Her Majesty the Queen v. Lowman et al.

[Indexed as: R. v. Lowman]

Ontario Reports

Ontario Court of Justice

West J.

June 16, 2017

138 O.R. (3d) 760 | 2017 ONCJ 433

Case Summary

Securities regulation — Offences — Accused charged with trading in securities without registration, issuing securities without filing prospectus and representing that securities would be listed on exchange with intention of effecting trade — Accused developing website for new company which stated that company would be listed on exchange in future — Website making it clear that company was not currently listed and that there were no shares available for purchase — Unregistered sales representatives defrauding private investors by selling them non-existent shares in company — Evidence not establishing any connection between accused and sales representatives or investors or that website was created for purpose of exciting reader to purchase shares — Creation of website not constituting act in furtherance of trade — Accused not trading in or issuing security and not making representation with intention of effecting trade — Charges dismissed.

C held a sub-licence for waste to energy technology. He entered into a joint venture agreement with L to form a company and ultimately to list its shares on a stock exchange in order to pursue opportunities in Asia. B was hired to design a website for the new company, Asia Global. J, an employee of one of L's companies, provided B with information for the content of the website. The website stated that Asia Global would be affecting a stock exchange listing of its common shares in the future. When the parties discovered that the name Asia Global was already registered by another company, the name was changed to Asia Power. The website content for Asia Power stated that Asia Power would be seeking a listing of its common shares in an EU registered stock market. Unregistered sales representatives (who had not been identified) contacted private investors and defrauded them by selling them non-existent shares in Asia Global. L and J were charged with trading in securities without the required registration contrary to s. 25(1) of the Ontario Securities Act, R.S.O. 1990, c. S.5, issuing securities without having filed a prospectus contrary to s. 53(1) of the Act, and representing that securities would be listed on an exchange with the intention of effecting a trade, contrary to s. 38(3) of the Act.

Held, the charges should be dismissed.

There was no direct or circumstantial evidence of any connection between the accused and the sales representatives or the private investors, no evidence of any connection between the accused and the impugned sale of Asia Global or Asia Power shares, and no evidence that the accused took any steps in furtherance of the sale or disposition of the shares, such as preparing promotional materials. The fact that the purported sales representatives included the Asia Global e-mail address and contact information from the website in their promotional material did not demonstrate a connection between the sales representatives and the accused. There was an equally reasonable inference available on the evidence, namely, that the sales representatives found the Asia Global website, saw an opportunity and created a scenario of their companies being a preferred underwriter of Asia Global pre-IPO shares. Both the Asia Global and the Asia Power websites made it clear that the company was not currently listed on a stock exchange and that there were no shares available for purchase. The evidence did not establish that the websites were created for the purpose of exciting the reader to purchase shares. The creation of the websites did not in itself constitute an act in furtherance of trading. There was nothing on the Asia Global website which would support a finding that the accused were promoting the sale or disposition of shares. The accused had no knowledge that non-existent shares were being sold. The OSC staff had not proved beyond a reasonable doubt that the accused traded in or issued a security. As for the offence under s. 38(3) of the Act, while the website clearly indicated that the company would be effecting a stock exchange listing of its common shares, the OSC staff had failed to prove beyond a reasonable doubt that the representation concerning the future listing of the company on a stock exchange was made with the intention or purpose of effecting a trade in a security.

Factual Background

[5] Cleworth was involved with a waste to energy company, Eco-eight, that had licensed a specific technology from another company, EITI International. Eco-eight was involved with an ongoing project in Madagascar and was seeking opportunities in Asia. Cleworth testified he had recently been given a commitment letter from the government of Nepal to start up a waste to energy facility in that country.

[6] In the summer of 2012, Cleworth told Igbal about the waste to energy technology his company had a licence for and his need to raise money in order to get the project off the ground. Igbal told Cleworth he knew someone who was in the business of raising money for start-up companies and offered to make an introduction. Igbal also believed he personally could assist with his contacts in Asia in terms of raising capital and wanted to become involved in the project.

[7] Igbal introduced Cleworth to Lowman, who owned Saxon Securities. In late July 2012, it was agreed between Cleworth and Lowman to move forward with raising capital for the waste to energy project by incorporating a new company, seeking private investment as well as ultimately listing this new company on a stock exchange. A joint venture agreement, dated July 30, 2012, was signed between Lowman's company, Euroex Ventures Ltd., and EITI.EEM, in which Cleworth was a partner. Cleworth and Lowman signed the agreement.

[8] The joint venture agreement between Euroex and EITI.EEM (Eco-8) is specific as to what Eco-8's role would be:

E8 agrees to provide and do all things necessary to effect the formation and organization of Bermco and all necessary documents and information required by Bermco in order to effect a successful listing of its shares onto the BSX.

[9] The joint venture agreement is specific as to what Euroex's role would be:

Euroex shall arrange for the formation, organization and listing of the shares of Bermco onto the BSX, including: all corporate, legal, accounting, audit, brokerage, exchange, sponsor and consulting fees pertaining to the said listing.

[10] This agreement was to facilitate the process of the incorporation and development of a company, Bermco, and to obtain a public listing of its shares onto the Bermuda Stock Exchange and to facilitate the commercialization of the first Municipal Waste to Power Technology ("MSW PT") project in Madagascar.

[11] Euroex also agreed to provide a loan facility to Eco-8 in the amount of $150,000. The bank records contained in exhibit 3 reflect that Lowman paid to Cleworth and Eco-8, $80,000.

[12] This new company went through a number of conceptual changes with different company names and structures. It was first called Bermco, being a proposed Bermuda company. Shortly after this, approximately six weeks later, the name was changed to Enviro Global NRG. At the end of August 2012, the name was changed again to Asia Global Energy. On October 10, 2012, the project's name, according to Cleworth and Igbal, was finally changed to Asia Power Solutions, a company incorporated in the British Virgin Islands. The name Asia Global was apparently registered with an existing company and could not be used. Both Cleworth and Igbal described the different company names as part of the process in obtaining registration in the British Virgin Islands on the GXG Exchange.

