Just like his investors’ millions, Rodney Jack Wharram’s way with words seemed to evaporate Monday at the start of a hearing that could see him banned from the B.C. investment industry.

Wharram, who is representing himself at the B.C. Securities Commission hearing, frequently stumbled over his words as he faced allegations around $9.3 million he is alleged to have raised from investors between 2007 and 2010.

The commission has accused Wharram of fraud and misleading investors. They say Wharram used investors’ funds to buy a $24,000 diamond ring for his wife and lend her $240,000 to invest in a grocery store and to purchase a home. The commission alleges those moneys were supposed to go towards building homes, a spa, a clubhouse and expanded golf facilities at The Falls Resort in Chilliwack.

Wharram was at one time a prominent figure in Chilliwack’s business community. One of his companies, West Karma Ltd., was a large sponsor of the WHL’s Chilliwack Bruins (who have since moved to Victoria), and New York Rangers general manager Glen Sather was an investor in West Karma. Sather is not part of the investigation.

The commission alleges that of the millions of dollars raised by Wharram through Falls Capital Corp. and Deercrest Construction Fund, less than half was actually forwarded on to the developer of the Falls Resort in Chilliwack, as promised. The allegations have not been proven and Wharram has never been charged in criminal court.

The hearing began on Monday with testimony from senior investigator Elizabeth Chan, who took the panel through the paper trail left by Falls Capital Corp. that left more than $2 million of investors’ money in West Karma’s bank account.

Chan showed records that Falls Capital had attracted $5.3 million of investors’ money. But when The Falls Resort’s developer went bankrupt in 2011, only $2.1 million of investors’ money had actually been passed on. The Falls Resort has since been taken over by the Aquilini Group, which could not be reached for comment.

The panel heard that in July of 2009, Wharram obtained a bank draft of $75,000 from the West Karma account. Wharram later told Chan that the bank draft was used to purchase his house.

In addition to the alleged misuse of investors’ money, Wharram is also accused of lying to investigators last year. During interviews last March, the commission says, Wharram told investigators that he had stopped soliciting money from investors. But he’s alleged to have raised at least $450,000 in the first four months of 2013, the majority of it after he was interviewed by the commission.

While commission staff will call nine witnesses, Wharram will call just one, a former commission staff member he described as a friend. He also promised to aggressively cross-examine Chan on her testimony.

An alleged victim, Arnold Earl, a High River, Alta., pensioner, said he knew there was no guarantee that he would recoup his money. It was the first time Earl had ever made such a large and risky investment.

After years of getting tiny percentages from his bank, the promised 12 per cent interest on his investment seemed attractive, even though Earl knew there was a reason investors were being offered 12 per cent; a Deercrest offering memorandum says in the first paragraph: “This is a risky investment. You could lose all the money you invest.”

“He definitely had the gift of the gab,” Earl said of Wharram.

“I went in with my eyes wide open knowing something could happen,” Earl said. But he didn’t imagine that all of the investors’ money might not be used to help develop The Falls, as the commission now alleges.

Among the witnesses who will speak at the hearing over this week will be six investors. The commission’s senior litigation counsel, Paige Leggat, said those investors will talk about the negative consequences of their investments in Wharram’s companies.

The proceedings are administrative, meaning that if Wharram is found liable for either of the accusations against him, he can only be fined and barred from trading.


Print Friendly, PDF & Email

Subscribe To Our Newsletter

Join our mailing list to receive the latest news and updates from ILSTV

You have Successfully Subscribed!

Pin It on Pinterest