Missed deadline sinks investor’s fraud claims against land banking group

She said one of the group’s representatives told her “that investors should expect to double their money in five to seven years,” and that the deal was described as “safe” because it was land. She certified she was an accredited investor, which in her case meant net income above $200,000, or $300,000 with a spouse. She now says she did not qualify, and that it was “strongly suggested to make the [Know Your Client] sheet look like we were accredited” by the group’s employees or agents.

The disclosure document showed a group subsidiary bought the land from an unrelated seller for about USD $8.7 million, then moved it into the project for about USD $26.1 million. An individual defendant admitted markups of three to five times were common on these transfers, a practice called a “Lift.” Of roughly USD $31.7 million raised, about $4.2 million went to commissions.

The letter that started the clock

The group refused her 2016 refund request, which said she had not qualified as accredited when she invested. In January 2018, during restructuring, the land was valued at just over USD $5 million.

On March 16, 2018, she wrote that the way investments were sold had “every appearance of deliberate misrepresentations and quite possibly fraudulent inducement.” The lawsuit was filed May 27, 2021, and Alberta generally allows two years from when someone knew, or should have known, a claim was worth pursuing.

Justice Feasby found that by March 2018 she had enough facts to reasonably conclude the group might be legally responsible. The project had stalled for 10 years, and the group’s insolvency was “fundamentally inconsistent” with claims that its investments “were safe and produced strong annual returns.” He noted an economic downturn could also explain it.