[13] Buchanan was hired in June or July 2012 to design a website for the waste to energy project. His company was called Anju Designs. Buchanan was already designing websites for other projects Saxon Securities and Lowman were involved in. Jarrett acted as the person who worked with Buchanan to develop the websites by providing information for the content.

[14] Initially, Buchanan worked on designs for Enviro Global NRG, creating logos and colouring once the design was approved. There were a number of different websites created, which were determined by the name of the company behind the project. When the name Enviro Global NRG was changed to Asia Global, Buchanan created the website for Asia Global. When it was discovered the name Asia Global was already registered, the name of the waste to energy project changed to the final name of Asia Power Solutions. The information for the websites was provided by Jarrett, Cleworth or Igbal. The same content was tweaked as the process proceeded. All of the witnesses referred to the process of setting up the website as being an iterative process.

[15] Cleworth testified there was a timely need for a website as early as August 2012 and he wanted the website to be operational to allow representatives of the project to start following up with certain target countries, such as Nepal and India. It was hoped by August 2012 their company could attain financing through marketing the technology to governments in the hope of being granted a power purchase agreement, as was done with the Eco-eight project in Madagascar.

[16] The content of the Asia Global website was provided to Buchanan by Jarrett through word documents attached to e-mails. Buchanan did not know who prepared these documents. Both Cleworth and Igbal testified they contributed source material for much of the website's content. Cleworth agreed he provided information pertaining to the technology to be used and financial data. Igbal agreed he provided information on markets, contact information for the registered office and background on the directors. A number of e-mails between Cleworth and Igbal and Jarrett were filed as part of the agreed documents.

[17] The Asia Global website created by Buchanan was developed in a stage by stage process. Revisions to the content and layout were ongoing throughout its development. Even after the Asia Global website was live, Buchanan testified he continued to make changes. He also testified changes could have been made by those involved in the project as well, Lowman, Jarrett, Cleworth or Igbal. Buchanan testified the Asia Global and Asia Power Solutions websites were not secure and the information contained in them could be copied and pasted for use elsewhere by others not connected to the project.

[18] Buchanan testified the Asia Global website was not optimized for a search engine, which meant it would not be found automatically or easily by an individual doing a search engine search. The reality is that a number of the foreign investors were directed to the Asia Global website by the securities brokers who contacted them and those investors were able to view the website. This will be dealt with in more detail when the foreign investors' evidence is discussed.

[19] On September 5, 2012, Jarrett e-mailed Buchanan and provided him with a website address, www.asiaglobalenergy.com, and instructed Buchanan to make the website live. The website was publically accessible on Google and Jarrett had the access information for those involved in the project to make changes if they desired.

[20] On September 10, 2012, Jarrett confirmed by e-mail he would provide Buchanan the text for the Investors page later that day.

[21] Cleworth, in a letter to Igbal dated September 20, 2012, transferred the sub-licence held by Eco8 for the municipal waste to power technology to Asia Power Solutions.

[22] On September 25, 2012, Jarrett e-mailed Buchanan he needed changes to the technology content to be made ASAP and he attached Word documents containing the new content. On September 26, 2012, Jarrett sent an e-mail to Buchanan, which reiterated the importance of making the changes under the technology tab ASAP, providing further Word documents and advised the "site is live and being viewed daily". The e-mail continued: "these changes along with the ones mentioned in the previous email represent a significant change in the company's direction and business, therefore, I would like to get this modified as soon as humanly possible".

[23] Payment for Buchanan's work in developing the websites for Asia Global and Asia Power Solutions were approved and paid by Lowman from Saxon Securities.

[24] Cleworth testified documentation was put together on the website to make Asia Power, the ultimate name of the project, a real company. When he was referred to an e-mail from Jarrett, dated August 27, 2012, reflecting urgency in Cleworth providing him with information so he could get the website up and running, this was because they wanted to show they had a company and they could start following up in Nepal. According to Cleworth, the creation of the website had nothing to do with effecting "a sale or disposition" of shares of the company.

[25] In an e-mail dated August 28, 2012, Cleworth is referring to obtaining a power purchase agreement ("PPA") from a government interested in the waste to energy technology, which would be a 20-year commitment to purchase electricity. In the e-mail, Cleworth testified when he referred to brokers and private placements he was talking about raising funds in a private manner. This e-mail was referring to discussion they had about perhaps approaching the government in the Bahamas. Lowman's response indicated if they had a PPA it would be much easier to finance the company. He believed Lowman had contacts who were interested in investing in the company. The proposal to raise funds in the Bahamas never came to anything.

[26] The investors page of the Asia Global website reads as follows:

For Investor or Shareholder information please contact:

Asia Global Energy Ltd. 9th Floor, Platina G Block, Plot C 59 Bandra Kurla Complex-Platina 400 031 India

Asia Global Energy Ltd. shall be effecting a Stock Exchange listing of its common shares in conjunction with a dual listing on a European Stock Quotation System, Fourth Quarter 2012. This will provide a liquid trading market in addition to a real-time, online stock quote through the facilities of quotation services such as Yahoo Finance, Reuters and Bloomberg Markets. The effective date of the listings and the applicable ticker symbols will be posted on the website and announced via press release when formally assigned.

All investor or shareholder correspondence must be sent in writing to the address above or to the following email address

Investors@@ asiaglobalenergy.com

STOCK QUOTES:

Stock Symbol: Bloomberg: T.B.A.

Stock Symbol: Yahoo: T.B.A.

Stock Symbol: Reuters: T.B.A.

