Interim Cease And Desist Order  and Notice Of Proposed Cease And Desist Order Against Wilton Neale

REGARDING the Insurance Act, R.S.O. 1990, Chapter I.8, as amended (the "Act"), in particular section 441

AND REGARDING Wilton Neale and 360 Degree Financial Services Inc.

Interim Cease And Desist Order

And

Notice Of Proposed Cease And Desist Order

Wilton Neale ("Neale") holds a licence as a life insurance and accident and sickness insurance agent under the Act. 360 Degree Financial Services Inc. ("360 Degree Financial") holds a corporate life insurance agency licence under the Act.

INTERIM CEASE AND DESIST ORDER

The Superintendent of Financial Services ("Superintendent") is of the opinion that Neale and 360 Degree Financial committed an unfair or deceptive act or practice by knowingly procuring by fraudulent representations, payment or the obligation for payment of any premium on an insurance policy; and by making a false or misleading statement or representation in the solicitation of insurance. A notice of proposal to order Wilton Neale and 360 Degree Financial to cease and desist engaging in the business of insurance is set out below.

Pursuant to section 441(4) of the Act, if the Superintendent is of the opinion that the interest of the public may be prejudiced or adversely affected by any delay in the issuance of a permanent order, the Superintendent, without prior notice, may make an interim order which shall take effect immediately and which shall become permanent as against each and every named person unless within 15 days such person requests a hearing before the Financial Services Tribunal ("Tribunal").

The Superintendent is of the opinion that the interest of the public may be prejudiced or adversely affected by any delay in the issuance of a permanent order for the following reasons:

  1. Neale is the holder of life insurance agent licence # 93005664, which will expire on June 9, 2010. Neale is the sole director of 360 Degree Financial, a life insurance corporation with a corporate agency licence #31906M. That licence will expire on March14, 2009.

  2. In or about mid-January, 2009, the Superintendent received two complaints regarding the activities of Neale and 360 Degree Financial and conducted an investigation. The investigation revealed the following.

  3. Neale has sole or primary control over the accounts of 360 Degree Financial.

  4. Neale and other representatives of 360 Degree Financial encourage clients to take out investment loans from AGF Trust Company (“AGF Trust”). The loan monies are then advanced to 360 Degree Financial for the purpose of being further advanced to the investment designated by the client.

  5. GT and MO are clients of Neale and of 360 Degree Financial.  In or about September 2007, GT obtained an investment loan of $300,000.00 from AGF Trust. AGF Trust advanced the loan monies to 360 Degree Financial. GT filled out an application for an Empire Life variable insurance product and instructed Neale and 360 Degree Financial to invest the loan with Empire Life.

  6. Shortly thereafter, GT began to receive $3,300.00 per month from 360 Degree Financial, which Neale informed GT were the interest payments earned on GT’s investment.

  7. The payments abruptly stopped in December 2008.

  8. In January 2009, Empire Life confirmed that it holds no account in the name of GT and that no investment was made in GT’s name at Empire Life.

  9. In September 2008, MO applied for a $50,000.00 investment loan from AGF Trust. A representative of 360 Degree Financial advised MO to invest $20,000.00 of the loan in a variable insurance contract at Empire Life and the remainder in an RSP with another institution. The loan was approved by AGF Trust. MO completed an application for the Empire Life product. The loan amounts were transferred to 360 Degree Financial.

  10. In or about December 2008, MO learned that 360 Degree Financial had not transferred the funds to Empire Life or the other financial institution. Empire Life has confirmed that, while it had received MO’s application for variable insurance contracts, it holds no account in the name of MO and that no actual funds were advanced in MO’s name to Empire Life.

  11. Neither GT nor MO has been able to contact Neale.

  12. A life insurance agent working for 360 Degree Financial has indicated that he has eight other clients for whom he arranged loans totalling $170,500.00 from AGF Trust. The loans had been approved by AGF Trust and forwarded to 360 Degree Financial. The funds were not subsequently advanced by 360 Degree Financial to the investment institution, as per the clients’ instructions. The institution, Marketing Concepts Group Inc., has confirmed that no monies had been received in respect of those clients.

  13. As of January 2009, 360 Degree Financial’s office appears to be closed. The life insurance agent referred to above has not been able to contact Neale and believes that Neale may have left the country.

  14. Neale, through his agency 360 Degree Financial, has been engaged in a practice of fraudulent misrepresentation, by selling insurance products of significant face value to clients and misappropriating the purchase monies for himself. He has made false or misleading statements in purporting to sell insurance products that were never actually purchased. These are unfair or deceptive acts or practices under the Act.

  15. Neale and his agency pose an imminent and significant risk to the public. That risk will continue as long as Neale and 360 Degree Financial are authorized to engage in or carry on the business of insurance in Ontario. Neale could continue his fraudulent activities at any point in time.

  16. Accordingly, the Superintendent is of the opinion that an order requiring Neale and 360 Degree Financial to cease engaging in or carrying on the business of insurance in Ontario must be immediately issued.

