Former Beleave CFO Bojan Krasic, left, speaks to marketer Follow The Money Investor Group on YouTube last November.

The British Columbia Securities Commission (BCSC) announced Wednesday it will not punish a marijuana company involved in an alleged, widespread illegal share distribution scheme.

The BCSC will not pursue trade orders against B.C.-registered, Ontario-based junior issuer Beleave Inc. in exchange for admitting to securities investigators it “participated in conduct that is abusive to B.C.’s capital markets” and is taking steps to remedy its operations.

“Companies need to know if they clean house and take appropriate steps to find out what’s wrong then there is significant opportunity to improve their outcomes with the BCSC,” Peter Brady, executive director of the BCSC, told Glacier Media.

The settlement implicates a number of stock promoters and chartered accountants, however the commission has made no indication, to date, that they are being, or will be, pursued separately.

By issuing $10 million worth of securities last April and June to purported consultants belonging to the Bridgemark Group (more than two dozen respondents to a BCSC notice of hearing) Beleave was able to issue a news release about interest in the company — a significant signal to future investors.

But the CSE-traded company — named as a respondent last November, along with 10 other companies, to a future BCSC hearing — returned $7.5 million through pre-paid fees to the purported consultants, even though they did not provide any services, noted a BCSC statement.

The consultants then “immediately resold most of their shares at prices below what they had paid,” resulting in significant profits.

The shady shares — which quickly ended up in the hands of retail investors — have devalued and diluted the company stock, which has lost two-thirds of its value since the April and June share sales.

The commission did not name the Beleave executives responsible for the so-called consulting contracts.

In February 2019, Beleave announced a “refresh” of its board of directors. Then CEO Andrew Wnek, CFO Bojan Krasic, and directors Mark Myles and Mark Heselton are said to have resigned. Only Bill Panagiotakopoulos survived from the time the deals were made with the purported consultants. He is now CEO.

Company spokesperson Kevin Keagan told Glacier Media on Thursday that Beleave immediately hired independent lawyers to determine the nature of the allegations — a matter the BCSC said was a mitigating factor in unhooking the leash on their investigation of the company.

Keagan said Panagiotakopoulos, the remaining executive who was the chief operating officer at the time, was not aware of the consulting contracts, which were arranged by Krasic.

Keagan said registered brokers introduced the consultants to the company. In another case before the courts, Preveceutical Medical Inc., also a respondent to the BCSC hearing, is suing several consultants alleging a “conspiracy.”

Preveceutical names Mackie Research’s Robert Barber in its suit as someone who introduced CEO Stephen Van Deventer to convicted securities fraudster Aly Babu Mawji.

Keagan, new to Beleave, said he understood the Bridgemark Group to be involved in hundreds of millions of dollars worth of transactions over recent years.

As for Beleave, “the extent of agreements was not made known to the entire board,” Keagan said, conceding the contracts were immense for such a small company.

“Bill was unaware of the intricacies of what those contracts were. He wasn’t into the day-to-day component of that,” explained Keagan.

Glacier Media could not reach Wnek, a certified professional accountant, for comment.

Krasic told Glacier Media, when contacted Thursday, he was advised by his counsel not to speak about the matter.

Keagan said the company never found “any evidence the CFO and CEO did anything other than make bad business decisions.

“Bojan (Krasic) made decisions that he thought were in the best interests of the company.”

Krasic previously told the Ottawa Citizen on April 3, 2018 the company had no interest in going into the “grey area of promotion” in the months before legalization.

Interim financial statements for the company state: “During the nine months ended December 31, 2018, the company issued 28,185,714 common shares to certain directors of the company as bonus compensation valued at $5,914,000 based on the market price of the common shares on the date of issuance.”

Those shares would have been issued in late 2018.

Keagan said the company has taken back “awards associated with performance.”

The company has yet to release its audited financial statement this year.

The 5.4 million shares were sold for either $1.75 or $2, to: Saiya Capital Corp. ($345,000), Cam Paddock Enterprises Inc. ($3 million), Kenneth Tollstam ($655,000), BridgeMark Financial Corp. ($2 million), Detona Capital Corp. ($1.5 million), Keir MacPherson ($500,000), Northwest Marketing and Management Inc. ($500,000) and Sway Capital Corp. ($1.5 million).

Bridgemark Financial Corp. is directed by West Vancouver resident Anthony Jackson. Sway Capital Corp. is directed by Von Rowell Torres and beneficially owned by David Schmidt. Saiya Capital is also directed by Tara Haddad and Northwest Marketing is managed by Mawji, according to the BCSC.

Jackson is a prolific penny-stock promoter who has business connections to several respondents, many of whom share office space with BridgeMark. Tollstam, also an accountant and former City of North Vancouver chief administrative officer, is his father-in-law. Haddad, an accountant, is his sister. Schmidt is named in an ongoing Alberta Securities Commission investigation alongside Jackson’s wife – realtor Lisa Jackson – related to Prize Mining consulting contracts.

Saiya, Haddad, Schmidt and BridgeMark Financial Corp. had their temporary trade orders lifted in January because a panel had deemed Brady had not provided enough evidence against them to maintain the orders.

It remains to be seen how Beleave’s admission will affect such orders, which were extended last month for another 12 months.

“This settlement does not speak to those individuals. It’s not relevant to what may or may not happen to them,” said Brady. “It is not a statement that nothing further is needed in relation to anyone else.”

When asked what would happen if every respondent simply admitted their wrongdoing and declared their operations reformed, Brady said the BCSC would consider such efforts on an individual basis.

gwood@glaciermedia.ca