Disclaimer
An order that is made regarding a licence holder reflects a situation at a particular point in time. The status of a licence holder can change. Readers should check the current status of a person’s or entity’s licence on the Licensing Link section of FSRA’s website. Readers may also wish to contact the person or entity directly to get additional information or clarification about the events that resulted in the order.
Financial Services Regulatory Authority of Ontario

IN THE MATTER OF the Loan and Trust Corporations Act, R.S.O. 1990, c. L.25, as amended (the “Act”), in particular sections 192 and 213;

AND IN THE MATTER OF Mark Dennis Carter (“Carter”), Earthink Incorporated (“Earthink”), and Earthink GmbH (“Earthink Germany”).


MINUTES OF SETTLEMENT

    PART I - INTRODUCTION

  1. Neither Carter, Earthink, nor Earthink Germany (collectively the "Unregistered Entities") are registered under the Act.

  2. The Unregistered Entities and the Executive Vice President, Legal and Enforcement ("EVP") by delegated authority from the Chief Executive Officer ("CEO") of the Financial Services Regulatory Authority of Ontario ("FSRA"), (collectively the "Parties") wish to resolve this matter on consent and without a hearing before the CEO.

    3. PART II - AGREED FACTS

  3. FSRA received a complaint dated April 23, 2020, from SW about the conduct of LCM. LCM was licenced under the Act as a life insurance and accident and sickness agent.

  4. SW's complaint stated that LCM, in the capacity of SW's investment advisor, had introduced SW to a financing opportunity that had resulted in SW losing the $55,000 she loaned.

  5. The promoter of the lending opportunity was Carter, a licenced life insurance and accident and sickness agent (licence #01068957). Carter's licence was valid between December 20, 2001, and December 19, 2021. He is no longer licensed under the Act.

  6. An order imposing an administrative penalty on Carter was issued under the Insurance Acton May 17, 2022.

    7. (a) Earthink and Earthink Germany

  7. Earthink is an Ontario corporation (Ontario Corporation Number 2409459). Carter is the President of Earthink and the sole director, officer and shareholder. Earthink does not own shares in any other business or project.

  8. Earthink Germany is a limited liability company registered in Germany. Carter is the President and sole shareholder of the company.

  9. Earthink Germany owns approximately 50% of the shares in Claystone GmbH ("Claystone Germany") and 50% of the shares in Claystone Masonry Ply Ltd ("Claystone Australia"). Claystone Germany owns certain mining rights in Australia.

  10. Earthink and Earthink Germany had little to no active business operations of their own. Both businesses were focused on investing in projects undertaken by other entities.

  11. In particular, Earthink and Earthink Germany invested in a project operated by Claystone Germany and Claystone Australia (collectively the "Claystone Project").

    12. (b) Soliciting of Loans for Earthink and Earthink Germany

  12. Carter solicited members of the public to make loans in both Earthink and Earthink Germany. Carter gave potential lenders printed materials to review, met with potential lenders in one-on-one meetings and did presentations to groups of people about Earthink and Earthink Germany.

  13. Earthink has a public website which identifies projects in which potential clients can make loans. Carter stated that the owner of the website was either himself or Earthink Germany.

  14. Information provided by Carter shows that there were at least 33 loans to Earthink and Earthink Germany by 41 lenders between August 2015 and October 2016. Some loans were made jointly by two lenders. These loans total $1,866,000 and all but $200,000 came from lenders with Ontario addresses. There were at least $375,000 in additional loans to Earthink and Earthink Germany that were not included in the information provided by Carter to FSRA.

  15. Carter solicited the vast majority of lenders.

  16. Most of the loan agreements reviewed by FSRA were signed by Carter. Carter reported that the Managing Director of Earthink Germany would sign the loan agreements for Earthink Germany if he was available, otherwise Carter would sign. In at least two cases Carter signed loan agreements on behalf of Earthink Germany as 'President, Earthink GmbH'.

  17. Where loans were made to Earthink, Earthink would sometimes enter into a formal loan agreement with Earthink Germany before providing the loaned funds. In other cases, the loan funds were provided to Earthink Germany by Earthink without a formal loan agreement in place, but with the understanding that the same terms from the previous written loan agreements would apply.

  18. Approximately 8 of the 41 lenders who loaned money to Earthink and Earthink Germany were corporate entities. Most of these corporate entities were family corporations or professional corporations. The remainder of the lenders were individuals or family members making joint loans. Of the 41 lenders, all but two had Ontario addresses, with the remaining lenders having Nova Scotia addresses.

  19. Most of the lenders who made loans to Earthink and Earthink Germany have not been repaid, nor have they received interest or other "bonus" payments that they are entitled to under the terms of the loans.