INTERIM CEASE AND DESIST ORDER

Effective this date, pursuant to section 441(4) of the Act, the Superintendent orders that Neale, 360 Degree Financial, and any agents or representatives thereof:

  1. Immediately cease engaging in or carrying on the business of insurance in the Province of Ontario;

  2. Immediately cease collecting money or anything else of value from any member of the public, in exchange for or in connection with the sale of insurance products in Ontario;

  3. Immediately cease withdrawing, transferring or dealing in any way whatsoever with any funds held in the accounts of 360 Degree Financial or elsewhere that were obtained from, or originate in funds obtained from, persons resident in Ontario in connection with the sale of insurance products to those persons;

  4. Immediately cease soliciting the sale of insurance products of any form in Ontario;
  5. Immediately cease advertising in any form in Ontario;

  6. Immediately provide the Superintendent with a written list of all insurance products for which applications have been received and/or which were sold to persons resident in Ontario within the previous eighteen (18) months, along with a complete accounting satisfactory to the Superintendent of all funds received from those persons and all payments made to or on behalf of such persons;

  7. Immediately mail to all clients in Ontario a copy of this Cease and Desist Order and provide evidence satisfactory to the Superintendent that this mailing was done.

TAKE NOTICE THAT the above Interim Cease and Desist Order shall become permanent unless within 15 days after you receive it, you make a written request for a hearing before the Tribunal.

AND TAKE NOTICE THAT if a hearing is requested, the Superintendent may extend the interim cease and desist order until the hearing before the Tribunal is concluded.

TAKE FURTHER NOTICE THAT section 447(2)(b) of the Act provides that any person who fails to comply with any order made under the Act is guilty of an offence and liable on a first conviction to a fine of not more than $100,000 and on each subsequent conviction to a fine of not more than $200,000.

Section 447(4) of the Act provides that every director, officer and chief agent of a corporation who caused, authorized, permitted or participated in a corporation committing an offence, or who fails to take reasonable care to prevent a corporation from committing an offence, is also guilty of an offence and is liable on a first conviction to a fine of not more than $100,000 and on each subsequent conviction to a fine of not more than $200,000.

Section 447(5) of the Act provides that where a person is convicted of an offence under the Act, the court making the conviction may, in addition to any other penalty, order the person convicted to make compensation or restitution in relation to the offence.

NOTICE OF PROPOSED CEASE AND DESIST ORDER

 

The Superintendent is of the opinion that Neale and 360 Degree Financial committed an unfair or deceptive act or practice by knowingly procuring by fraudulent representations, payment or the obligation for payment of any premium on an insurance policy; and by making a false or misleading statement or representation in the solicitation of insurance. The particulars are set out in the Report of the Superintendent which will be served with this Notice.

 

TAKE NOTICE THAT pursuant to section 441(2) of the Act the Superintendent intends to order Neale and 360 Degree to:

  1. Immediately cease engaging in or carrying on the business of insurance in the Province of Ontario;

  2. Immediately cease collecting money or anything else of value from any member of the public, in exchange for or in connection with the sale of insurance products in Ontario;

  3. Immediately cease withdrawing, transferring or dealing in any way whatsoever with any funds held in the accounts of 360 Degree Financial or elsewhere that were obtained from, or originate in funds obtained from, persons resident in Ontario in connection with the sale of insurance products to those persons;

  4. Immediately cease soliciting the sale of insurance products of any form in Ontario;

  5. Immediately cease advertising in any form in Ontario;

  6. Immediately provide the Superintendent with a written list of all insurance products for which applications have been received and/or which were sold to persons resident in Ontario within the previous eighteen (18) months, along with a complete accounting satisfactory to the Superintendent of all funds received from those persons and all payments made to or on behalf of such persons;

  7. Immediately mail to all clients in Ontario a copy of this Cease and Desist Order and provide evidence satisfactory to the Superintendent that this mailing was done.

WITHIN 15 DAYS after receiving this Notice, you may request in writing that the Tribunal hold a hearing on whether or not a Cease and Desist Order should be issued.

IF NO HEARING IS REQUESTED within 15 days, the Superintendent may make a Cease and Desist Order in accordance with this Notice, which shall take effect on the date set out in the Order.

A request for a hearing should be directed, in writing, to:

Financial Services Tribunal
5160 Yonge Street
Box 85
Toronto ON  M2N 6L9         

Attention: 
Registrar                                                              
Fax: 416.226.7750

ISSUED AT the City of Toronto,  February 10, 2009

 

Robert Christie
Chief Executive Officer and
Superintendent of Financial Services

 

TO:                

Wilton Neale
4 Rovinelli Road
Toronto ON M1B 4L6

AND TO:      

360 Degree Financial Services Inc.
231-80 Nashdene Road
Toronto ON  M1V 5E4

360 Degree Financial Services Inc.
701- 2075 Kennedy Road
Toronto ON  M1T 3V4

AND TO:      

Larissa Easson
Counsel
Financial Services Commission of Ontario
5160 Yonge Street, Suite 1700
Toronto ON  M2N 6L9
Tel: 416.226.7842
Fax: 416.590.7556