Fraser Valley Hop Farm operators fined almost $1.1M for fraud, illegal distributions, BCSC finds

Hops are seen in this undated file photo. (Shutterstock.com)

B.C.'s financial markets regulator has issued nearly $1.1 million in sanctions to a hops farming company in the Fraser Valley and two people associated with it.

In a decision issued Thursday, a panel of the B.C. Securities Commission issued the bulk of the penalties – more than $1 million – to Fraser Valley Hop Farms Inc. and its only named director, Alexander William Bridges, also known as Alex Blackwell. 

Bridges and his company were also permanently banned from participating in investment markets, with the exception of Bridges' personal retirement accounts.

A second individual, Shane Douglas Harder-Toews, was given a $50,000 fine and a six-year market ban.

The sanctions stem from fraud the panel determined Bridges and his company committed against investors, as well as the illegal distribution of securities without a prospectus.

According to the BCSC decision, FVHF and Bridges committed fraud against 18 investors who contributed more than $1.8 million thinking their investments would be used for the operation of a 125-acre hops farm serving the craft brewing industry.

"In reality, Bridges and FVHF knowingly used $498,273 of their money for other purposes," the decision reads.

Bridges and FVHF also illegally distributed securities on 22 occasions, raising a total of $930,000, according to the panel.

Harder-Toews participated in 10 of those distributions totalling $378,000, but the panel found that he served as a "de facto director" of the company and held him vicariously liable for all 22.

"There was no finding that (Harder-)Toews participated in or was aware of the fraud which was proven against the other respondents," the decision reads. "On the whole (Harder-)Toews’ breaches of the Act were serious, but significantly less serious than those of Bridges and FVHF."

In determining what penalties to assess against the parties, the panel considered the impact of the fraud and illegal distributions on investors, noting the investors had suffered both financial and emotional distress from the crimes.

"It is virtually certain that the investors lost all of their money," the decision reads. "FVHF is not in good standing with the BC Company office and is in danger of being dissolved. There is no evidence indicating any potential avenue for recovery by investors."

The panel included the stories of several victims in its decision. One investor told the panel the money he invested came from a lottery win, and the loss of the funds made him feel "foolish."

Another invested money from a legal settlement.

"She told Bridges and (Harder-)Toews about this and trusted them," the decision reads. "She also had a history of severe trauma and abuse and was terrified of (Harder-)Toews when things were falling apart and he started screaming at her. The investment experience was 'quite traumatic' to her."

Two others told the panel the money lost inhibited their ability to buy homes for their families, which they had intended to do.

"The respondents’ conduct harmed the investors who invested in FVHF and damaged the integrity of the capital markets in British Columbia," the decision reads.

Though the parties had the opportunity to make submissions to the panel about what penalties they should face, they did not do so, according to the decision.

The panel ordered Bridges and FVHF to jointly pay a $498,273 "disgorgement," representing the amount of money they profited from their fraud.

Bridges was also ordered to pay a $550,000 administrative penalty, for a total of more than $1 million in sanctions against him. The $50,000 penalty assessed to Harder-Toews brings the total monetary sanction in the case to nearly $1.1 million.