    20. PART Ill - NON-COMPLIANCE WITH THE ACT

  20. By engaging in the conduct described above in Part II, the Unregistered Entities admit and acknowledge that they breached the Act as follows:

    1. Conducting, undertaking or transacting in Ontario the business of a loan corporation contrary to section 213(1) of the Act;

    2. Soliciting the business of a loan corporation contrary to section 213(6) of the Act; and

    3. Undertaking transacting or soliciting in Ontario any part of the business of a loan corporation contrary to section 213(7) of the Act.


    21. PART IV - TERMS OF SETTLEMENT

  21. Earthink Canada and Earthink Germany agree that Carter has the authority to enter into this settlement on their behalf.

  22. The Unregistered Entities admit the facts contained in Part II.

  23. The Unregistered Entities acknowledge and agree that they have been given the opportunity to seek independent legal advice and have done so and are entering into these Notice and Minutes of Settlement ("Minutes") voluntarily, understanding the consequences of doing so.

  24. The unregistered entities acknowledge and agree that the failure to comply with any part of these Minutes and/or the Order referred to herein may result in immediate regulatory action, including but not limited to a prosecution under the Provincial Offences Act.

    25. (a) Issuance of Order

  25. The Unregistered Entities acknowledges that, upon execution of these Minutes by both Parties, the order attached as Schedule "A" to these Minutes (the "Order") will be issued pursuant to section 192(1) of the Act.

  26. The Order shall include the following terms which shall take effect upon execution of the Minutes by the Parties. The Unregistered Entities shall:

    1. immediately cease the unregistered conduct set out in Part Ill, paragraph 20 above and provide FSRA with written confirmation that they have done so;

    2. not, directly or indirectly, extend or renew any existing loans made to Earthink Canada, Earthink Germany or any of the projects funded by Earthink Canada or Earthink Germany;

    3. within 30 days of the execution of this settlement, provide the following information, in writing, to all lenders in Earthink and Earthink Germany:

      1. the original amount of their loan and the date upon which the loan was made;

      2. the term of the original loan and any extensions and that none of the Unregistered Entities may enter into any further loans or loan extensions;

      3. the current due dale of the loan;

      4. interest due on the loan;

      5. any payments made to the investor on the loan;

      6. the amount of the loan and any interest payments outstanding;

      7. an ETA on when the loan will be repaid and when interest will be paid; and

      8. that the Unregistered Entities were subject to a FSRA investigation, that Earthink Canada and Earthink Germany were found to not be registered loan corporations in Ontario, that Carter solicited on behalf of Earthink Canada and Earthink Germany, and enclosing a link to the FSRA Order and the Settlement.


    4. provide FSRA with a copy of all communications (to lenders identified by FSRA) within 5 days of the communication being made; and

    5. provide FSRA with such further information as it may request arising from the information provided to lenders above.


  27. The Unregistered Entities acknowledge receiving the notice required under section 192(1) of the Act and waive their right to a hearing under section 192(2).

    28. (b) Process for Execution of Settlement

  28. The Unregistered Entities acknowledge that these Minutes are not binding on the EVP until signed by the EVP.

  29. These Minutes may be executed in counterparts, and may be executed and delivered by facsimile or e-mail, and all such counterparts and facsimiles or e-mails, as applicable, shall together constitute one and the same agreement.

  30. The Parties agree that the EVP will issue an Order in the form attached as Schedule "A" to these Minutes.

  31. The Parties accept and understand that these Minutes and any rights within the Minutes shall enure to the Parties and to any successors or assigns of the Parties.

    32. (c) Disclosure of Minutes and Order

  32. The Parties will keep the terms of these Minutes and the Order confidential until the Order is issued, except that the EVP shall be permitted to disclose the Minutes and the Order within FSRA.

  33. If either of the Parties do not sign these Minutes or the EVP does not issue the Order:

    1. These Minutes, the Order, and all related discussions and negotiations will be without prejudice to FSRA and the Unregistered Entities; and

    2. FSRA and the Unregistered Entities will each be entitled to all available proceedings, remedies and challenges, including proceeding to a hearing of the allegations .. Any proceedings, remedies and challenges will not be affected by these Minutes, the Order, or any related discussions or negotiations.


  34. Upon issuance of the Order:

    1. The Unregistered Entities agree that these Minutes and the Order form part of their administrative record for the purposes of any future licensing decision or as an aggravating factor in respect of a future administrative penalty or prosecution against them or any affiliated entities;

    2. The Unregistered Entities acknowledge that these Minutes and the Order are public and will be published by FSRA on its public website (or that of its successor) and that FSRA may issue a press release that summarizes these Minutes and the Order; and

    3. The Unregistered Entities agree not to make representations to any member of the public or media or in a public forum that are inconsistent with these Minutes or the Order.


