Court rejects bankrupt B.C. woman's bid to avoid paying fines for Ponzi scheme involvement

A court has declined to discharge the debts of a B.C. woman who was involved in a Ponzi scheme, citing her repeated efforts to "resist and frustrate" the collection of fines issued against her in the case.

Renee Michelle Penko owes the B.C. Securities Commission roughly $207,000, a figure that includes $155,000 in commissions she received in the Ponzi scheme, a $40,000 administrative penalty, and interest.

In 2016, the financial regulator ordered her to pay those amounts after finding that she and others had traded in securities without having filed a prospectus and without being registered under the provincial Securities Act.

The court decision published Tuesday notes that Penko was "not a central player" in the Ponzi scheme, which was "carried out principally by Thomas Williams." 

Still, the BCSC found that Penko had made "illegal distributions to 22 investors and 31 investments with a value of $1,171,003," according to the B.C. Supreme Court decision.

'ORGANIZED PSEUDOLEGAL COMMERCIAL ARGUMENT'

Penko assigned herself into bankruptcy in May 2019. In September of this year, she applied to the court to discharge her debts.

Master John Bilawich denied her application, on the grounds that she had spent years attempting to avoid payment of her debt to the BCSC using "Organized Pseudolegal Commercial Argument" tactics.

Bilawich's decision doesn't define that term – abbreviated throughout the decision as OPCA – but it does reference the Alberta court decision in which it was coined and provide several examples of Penko's behaviour. 

The Alberta decision describes OPCA litigants as people who "employ a collection of techniques and arguments promoted and sold by 'gurus' … to disrupt court operations and to attempt to frustrate the legal rights of governments, corporations, and individuals."

According to Bilawich, Penko responded to the BCSC's attempt to seize and sell her assets with a letter purporting to be from the "Tree of Life Foudation."

"She took the position that assets the commission and bailiff sought to attach were in a trust and they did not have authority or jurisdiction to pursue them," the master wrote in his decision.

"Any further action from them would be dealt with appropriately. She signed the letter: 'Managing Director: Lady Renee Michelle, Penko UCC 1-308.' Her approach and sign off are consistent with OPCA conduct."

She sent similar letters to the commission's lawyer and the court itself, the decision indicates.

Later, when she was ordered to appear in court for a hearing, she "returned a copy of counsel’s cover letter, on which she hand-wrote 'I dishonour the above presentment under the Uniform Commercial Code, in particular UCC 3-503, 3-504, 3-505 (Notice of Dishonour),'" according to Bilawich's decision.

The Uniform Commercial Code is state-level U.S. legislation that does not apply in Canada.

Penko also questioned the authority of a B.C. Supreme Court justice to preside over her case and was found in contempt of court, Bilawich notes.

In February 2019, Penko was ordered to pay the BCSC $75 per month toward her debt.

"Ms. Penko sent the commission two post-dated cheques for $75 each, for the months of March and April 2019," Bilawich wrote. "The March cheque included a memo 'issued under duress, threat, & coercion.' The commission successfully negotiated the March cheque. Ms. Penko stopped payment on the April cheque."

BANKRUPTCY DECISION

Penko told the court that she had abandoned OPCA tactics when she filed for bankruptcy, after realizing that her efforts to pursue that route had failed.

"Ms. Penko declares that she intends to comply with the rules of all proceedings related to her bankruptcy discharge and court proceedings," Bilawich wrote. "She recognizes the commission’s and this court’s authority and jurisdiction and was prepared to state that under oath in open court, if required to do so."

The master expressed doubt about this argument, noting that Penko had signed some documents using "an OPCA identifier" even after the bankruptcy proceedings began.

"It frankly appears that Ms. Penko was, in part at least, stubbornly refusing to make voluntary payments towards the debt she owed to the commission," Bilawich wrote. "She compounded this by engaging in OPCA-style tactics to resist and frustrate collection proceedings in this court … Her newfound desire to disavow her past conduct appears to coincide with her application for discharge."

He added that he was not persuaded that Penko had been rehabilitated by her bankruptcy.

"In my view, Ms. Penko’s post-sanctions-decision OPCA-oriented conduct is sufficiently reprehensible to warrant dismissal of her application for discharge at this time, but I grant her leave to re-apply two years after the date of this order," Bilawich concluded.