[27] Similar drafts of the investors page were found on Jarrett's computer for both Asia Global and Asia Power Solutions websites. The different versions of the investors page of the website clearly indicated Asia Global shares were currently not available to be traded as the company was not listed with a regulated stock exchange. The investors page advised the company was seeking a listing and if the listing was granted there would be a press release and the applicable ticker symbol would be posted on the website. The evidence demonstrated this occurred after the new company name, Asia Power Solutions Ltd, was registered in May 2013 on the GXG Exchange. The investor page indicated all investor queries must be sent in writing to either the company address or e-mail address listed.

[28] On September 25, 2012, Cleworth sent an e-mail to Lowman, which addressed his agreement to switch from Bermuda to the British Virgin Islands for the registration of Asia Global. He also discussed the need for a further infusion of money from Lowman and that he would be forwarding the sub-licence to Jarrett in a day or two.

[29] On October 4, 2012, Cleworth e-mailed Igbal and indicated it looked like the "deal may come off the rails". He indicated he was being blamed for not providing documents and the fact that the name Asia Global could not be used as it was already registered by another company. Consequently, the name had to be changed and nothing was registered yet. In his evidence, he testified he was told this by Lowman and Jarrett. On October 5, 2012, an exchange of e-mails between Jarrett and Igbal indicated the deal was still in process and further inquiries as to whether a company was being incorporated.

[30] On October 10, 2012, Asia Power Solutions Ltd. was incorporated in the British Virgin Islands by Anna Niemira ("Niemira"), by her company BGX Capital Corp., according to the laws of the British Virgin Islands. Cleworth testified Niemira was responsible for preparing Asia Power's application to be listed on the GXG stock exchange. Niemira was not called as a witness and Cleworth did not provide any evidence as to how Niemira registered Asia Power on the GXG Exchange. Cleworth testified it was Niemira who did the paperwork in terms of shares and share certificates for Asia Power after it was registered.

[31] On October 23, 2012, Cleworth, on behalf of Eco-8 Inc. and Igbal, on behalf of Asia Power Solutions Ltd, signed a sub-licence agreement respecting the waste to energy technology.

[32] Around October 25, 2012, Jarrett instructed Buchanan to change the name of the website to Asia Power Solutions Ltd ("Asia Power") from Asia Global. Buchanan testified the Asia Power website was identical to the Asia Global website. Content on this website was changed and revised and added to while it was live. There was no date indicated in any of the e-mails between Jarrett and Buchanan as to when this Asia Power website was made live. From the e-mails and Buchanan's invoices contained in the agreed documents, it is my view there is a reasonable inference these changes relating to Asia Power were made to the existing Asia Global website, particularly given the difference in the amount charged in August 2012 for the Asia Global website, $4,000 and the invoiced amount for the Asia Power website in October 2012 of $500. Buchanan was not questioned about what happened to the Asia Global website that had been live after he changed it over to Asia Power.

[33] On January 29, 2013, Buchanan was requested by Jarrett to take the Asia Power website offline. Buchanan was instructed to create a simpler, preliminary website and to preserve the original Asia Power website for later. Jarrett sent information as to content for Buchanan to put on the website, which included an investors page, almost identical to the Asia Global Investors page:

For Investor or Shareholder information please contact:

Asia Power Solutions Ltd.

187 Romina Drive

Concord, Ontario

L4K 4V3

Asia Power Solutions Ltd. shall be seeking a listing of its common shares to an E.U. regulated stock market in the first quarter of 2013. This will provide a liquid trading market in addition to a real-time online stock quote through the facilities of quotation services such as Bloomberg Markets. The effective date of the listing and the applicable ticker symbol will be posted on the website and announced via press release when formally assigned.

All investor or shareholder correspondence must be sent in writing to the address above or to the following email address:

Investors@@ asiapowersolutions.com

STOCK QUOTES:

Stock Symbol: Bloomberg: T.B.A.

[34] This new Asia Power website went live on the Internet on February 8, 2013, as indicated in Buchanan's e-mail dated February 11, 2013. In the e-mail correspondence, this site was referred to as a "preliminary" website.

[35] As part of the additional agreed statement of facts, filed as exhibit 8, it was agreed by counsel that the Asia Global and Asia Power Solutions Inc. websites, filed as exhibit 6, 6A, 7 and 7A, were captured on January 24, 2014. The investors page 1 on the Asia Power website was significantly different from previous investor pages produced during the trial. No evidence was led as to what, if any, significance should be given to this different investor page.

[36] An application to list the shares on the GXG First Quote market in the United Kingdom was filed in April 2013. The application was prepared by Niemira, through her company BGX Capital. No evidence was presented concerning whether Niemira was properly registered or what steps she took to obtain the listing for Asia Power. The evidence only disclosed that Asia Power was listed on the GXG First Quote market as of May 13, 2013. GXG Markets indefinitely suspended trading of Asia Power shares on July 12, 2013. Asia Power's class B shares were never publically traded. No evidence was presented respecting the reason(s) for Asia Power's shares being suspended.

[37] Seven private individuals were contacted to purchase shares in Asia Global by sales representatives, purportedly from investment brokerages. Persons holding themselves out as sales representatives from Rentier Capital Investments (RCI), IQ Division Holding Ltd. or Izard Quin Division Holding Ltd. (IQ Division), Summit Capital Management (Summit Capital), CPI Global Research (CPI) and Tokai Global Trading Ltd. made "cold calls" to these private investors, as none had dealt previously with these companies. The seven individuals who purchased Asia Global shares over the telephone resided in France (2), Germany, South Africa, Bosnia, the Netherlands and the United Kingdom.

[38] The investors were contacted at different times by the purported sales representatives concerning Asia Global. Metcalfe and Wilding, residents of France, were first contacted in January 2013 by representative of RCI. Ranchod, a resident of South Africa, was contacted by IQ Division in October/ November 2012. Sept, a resident of Germany, was first contacted by a representative of IQ Division in December 2012. Karahasanovic, a resident of Bosnia, was contacted by a representative of Summit Capital in early 2013. Kang, a resident of the United Kingdom, was contacted by CPI in November 2012. Koolen, a resident of the Netherlands was contacted by a representative of Tokai in November 2012.