    35. (d) Further Proceedings

  35. Whether or not the Order is issued, the Unregistered Entities will riot use, in any proceeding, these Minutes or the negotiation or process of approval of these Minutes as the basis for any attack on FSRA's jurisdiction, alleged bias, alleged unfairness, or any other remedies or challenges that may be available.

  36. Upon issuance of the Order: j

    1. The Unregistered Entities waive all rights to a hearing before the CEO regarding the notice;

    2. The Unregistered Entities waive all rights to a judicial review or appeal of the Order;

    3. The EVP agrees that FSRA will not take any further proceedings against the Unregistered Entities arising solely from the facts contained in Part II of these Minutes, unless facts not disclosed by the Unregistered Entities come to the attention of FSRA that are materially different from those contained in Part II of these Minutes or the Unregistered Entities fall to comply with any term in the Order; and

    4. The Unregistered Entities agree that should they fail to comply with any term in these Minutes or the Order, FSRA is entitled to bring any proceedings available to it.


DATED at Bradford, Ontario, Dec 19, 2022

Mark Dennis Carter

DATED at Bradford, Ontario      Dec 19, 2022

Earthink Incorporated

DATED at Bradford, Ontario    Dec 19, 2022

Earthink GmbH

DATED at Bradford, Ontario,

Name of Witness

DATED at Bradford, Ontario, Jan 6, 2023

Original signed by

Jordan Solway
Executive Vice President, Legal and Enforcement
Financial Services Regulatory Authority of Ontario

By delegated authority from the Chief Executive Officer

 

 

Financial Services Regulatory Authority of Ontario

APPENDIX A

IN THE MATTER OF the Loan and Trust Corporations Act, R.S.O. 1990, c. L.25, as amended (the “Act”), in particular sections 192 and 213;

AND IN THE MATTER OF Mark Dennis Carter (“Carter”), Earthink Incorporated (“Earthink”), and Earthink GmbH (“Earthink Germany”).

 

COMPLIANCE ORDER

Earthink is an Ontario corporation (Ontario Corporation Number 2409459). Carter is the President of Earthink and the sole director, officer and shareholder.

Earthink Germany is a limited liability company registered in Germany. Carter is the President and sole shareholder of the company.

Neither Carter, Earthink, nor Earthink Germany (collectively the "Unregistered Entities") are registered under the Act.

Pursuant to section 192(1) of the Act, the Executive Vice President, Legal and Enforcement ("EVP"), by delegated authority from the Chief Executive Officer of the Financial Services Regulatory Authority of Ontario ( "FSRA"), provided a notice to the Unregistered Entities of his intention to make a compliance order. The Unregistered Entities acknowledge receiving the notice required under section 192(1) of the Act and waive their right to a hearing under section 192(2) of the Act.

This order is made pursuant to a settlement entered into by Carter, Earthink, Earthink Germany and the EVP.

ORDER

It is hereby ordered that Mark Dennis Carter, Earthlink Canada, and Earthlink Germany:


  1. immediately cease the unregistered business of a loan corporation in Ontario, contrary to section 213(1) of the Act, and provide FSRA with written confirmation that they have done so;

  2. not, directly, or indirectly, extend or renew any existing loans made to Earthlink Canada, Earthlink Germany or any of the projects funded by Earthlink Canada or Earthlink Germany;

  3. within 30 days of the execution of the settlement, provide the following information, in writing to all lenders in Earthlink and Earthlink Germany:

    1. the original amount of their loan and the date upon which the loan was made:

    2. the term of the original loan and any extensions and confirmation that none of the Unregistered Entities may enter into any further loans or loan extensions;

    3. the current due date of the loan;

    4. interest due on the loan;

    5. any payments made on the loan;

    6. the amount of the loan and any interest payments outstanding;

    7. an ETA on when the loan will be repaid and when interest will be paid;

    8. that the Unregistered Entities were subject to a FSRA investigation, that Earthlink Canada and Earthlink Germany were found to not be registered loan corporations in Ontario, that Carter was found to have solicited on behalf of Earthlink Canada and Earthlink Germany, and enclosing a link to the FSRA Order and Settlement.

  4. provide FSRA with a copy of all communications (to lenders identified by FSRA) within 5 days of the communication being made; and

  5. Provide FSRA with such further information as it may request arising from the information provided to lenders above

DATED at Toronto, Ontario,

Jordan Solway
Executive Vice President, Legal and Enforcement

By delegated authority from the Chief Executive Officer

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