New Brunswick Securities Commission

Quebec company allegedly offered securities illegally in New Brunswick (09/03/19)

NB 352

March 19, 2009

SAINT JOHN (CNB) - New Brunswickers should be aware that a business operating under the name Groupe Financier CTIC (CTIC), a related shell company, CITCAP Groupe Financier Inc. (CITCAP), and Patrick Gauthier have been served with a notice of hearing of motion issued today by the New Brunswick Securities Commission (NBSC). This notice schedules a preliminary hearing for April 15.

CTIC is not registered to sell securities in New Brunswick. In its motion materials, NBSC staff allege that CTIC did not comply with the disclosure or registration requirements under New Brunswick securities law and that CTIC did not meet the criteria for exemptions with respect to sales of securities to New Brunswick residents.

NBSC staff allege that CTIC raised money mainly from investors in Edmundston and Grand Falls and also from investors in the Acadian Peninsula, Moncton, Saint John and Fredericton. The NBSC staff's investigation revealed that securities sold in 2006, 2007 and 2008 involved 109 trades by 63 individuals and raised more than $5.7 million in New Brunswick alone.

Allegations state that the securities being offered by CTIC are loans packaged as investments, purportedly used to conduct factoring, which involves purchasing accounts receivable from businesses. These investments provide a 24 per cent return per year divided between the investor as interest and the salesperson as commission. Most investors earned interest of 12 per cent to 14 per cent.

The NBSC staff are concerned about the information provided by CTIC. The NBSC staff allege that the offering memorandum filed by CITCAP on Jan. 23 did not contain adequate information for the investors to make an informed decision.

"In today's turbulent market conditions, it is critical that those selling investments be particularly conscious of providing adequate information to potential investors," said Rick Hancox, NBSC executive director. "Investors need to be able to determine with confidence, and advice from a professional, that the investment is sound. We always warn investors, if it looks too good to be true, it probably is."

The NBSC staff allege that Pierre Emond, Armel Drapeau, Jules Bossé and Robert St. Onge were engaged by CTIC to solicit investors and sell its securities in New Brunswick. These individuals are not currently named in this matter.

At the April 15 motion, NBSC staff will request that appropriate interim sanctions be imposed upon CTIC, CITCAP and Gauthier. Documentation containing the NBSC staff's allegations may be viewed on the NBSC website.

Investors should contact the NBSC if they have questions about the company or individuals named in this release. Please call 1-866-933-2222 or visit the NBSC website.

09/03/9

MEDIA CONTACT: Michelle Robichaud, communications officer, New Brunswick Securities Commission, 506-643-7045.

09/03/19