Hamilton developer accused of breaking Ontario securities law in $19M hotel-condo project
CBC
The Ontario Securities Commission (OSC) is accusing a Hamilton developer of violating provincial securities law by allegedly misleading investors who gave him $19 million for the Buffalo Grand Hotel in New York and using the money for other projects.
Harry Stinson, who moved to Hamilton in 2008, said he disagrees with the allegations, but wouldn't dispute the claims publicly. The accusations haven't been proven.
The OSC's statement of allegations names Stinson and an employee, Stephen Kelley.
The statement requests numerous orders be imposed, including that Stinson and Kelley halt trading in any securities, resign from their positions, no longer be allowed to be directors or officers of any issuer under the OSC, and pay an administrative penalty of up to $1 million.
Stinson is behind numerous Hamilton projects and developments.
He finished the Stinson School Lofts at the former Stinson School. He's also still working to complete the Beasley Park Lofts at the former Cannon Knitting Mills and the Gibson Loft Rentals at the former Gibson School.
The document states Stinson made a plan in 2016 to convert the hotel into a condo building. It says Kelley, the project's investment co-ordinator, was unregistered and "has no education, training, or experience in the securities industry."
Stinson and Kelley allegedly made "false or misleading statements" to investors by telling them the investments were RRSP and TFSA-eligible and some investments were secured by a mortgage or interest reserve.
The document says Stinson told investors there would be "substantial renovations" to the hotel that would benefit them, but he spent "only a modest share of investor funds on renovations."
Instead, the document states he "allowed investor funds to be co-mingled into omnibus accounts from which funds were used for other Stinson projects and transfers were made to other bank accounts and credit cards, including certain accounts and credit cards held by Stinson."
The document adds there aren't accurate records of the funds raised and how they were used.
Stinson allegedly had cash flow issues but didn't inform investors, and as of November, still doesn't have legal approval to convert the hotel into a condo building, the document says.
It also notes many of the roughly 207 investors weren't accredited and Stinson reportedly didn't try to verify if they were.
The document adds Stinson and Kelley ignored a Temporary Cease Trade Order.
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