[39] All of the purported investment brokerages were situated outside of Canada. Investors who dealt with RCI (two investors) and IQ Division (two investors) were later advised those companies had been purchased by Tokai Global Trading Ltd. One investor was contacted by Tokai directly.

[40] Five of the investors were directed to the Asia Global website by the sales representatives after the initial "cold calls" had been made. Investors who dealt with RCI and IQ Division were provided an RCI select report ("Global IPO report 2012") on Asia Global, which contained information not contained in the Asia Global website. The purported sales representatives advised the investors their company had been selected as a preferred underwriter of Asia Global Energy pre-IPO, which they advised would create outstanding short term gains. Two of the investors were not directed to the Asia Global website by the sales representatives and did not rely on it in making their decision to invest funds.

[41] None of the investors were ever provided shares in Asia Global by the purported sales representatives, although all of the investors wired funds to accounts in oversea jurisdictions, in accordance with the payment directions of the purported sales representatives. All investors were advised around May 2013 that Asia Global's name had been changed to Asia Power and that Asia Power shares were trading on the GXG Exchange. The purported sales representatives solicited the investors to purchase Asia Power shares and five of the investors did so. Even after the GXG Exchange suspended the trading of Asia Power shares, one of the investors purchased additional Asia Power shares after being solicited by the Tokai sales representative. The investors received share certificates for some or all of the securities they purchased but the share certificates were all for Asia Power Solutions.

[42] There is no evidence that any of the investors ever contacted the Asia Global e-mail address listed in the website for investors or shareholders. Buchanan was asked by Mr. Feasby if he had ever contacted the e-mail address of Asia Global and he testified he had not. No evidence was presented as to who was receiving investor queries through the email address on the website, if in fact there were any.

[43] In the agreed statement of facts, exhibit 5, three of the investors described how they contacted Asia Power through the e-mail address listed in the Asia Power website and they received confirmation of the number of Asia Power shares they held. No evidence was presented as to who responded to these investors, other than Cleworth's evidence that Niemira was doing the paperwork for the shares and share certificates. These e-mails were sent in April/May 2014 by Wilding; June 2014 by Karahasanovic and August 2015 by Kang. The principals of Asia Power Solutions Ltd. had changed as of January 2014 as evidenced in the Asia Power website capture by the OSC on January 24, 2014, when Cleworth's son, Jeffrey Cleworth ("J. Cleworth"), and his friend, Frank Sager ("Sager"), were listed as the corporate officers of Asia Power. An e-mail address for Cleworth's son was provided in the capture of the Asia Power website on January 24, 2014.

[44] None of the purported sales representatives have been identified and the agreed statement of fact, exhibit 5, refers to each sales representative by the names they provided to the investors, either by telephone or by e-mail. It is unknown if these names are accurate. Summit Capital was purportedly operating from Milan, Italy, and when an investor attended the address in the summer of 2013, he only discovered an administrator who knew very little about the company. One of the investors dealing with Rentier Capital had been to Singapore where documents he had received indicated the company's offices were located. When the investor asked the sales representative questions about the location and the representative could not immediately provide an answer, the investor knew his money was gone. One of the investors discovered scam warnings when he attempted to find out information about Tokai on the Internet. No evidence was provided during the trial as to whether the brokerage companies referred to above were in fact legitimate investment companies or brokerages trading in securities.

[45] There is no direct evidence of any connection between any of the purported sales representatives and Lowman and Jarrett. Further, there is no evidence Cleworth or Igbal had any connection with these purported sales representatives. There was no direct evidence presented as to who provided the Asia Power shares certificates to the purported sales representatives or to the foreign investors, although Cleworth believed the shares and share certificates of Asia Power would have been provided by Niemira.

[46] There is no direct or circumstantial evidence demonstrating that any of the foreign investors had any direct or indirect contact or communication with Lowman or Jarrett.

[47] Lowman and Jarrett were never registered with the OSC to trade in securities. No corporation in this matter was registered to trade in securities during the time set out in the information. No prospectus was ever filed with the OSC by Asia Global or Asia Power or by anyone in respect of the securities of either of those companies during the time period set out in the information. No evidence was presented respecting the materials filed for the registration of Asia Power on the GXG Exchange. There was no evidence presented as to whether registration or a prospectus was necessary on the GXG Exchange.

[48] The evidence presented demonstrated that Jarrett worked as an employee of Saxon Securities, which was owned by Lowman. Jarrett was not part of the joint venture agreement and from the evidence had no involvement in Euroex, which was Lowman's company.

Position of the Parties

1. Position on behalf of the OSC

[49] Mr. Feasby, on behalf of the OSC, argues that Lowman and Jarrett were involved in the actual trades of Asia Global shares made by foreign sales representatives to the foreign investors. He points to an e-mail sent by Jarrett to Buchanan, the website designer, to make the content changes ASAP because people were viewing the website "daily". The OSC staff argues this demonstrated Jarrett was aware that shares were being sold. The RCI select report contains information very similar to the Asia Global website, which Mr. Feasby submits is a strong indication of a connection between the distributors of this report and Lowman and Jarrett, who controlled the Asia Global website. Mr. Feasby points to this report referring directly to the email address for investors on the Asia Global website and submits the only reasonable interpretation of this action is that those in control of the Asia Global website were well aware of the ongoing efforts to sell Asia Global shares. Further, the fact that this report made reference to Asia Global being listed in the future on the GXG Market in the UK shows a connection between Lowman and Jarrett and those selling the shares. Finally, Mr. Feasby points to the fact that two investors dealt with IQ Division in purchasing Asia Global shares and there is a wire transfer from IQ Division BVI approximately five weeks after one of the investors sent funds to purchase Asia Global shares to IQ Division.

