A B.C. man who was banned from trading after admitting to illegally raising $12 million says he has no idea how he'll pay back his investors now that he and his company are bankrupt.

Steven Brian Friedland, 52, entered into a settlement with the British Columbia Securities Commission (BCSC) Thursday, agreeing to a 20-year market prohibition after taking the money of 140 investors – at least 100 of whom live in B.C.

"I'm very upset about it," Friedland told ctvbc.ca in a telephone interview. "It's not a very nice time we're going through."

The BCSC says under his businesses, Western Liquid Funding (WLF), a sole proprietorship, and Western Liquid Funding Inc. (WLF Inc.), Friedland traded securities when they entered into agreements between 2004 and 2010 that provided interest payments to investors and a return on capital. WLF then used investors' money to make bridge-financing loans.

The distributions were illegal under B.C. law because neither Friedland nor his companies were registered to trade securities.

The BCSC said Friedland did take steps to legally regulate his business once he recognized the loan business was subject to regulations. But that's when the securities regulator took notice.

"In the course of restructuring, he disclosed the respondents' misconduct to BCSC staff," BCSC spokesperson Ken Gracey told ctvbc.ca.

WLF and WLF Inc. paid more than $10 million in interest to investors and made substantial repayments of capital until June 2010.

After that date, WLF couldn't keep up with their loan obligations because some of the borrowers were unable to pay back its money, Friedland said.

"It comes back as a default to some of my borrowers. So I couldn't pay my investors."

The BCSC said Friedland invested a substantial amount of his own money in the business and investors, and incurred "significant debt" in order to pay clients.

Friedland and WLF Inc. were declared bankrupt in the B.C. Supreme Court in Oct. 2010. They are now unable to pay the fine of $225,000 that the BCSC normally takes in settlements of this kind.

"The company has been put into bankruptcy, I'm in bankruptcy. At this point, the trustees are dealing with this," Friedland said.

Under the agreement, Friedland is banned, with limited exceptions, from trading or purchasing securities, or managing any investment funds for the next two decades.

Friedland said he's sorry for any financial hardship he's caused the people who trusted him with their savings but he still doesn't know how he'll raise money to repay them.

"I'm looking at my options. I have no income coming in," he said. "I really want to express my regret -- a lot."

WLF and WLF Inc. have permanently ceased trading.

Friedland is allowed to stay on with the companies solely for the purpose of "winding up their businesses and to facilitative recovery of outstanding loans."

The BCSC says it's unlikely the investors will be repaid.

"In cases where someone is bankrupt it's difficult for them to get their money back," Ken Gracie said.

Gracie says potential investors should always do their homework about who they're investing from, especially if there's a possibility they aren't registered with the province.

"Do your research, do your due diligence," he said. "It can save you."

If you invested with WLF we'd like to hear from you. Write us at bconline@ctv.ca