A former Grand Bend business owner facing fraud charges by Ontario’s securities regulator is skipping the hearings into his involvement in an alleged multimillion-dollar cryptocurrency scheme as lawyers for the commission began laying out their case against him.
Troy Hogg sent two emails to Ontario Securities Commission counsel Tuesday, the first day of the scheduled Ontario Capital Markets Tribunal hearing on the case’s merits, announcing he would not attend. In the first, entered as an exhibit, Hogg said he would not be going, but it was unclear if it was a single-day absence or more, OSC counsel Alvin Qian told the tribunal before beginning his opening remarks.
In a second email to counsel and the tribunal panel at 10:40 a.m., Hogg signaled he would not attend any multi-day hearings on the four Securities Act charges he is facing.
Calling Hogg the “mastermind” behind the creation of the cryptocurrency token at the center of the scheme and the “directing mind” behind the corporations named alongside him in the case, Qian alleged Tuesday that the former owner of the Colonial Inn and Gables in Grand Bend perpetuated a fraud on unwitting investors.
The OSC alleges that between May 2017 and June 2019, Hogg and his companies Cryptobontix, Arbitrade, TJL Property Management Inc., and Gables Holdings were involved or profited from the fraudulent offering of a crypto asset called Dignity, which its creators claimed was backed by gold, that raised about US$51 million.
The fraud, OSC counsel alleges, had three parts. The first was the claim that Dignity was backed by real gold and the actors behind the token had title to gold bullion. The second fraud was an alleged audit of the gold stores that the OSC claims never happened because no gold existed. The OSC alleges that both the gold title claim and the audit were trumpeted out to investors in the Dignity token. The final fraud alleged by the regulator was the improper use of millions in investor money.
“Contrary to what was promised to investors, in reality, a significant amount of investor funds raised from the sale of Dignity tokens were misappropriated by the respondents and used for other purposes,” Qian said.
The OSC alleges US$7 million of funds was used to buy properties in Grand Bend. The regulator contends that another US$2 million was transferred to TD and Bank of Montreal bank accounts held by TJL Property Management and Gables Holdings.
The OSC also claims US$1 million was misappropriated to third parties benefitting Hogg, in particular to a company for the purchase of two luxury boats.
The provincial securities regulator froze and sold off assets, including the Colonial Hotel, in 2021 as part of its investigation.
OSC counsel intends to call four witnesses, including commission investigators and a forensic accountant. It is expecting to wrap up its case by Thursday. The merits hearing had scheduled dates this week and several in January.
Just weeks ago, Hogg – without legal representation – lost his bid to have the OSC merits hearing put off until he can secure a lawyer.
Among other individuals and companies, Hogg, Cryptobontix, and Arbitrade are also facing civil charges brought by the Securities and Exchange Commission (SEC) in the United States. That case is expected to proceed in the spring.