[50] Mr. Feasby argues the Asia Global website was designed and created for the purpose of "exciting the reader" and this alone amounts to an act in furtherance of trading. The OSC staff submits the only reasonable interpretation of the content of the website is that it was created to induce trading. The OSC staff also submits the website existed for the purpose of indirectly soliciting securities transactions.

[51] It is the position of the OSC if the court finds there is connection between the sales representative's companies and/ or finds the Asia Global website was created for the purpose of "exiting the reader" and thereby induce investors to purchase shares the offences pursuant to ss. 25(1) and 53(1) will be proven.

[52] Finally, with respect to the offence pursuant to s. 38(3), Mr. Feasby submits the Asia Global website stated the company's common shares would be listed for trading on an exchange and specified a specific time frame for the listing. The OSC Staff argues the only reasonable interpretation of those statements in the context in which they were made was they were intended to effect trades in Asia Global's common shares. A contravention of ss. 25(1) and 53(1), according to Mr. Feasby, is a strong indication that the prohibited representation was made with such intention.

2. Position on behalf of Mark Lowman

[53] Mr. Fenton, on behalf of Mark Lowman, set out his position in Part 1 of his written submissions:

Overview:

1. All three charges relate to conduct in relation to Asia Global. None of the charges relate to alleged illegal conduct in relation to Asia Power Solutions Ltd. ("Asia Power"). There is no allegation of fraud.

2. The OSC Staff's theory has two strands. First, the Crown maintains, somewhat technically, that Lowman and Jarrett are guilty of all three charges simply by having created a website for Asia Global. The Crown argues that the website was an act in furtherance of trading because its content was designed to "excite the reader".

3. In response, Lowman respectfully submits that the Crown has not come close to proving the actus reus of the charges beyond a reasonable doubt. Lowman denies that the Asia Global website, transitory as it was, constituted an act in furtherance of trading or the making of a prohibited representation "with the intention of effecting a trade". Further, the Crown's submission that a mere statement in a website that "excites the reader", without more, constitutes an act in furtherance of trading, is based on an erroneous interpretation of the definition of "trading" in the Act.

4. Second, the Crown submits that Lowman and Jarret were effectively parties to purported sales of common shares of Asia Global by European-based institutional sales representatives (the "Foreign Representatives") to seven foreign investors (the "Foreign Investors"). The Crown makes these allegations even though there were never any common shares of Asia Global issued or in fact sold to any person at any time.

5. More importantly, there is not a shred of evidence that any of the Foreign Investors or Foreign Representatives had any contact with Lowman or Jarrett, let alone in relation to the purported sale of Asia Global shares. Rather, on all the evidence led by the Crown, the Foreign Investors and Representatives only dealt with each other.

6. Further, not a single Crown witness ever stated that they saw, heard, read or understood that Lowman or Jarrett ever took a single step in furtherance of trading in shares of Asia Global. Rather, all the Crown's witnesses testified to the exact opposite. As such, there is simply no evidence to support the Crown's allegations. Further, the Crown's submissions are replete with factual errors, innuendo, hearsay and speculation.

7. Rather, what is clear is that the Foreign Representatives committed fraud on the Foreign Investors, but there is no evidence that either Lowman (or Jarrett) had anything to do with it.

8. In the result, Lowman respectfully requests that the Court enter acquittals against him on all three charges.

3. Position on behalf of Dave Jarrett

[54] Mr. Hamm, on behalf of Dave Jarrett, set out his position in part 2 of his written submissions:

Overview: The Accused Did Not Trade in Securities

1. The OSC's position at paragraphs 56 to 103 of its Submissions is a narrow one: essentially, by creating and maintaining the Asia Global website, the accused committed an act in furtherance of a trade that was contrary to sections 25(1) of the Securities Act.

2. In the OSC's view, that website was "designed to excite" any "potential investors" about the prospects of Asia Global. It argues that because not only potential investors, but certain of the Investors contacted by purported brokers overseas actually viewed that website, its creation should constitute an act with a sufficiently proximate connection to the "potential trade" of Asia Global shares.

3. Respectfully, this is a misinterpretation of the facts and an overly broad interpretation of the law. The accused did not represent to be issuers of securities in Asia Global, and the Asia Global website was not designed to entice potential investors of Asia Global shares. Even if it were capable of being characterized as a form of promotional material, it certainly was not created indirectly or directly by a "proposed issuer" in furtherance of a "trade" pursuant to s. 1(1) of the Securities Act.

[55] Mr. Hamm submits the Asia Global website was not created as an act in furtherance of a trade. He argues the Asia Global website was created to arrange private financing and to generate government interest in the project and he points to the fact Jarrett's comment about individuals viewing the website "daily" in September 2012, was sometime before any of purported brokers seeking to sell Asia Global shares had contacted the seven investors and directed them to examine the Asia Global website. He submits this alternative purpose for creating the website is in line with the evidence of Cleworth, who testified he wanted the website up and operational so he could utilize in his negotiations with the government of Nepal to obtain funding as he had in Madagascar.

[56] Mr. Hamm also argues Jarrett's position with the waste to energy project supports this view as to the purpose behind the creation of the website. First, the Asia Global website was a "placeholder" name used to identify the project, a work in progress, which ultimately became Asia Power Solutions. Jarrett was performing a task of building and populating a website with Buchanan's assistance, based on the content and approvals given to him. Jarrett did not stand to personally benefit from the sale or distribution of Asia Global shares or even from the success of the waste to energy project. It is Mr. Hamm's position Jarrett did not exercise control over the Asia Global website.

