210,219.50 to Reynold and WCC. Although Reynold testified that there was no clear distinction as to whether the funds he received were a return on his investment or commissions, we find that Taylor and Reynold received payments as a result of acting as point persons for Driver.
Page 40, 41 and 42 [200-212] lay out the details of Reynold Mainse activity and involvement.
 Staff’s flow of funds analysis shows that Reynold received a total of $210,219.50 from Driver, of which $9,987 was received by Reynold personally and $200,232.50 was received through an account in the name of WCC.
 Based on Reynold’s admissions and evidence described above, we find that Reynold and WCC engaged in trades and acts in furtherance of trades within the meaning
of the OSA in relation to both the Axcess Automation Investment and the Axcess Fund Investment.
While Ronald and Reynold Mainse made it publicly clear they were victims of this scam, as point people were also victimizers. Neither brother is facing, or will face criminal charges. They remained ordained ministers in Ontario through out this investigation, despite the fact it was then alleged they violated an Act of the Ontario Legislature (OSA),and a federal Act (CFA). I posted about Reynold Mainse ministerial credentials previously, which he holds because of the good graces and trust of the Ontario government. (** important update at the end of this post – please read – BD)
How much did this OSC investigation cost taxpayers? Why do Christians not hold their own accountable for acting contrary to the public interest? Who is Reynold Mainse accountable to as an ordained minister if not taxpayers and the body authorized to ordain him? How is breaking regulatory law different than breaking criminal law, and why does his leadership turn a blind eye?
I understand that paying restitution is a hardship – a consequence of roping family and friends into a scam. I understand both brothers suffered public shame being yanked off 100 Huntley Street for a few months. Ron was allowed back on-air, appointed Spiritual Director of the Crossroads Family of Ministries and Executive Director of 100 Huntley Street. Reynold Mainse started his own company. Unlike his two defendants before the OSC, Reynold Mainse had competent legal representation. The point is, the 252 investors who have never spoken publicly, wsome of who placed their trust in the Mainse brothers face considerable hardship also.
I have no idea if Reynold Mainse does contract work for the charity his dad founded. I remain troubled that neither brother faced suspension of their ordination during the OSC investigation. Is breaching a provincial Act no big deal to Christian leaders?
 We also find that Reynold authorized, permitted or acquiesced in WCC’s contraventions of subsections 25(1)(a) and 53(1) of the OSA and is, therefore, responsible for such contraventions pursuant to section 129.2 of the OSA.
 The conduct of the Respondents undermined the integrity of and confidence in the
capital markets, which we find to be contrary to the public interest.
Section V of the document lays out how the scam unfolded and how the point people and their investors got sucked in. My grandmother used to say, if it sounds to good to be true, it probably is. The returns on investments promised (and in some cases received) makes shows the read in hindsight, the blinding effect of greed.
Both brothers wanted some of the money they made to go to ministries. In the OSC document it was suggested that Axcess investors donate their returns to ministries of choice.
In July of 2009, the board of Crossroads Christian Communications made it clear that a forensic audit had determined no donor funds had gone into the Axcess scam. Back in that 2009 post I wondered which ministries were recipients of the monies the brothers and cousin made. Did Crossroads receive donations from the brothers ill-gotten gains?
Reynold Mainse remains on the board of Heaven’s Rehearsal, a registered charity described as a ‘missionary organization, evangelism’, which produced an extravagant concert at the Rogers Centre in 2007, with grand plans to hold a similar show in the future in Africa. He took over Heaven’s Rehearsal from Norm MacLaren, a former 100 Huntley Street host. According to the 2011 T3010, Heaven’s Rehearsal is making a bit of money from product sales and donations, and is in a deficit position.
I’d hardly call a concert a “Christian non-profit charitable organization to lead and promote international humanitarian aid missions , which is why I wonder if the brothers donated money to ministries and if they did, where it went.
Reynold Mainse and his cousin David Rutledge are pleading financial hardship in regards to restitution and penalties required by the OSC. November 7th, Reynold Mainse will find out how much more financial hardship he’ll face.
Gordon Driver, already looking at a 41 million dollar civil judgement in the US, was arrested in Las Vegas October 9th. He made bond and was ordered to appear for arraignment in a Los Angeles court this past Wednesday. Ponzitracker:
Gordon Driver, 54, was arrested October 9th and charged with two counts of mail fraud, nine counts of wire fraud, two counts of commodity pool operator fraud, and three counts of making false statements to the Securities and Exchange Commission. If convicted of all charges, he faces up to 275 years in federal prison.
…Despite being successfully prosecuted by civil regulatory authorities for masterminding a massive Ponzi scheme, any intervention by criminal authorities remained conspicuously absent. In a Forbes article I authored earlier this summer pondering this same question, I noted that “while the CFTC outlined allegations in its complaint that could form the basis of mail and/or wire fraud, the five-year statute of limitations continues to tick.” Among the criminal charges Driver now faces are two counts of wire fraud and nine counts of mail fraud.
Also noteworthy is the decision to charge Driver with three counts of making false statements to the Securities and Exchange Commission. Authorities rarely bring this charge against those accused of Ponzi schemes, with the only known exception to be Laura Pendergast-Holt, the former chief investment officer under Allen Stanford’s massive $7 billion Ponzi scheme who received a three-year prison sentence after pleading guilty to obstructing an SEC investigation. Driver was presumably charged under 18 U.S.C. 1001, which forbids making any false or fraudulent statement in “any matter within the jurisdiction of the executive, legislative, or judicial branch” of the U.S. government. Each charge carries a maximum sentence of up to five years in federal prison.
Update: God is in the details, and I want to commend OBFF. In a world where Christian ministries often fall short of ideals, we need to see ministries operate openly, with integrity and walk in the grace of God. OBFF:
Approximately four months ago we conducted further investigations concerning Reynold Mainse and decided to suspend the ministerial credentials Reverend Mainse held with Open Bible Faith Fellowship until the matter regarding the O.S.C. and Reverend Mainse is resolved.