Chatham, Ont. Mother Leads Class Action Lawsuit Against Alleged Ponzi Scheme
A class action lawsuit has been filed at the Ontario Superior Court of Justice, alleging that a company in Chatham, Ont., Banknote Capital Inc., was operating as a Ponzi scheme. The lawsuit, spearheaded by Emily Hime, a 31-year-old mother, represents 125 people who invested with the company. The legal action is seeking to trace and preserve assets with the goal of redistributing the funds to investors.
The allegations came to light after a whistleblower from the company filed a complaint with the Ontario Securities Commission earlier this year. The complaint alleged that the owner of Banknote Capital Inc. had pocketed investments. The whistleblower, former Banknote employee Brock Tedford, spoke out for the first time, claiming that the owner saw another individual, Aiden Pleterski, allegedly exploiting investors and decided to do the same thing.
Pleterski, known as Ontario’s ‘crypto king,’ allegedly operated a Ponzi scheme worth between $40 million and $100 million. Pleterski was pushed into bankruptcy in 2022, with court documents revealing that over 98% of the money collected was never invested.
According to court documents, Banknote Capital Inc. was created in 2021 as a “feeder fund” for Pleterski. Ryan Rumble, one of the directors of Banknote, sent nearly $4 million to Pleterski while engaging in his own trading with investors’ money.
Hime, who initially had reservations about Banknote, eventually invested a significant amount after hearing positive feedback from friends and family. However, suspicions started to arise when Banknote stopped accepting new investments due to “cash flow problems,” which were allegedly caused by Pleterski’s failure to return funds.
The lawsuit alleges that Banknote then became a Ponzi scheme, with new client money being used to pay client redemption demands and engage in further trading, resulting in more losses. Norman Groot, a fraud recovery lawyer representing the class action, described the situation as “a Ponzi scheme feeding another Ponzi scheme.”
Tedford, the whistleblower, accumulated evidence to support his claim and filed a complaint with the Ontario Securities Commission in January 2023. The commission declined to comment on the status of the complaint in order to protect the integrity of its investigations.
Groot has filed a motion to extend a court injunction, freezing Banknote’s assets and Rumble’s personal assets. The motion also seeks to trace and retrieve funds that left Banknote’s accounts or were transferred to Rumble personally. The court documents reveal that Banknote sent a wire transfer worth over $212,000 to Dubai just before the lawsuit was launched.
In the aftermath of the Banknote debacle, Hime expressed the emotional, mental, and physical toll it has taken on her. Rumble has not responded to interview requests from CTV News Toronto.
The allegations against Banknote and Rumble have not been proven in court. Groot emphasized the importance of conducting due diligence and understanding investments before committing to them. The class action lawsuit will continue as the legal proceedings unfold.
More detail via Pulse24.com here… ( Image via Pulse24.com )