[57] Finally, Mr. Hamm submits the court lacks jurisdiction over the alleged offences as there must be a sufficiently real and substantial connection between the offence and Ontario. He argues in a securities context, a real and substantial link necessitates that substantial elements of trades occurred in Ontario. He submits all activities in relation to the foreign investors were conducted by foreign overseas purported brokers outside of Ontario. The website was viewed outside of Ontario and there is no evidence to suggest the GoDaddy server the Asia Global website was housed on was located in Canada, let alone in Ontario. There is no evidence that shares or correspondence delivered to the investors, including the RCI select report, came from Ontario and no payments were made from the investors to any bank account in Ontario or to any Ontario company. Mr. Hamm submits the substantive link to Ontario does not exist.

Ontario Securities Law

[58] Section 122(1)(c) of the Securities Act makes it an offence to breach Ontario securities law and makes it an offence to breach any other provision of the Securities Act. A breach of ss. 25(1), 53(1) and 38(3) of the Securities Act are all offences pursuant to s. 122(1)(c).

[59] Offences under the Securities Act are strict liability offences. The standard that must be met by the OSC staff is proof beyond a reasonable doubt that the accused committed the impugned act. Once the prosecution has met its burden of proof respecting the actus reus, the defence may establish the defence of due diligence on a balance of probabilities. See R. v. Stucky, 2009 ONCA 151, at para. 6; R. v. Felderhof, 2007 ONCJ 345.

[60] The definition of "security" in the Securities Act, s. 1(1) includes the following relevant categories:

"security" includes,

(a) any document, instrument or writing commonly known as a security,

(b) any document constituting evidence of title to or interest in the capital, assets, property, profits, earnings or royalties of any person or company,

(n) any investment contract,

whether any of the foregoing relate to an issuer or proposed issuer.

[61] The Asia Global website refers to the company's "common shares" being listed in the future on a "Stock Exchange" in conjunction with a "dual listing on a European Stock Quotation System in the fourth quarter of 2012". With each revision of the Asia Global website, this timing was altered and postponed. The Asia Global website, as well as the Asia Power website that replaced the Asia Global website, made it clear no shares of Asia Global or Asia Power were currently available for sale.

[62] In my view, a "common share" is an instrument commonly known as a security and defence counsel did not make any submissions to the contrary.

[63] Section 25(1) of the Securities Act provides:

25(1) Unless a person or company is exempt under Ontario securities law from the requirement to comply with this subsection, the person or company shall not engage in or hold himself, herself or itself out as engaging in the business of trading in securities unless the person or company,

(a) is registered in accordance with Ontario securities law as a dealer; or

(b) is a representative registered in accordance with Ontario securities law as a dealing representative of a registered dealer and is acting on behalf of the registered dealer.

(Emphasis added)

[64] As set out in the agreed statement of facts, exhibit 5, both Lowman and Jarrett were not registered with the OSC for the purpose of trading in securities. The issue to be determined respecting the s. 25(1) allegation is whether there is any evidence that Lowman and/or Jarrett traded in securities or were engaged in acts in furtherance of trading and whether the OSC staff has met their burden of proof.

[65] Section 53(1) of the Securities Act provides:

53(1) No person or company shall trade in a security on his, her or its own account or on behalf of any other person or company if the trade would be a distribution of the security, unless a preliminary prospectus and a prospectus have been filed and receipts have been issued for them by the Director.

(Emphasis added)

[66] The same issue arises with respect to the offence contrary to s. 53(1), where it is alleged Lowman and Jarrett distributed securities without a prospectus, namely, whether there is any evidence that Lowman and/or Jarrett traded in securities.

[67] The Supreme Court of Canada has repeatedly cited with approval Sullivan's (formerly Driedger's) approach to the interpretation of statutes (see Ruth Sullivan, Sullivan on the Construction of Statutes, 5th ed. (Markham, Ont.: LexisNexis, 2008)):

Today there is only one principle or approach, namely the words of an Act need to be read in their entire context and in their grammatical and ordinary sense harmoniously with the scheme of the Act, the object of the Act, and the intention of Parliament.

Some recent examples where the Driedger (now Sullivan) approach has been recognized include Ontario v. Canadian Pacific Ltd., [1995] 2 S.C.R. 1031; Rizzo & Rizzo Shoes Ltd. (Re), 36 O.R. (3d) 418, [1998] 1 S.C.R. 27, at para. 27; R. v. Gladue, [1999] 1 S.C.R. 688, at para. 25; R. v. Araujo, 2000 SCC 65, [2000] 2 S.C.R. 992; R. v. Sharpe, 2001 SCC 2, [2001] 1 S.C.R. 45, at para. 33; Bell ExpressVu Limited Partnership v. Rex, 2002 SCC 42, [2002] 2 S.C.R. 559, at paras. 28-30.

[68] As Chief Justice Lamer in Ontario v. Canadian Pacific Ltd., supra, at para. 11, explained,

. . . the first task of a court construing a statutory provision is to consider the meaning of its words in the context of the statute as a whole. If the meaning of the words when they are considered in this context is clear, there is no need for further interpretation. The basis for this general rule is that when such a plain meaning can be identified this meaning can ordinarily be said to reflect the legislature's intention . . . Thus, the best way for the courts to complete the task of giving effect to legislative intention is usually to assume that the legislature means what is says, when this can be clearly ascertained.

[69] The Securities Act, s. 1(1) defines "trade" or "trading" to include:

(a) any sale or disposition of a security for valuable consideration, whether the terms of payment be on margin, instalment or otherwise, but does not include a purchase of a security or, except as provided in clause (d), a transfer, pledge or encumbrance of securities for the purpose of giving collateral for a debt made in good faith,

(e) any act, advertisement, solicitation, conduct or negotiation directly or indirectly in furtherance of any of the foregoing [.]

(Emphasis added)

[70] As the plain words of the statute indicate, a "trade" includes "any sale or disposition of a security for valuable consideration", but also five other acts that are taken in furtherance of any sale or disposition of a security. On the evidence presented, there is no evidence that Lowman and/or Jarrett were directly involved in the sale or disposition of the securities of Asia Global.

[71] In R. v. Sussman, [1993] O.J. No. 4359, 1 C.C.L.S. 273 (Prov. Div.), Justice Knazan observed, at paras. 44 and 46:

Very wide terms are also used in defining what is included in a trade in s. 1(1)42 of the Act and no exceptions are given.

Regarding "trade", the legislature has chosen to define the term and they have chosen to define it broadly in order to encompass almost every conceivable transaction in securities.

[72] Mr. Feasby, on behalf of the OSC, set out the following activities that have been found to be "acts in furtherance" of trading:

• creating and maintaining a website designed to "excite the interest" of investors;
• issuing and signing share certificates;
• distributing promotional materials concerning potential investments;
• accepting money from investors and depositing investor cheques for the purchase of shares in a bank account;
• providing potential investors with subscription agreements to execute;
• paying referral fees to existing investors who referred new investors;
• preparing and disseminating forms of agreements for signatures by investors;
• preparing and dissemination of materials describing investment programs;
• conducting information sessions with groups of investors; and
• meeting with individual investors.

(See American Technology Exploration Corp. (Re), 1998 LNBCSC 1, at paras. 30-31; R. v. Rainshed Inc., [1996] O.J. No. 5326 (C.J.), at paras. 122-23, 126-27; R. v. O'Brien, [2011] O.J. No. 6610 (C.J.), at paras. 32-33; First Federal Capital (Canada) Corp. (Re), 2004 LNONOSC 57, 27 OSCB 1603, at paras. 45-46; Momentas Corp. (Re), 2006 LNONOSC 778, 29 OSCB 7408, at paras. 78, 80; Limelight Entertainment Inc (Re), 2008 LNONOSC 78, 31 OSCB 1727, at para. 131; Hibbert (Re), 2012 LNONOSC 652, 35 OSCB 8583, at para. 70; and Richvale Resource Corp. (Re), 2012 LNONOSC 297, 35 OSCB 4286, at paras. 70, 79-80).

[73] On the evidence presented in this trial the only act in furtherance of trading from the list prepared from the case law appears to be "creating and maintaining a website designed to excite the interest of investors". A further related issue is whether on the evidence presented that the OSC staff has proved beyond a reasonable doubt there was a connection between Lowman and Jarrett and the purported foreign sales representatives who sold Asia Global shares to the foreign investors.

[74] An act(s) in furtherance of a trade is an essential element under ss. 25(1) and 53(1) of the Securities Act and it "requires an examination of the totality of the conduct and the setting in which the acts have occurred, the primary consideration of which is the effects of the acts had on those to whom they were directed" (see Momentas Corp. (Re), supra, at para. 77). (See, also, Limelight Entertainment Inc. (Re), supra, para. 131; and Moncasa Capital Corp. (Re), 2013 LNONOSC 369, 36 OSCB 5320, para. 44.)

[75] This examination must be a contextual analysis of the facts and circumstances of the case. In Costello (Re), 2003 LNONOSC 80, 26 OSCB 1617, at para. 47, the commission held:

There is no bright line separating acts, solicitations and conduct indirectly in furtherance of a trade from acts, solicitations and conduct not in furtherance of a trade. Whether a particular act is in furtherance of a trade is a question of fact that must be answered in the circumstances of each case. A useful guide is whether the activity in question had a sufficiently proximate connection to an actual trade.

(Emphasis added)

[76] In First Federal Capital (Canada) Corp (Re), supra, at paras. 45, 49 and 50-51, the commission held an act in furtherance of trading does not require an actual or completed trade, "anticipated" trades that arise where there is a direct proximate connection between the offering and any trade that was anticipated as a result of those solicitations (see, also, Winick (Re), 2013 LNONOSC 605, 36 OSCB 8202, at para. 101). The OSC staff argue, "even if the Investors had never agreed to purchase Asia Global's shares, the creation of the company's website, if done in furtherance of anticipated or potential trades, would still amount to trading". Of course, the operative determination to be made is whether the OSC staff has proved beyond a reasonable doubt the Asia Global website was created for the purpose of furthering actual or anticipated trades of Asia Global shares, namely, was the website designed to "excite the interest of investors"? In First Federal, supra, the website actually offered a "trading program" and the principal of the company engaged in direct solicitation and negotiations with investors which continued over an extended period of time. The website was directly offering securities for sale through the website.

[77] In Brown (Re), 2004 LNONOSC 499, 27 OSCB 7955, at para. 34, the commission held:

For a person to act in furtherance of a sale or disposition of a security that is in fact being sold or disposed of by someone else, there must be at a minimum something done by that person for the purpose of furthering or promoting the sale or disposition of the security by the one engaged in that activity, in this case Anderson. The receipt of consideration or some other direct or indirect benefit, although not a necessary component, could be a strong indication of such a purpose.

[78] Mr. Feasby, on behalf of the OSC, submits the commission has held that a website need not specifically offer shares to be considered an act in furtherance of a trade (see para. 82, submissions of staff of the OSC). It is my view this is not an accurate statement of the case law. Mr. Feasby cites Xi Biofuels Inc. (Re), 2010 LNONOSC 217, 33 OSCB 3077, at paras. 115-20 as support for that proposition; however, in para. 117, the commission only makes reference to the staff position that "a website need not specifically offer securities for its creation and maintenance to consider an act in furtherance of a trade", and does not indicate any adoption of that submission. I was unable to find any other decision of the commission that adopts this submission. The commission in Xi Biofuels Inc makes reference to the staff's reliance on the British Columbia commission's decision in American Technology Exploration Corp. (Re) ("ATEC (Re)"), supra, as support for this proposition; however, in Re ATEC, shares were offered for sale on the website with information on how an investor could purchase them, see paras. 25 and 30:

The glowing descriptions of ATEC's Nevada mineral property and its future prospects, together with the information about ATEC shares and how to buy them, clearly communicated information (and misinformation) that promoted the purchase of ATEC shares.

The contents of the ATEC Web site were designed to excite the reader about the prospects for ATEC and its shares and to interest potential investors in buying ATEC shares. The reader of the Web site is told (misleadingly) that the shares trade on the "NASDAQ small cap bulletin board" and that "Shares can easily be purchased anywhere in the world through any securities house." The material on the Web site could therefore be described as an advertisement or solicitation for investors to purchase ATEC shares, which would thereby create demand and allow others to trade their ATEC shares.

(Emphasis added)

[79] In Xi Biofuels Inc. (Re), supra, the commission found the website was created for the purpose to "excite the reader" and solicit potential investors by numerous misleading statements. It is important to note, however, that in Xi Biofuels the commission pointed to multiple other acts in furtherance of trades, apart from the creation of a website that was found to be created for the purpose of "exciting the reader", to cause an investor to purchase shares. The additional acts in furtherance, in my view, are significant in considering the conduct of the accused in its entirety and in context, namely, "signing Treasury Directions to Heritage, signing share certificates, attending at Heritage to pick up share certificates, opening bank accounts and depositing investor funds into them" (see paras. 80, 86, 90, 100, 108 and 120-121).

[80] In the OSC staff's written submissions, Mr. Feasby submits an act in furtherance of trading does not require an actual or completed trade. On the evidence of the foreign investors, there is no doubt the purported foreign sales representatives offered Asia Global shares to the various investors for sale, as a pre-IPO opportunity and seven investors sent wire transfers of money to different foreign banks in Seychelles, Germany, Singapore, Malaysia, Switzerland and Hong Kong in favour of the purported investment companies. However, no share certificates in Asia Global Energy were ever provided to any of these foreign investors. It is Mr. Feasby's position the creation of the Asia Global website, if done in furtherance of anticipated trades, would still amount to an act in furtherance of trading. It is my view, on the case law, it is essential, at a minimum, for the Asia Global website to have been created for the purpose of promoting an anticipated sale or disposition of Asia Global shares. This has led to the line of cases, which refers to websites created for the purpose of "exciting the reader" to purchase shares.

[81] In First Global Ventures, S.A. (Re), 2007 LNONOSC 78, the accused solicited investors directly, received funds from a brokerage selling the securities, provided shareholder agreements and sold a list of investor names to the brokerage. These additional acts in furtherance provide the context to find the website was created for the purpose of "exciting the reader" to purchase shares. (See, also, Goldpoint Resources Corp. (Re), 2011 LNONOSC 364, 34 OSCB 5478; Al-tar Energy Corp. (Re), 2010 LNONOSC 406, 33 OSCB 5535.)

[82] In Moncasa Capital Corp. (Re), supra, paras. 44-45, 54-55 and 60-65, the commission found Moncasa and its directing mind, Collins, engaged in the following acts in furtherance of trading:

• Collins planned, was aware of and participated in the sale of Moncasa securities to the public;
• salespeople were hired to sell Moncasa securities to the public;
• met with investors to discuss Moncasa investment;
• prepared and disseminated promotional materials/press releases relating to the Moncasa investment;
• directed potential investors to the websites in furtherance of selling Moncasa securities, websites used as a tool to solicit investors;
• provided subscription agreements to investors with instructions on how to complete the agreement;
• received funds from investors for the purpose of investing in Moncasa;
• Collins was the sole signatory to the bank account into which investor funds were deposited;
• Collins caused Moncasa's transfer agent to issue share certificates to purchasers of Moncasa's shares;
• Collins signed Moncasa share certificates and delivered the share certificates to investors; and
• Collins was responsible for the Moncasa websites that investors were referred to for information about the company when solicited to invest in Moncasa.

[83] Clearly, in Moncasa, the company and its directing mind, Collins, were engaged in numerous acts in furtherance of trading beyond simply creating a website. Further, this evidence provides context for determining the purpose of creating the company website.

[84] As discussed above, the requirement for registration under s. 25(1) is triggered by a trade, including an act in furtherance of a trade, being for a "business purpose" or by a person or company holding itself out as being in a business. Mr. Feasby, on behalf of the OSC, sets out section 1.3 of companion policy 31-103, which sets out a non-exhaustive list of relevant business factors to be considered in assessing this essential element of the section:

• engaging in activities similar to a registrant, including promoting securities or stating that an individual or company will buy or sell securities;
• intermediating trades or acting as a market maker;
• directly or indirectly carrying on the activity with repetition, regularity or continuity, especially trading in any way that produces, or is intended to produce, profits;
• being, or expecting to be, remunerated or compensated for trading and it is irrelevant if the individual or company actually received compensation or in what form; and
• directly or indirectly soliciting, including contacting anyone by any means to solicit securities transactions.

[85] Many of the business purpose cases are decided in the context of an issuer offering its own shares to the public and must address the question of whether the trades were incidental to or a core part of the business of the company. This question does not arise on the facts of this case as Lowman and Jarrett are not the issuers of the security. The issue is whether they were engaged in a business arrangement to market the securities of the issuer, Asia Global (see Momentas, supra; and IMAGIN Diagnostic Centres Inc. (Re), 2010 LNONOSC 632, 33 OSCB 7761). This is similar to the requirement respecting the creation of a website for the purpose of promoting an actual or anticipated sale or disposition of shares, in this case shares of Asia Global to "excite the reader".

[86] Section 38(3) of the Securities Act provides:

38(3) Subject to the regulations, no person or company, with the intention of effecting a trade in a security or derivative, shall, except with the written permission of the Director, make any written or oral representation that the security or derivative will be listed on an exchange or quoted on a quotation and trade reporting system, or that application has been or will be made to list the security or derivative on an exchange or quote the security or derivative on a quotation and trade reporting system, unless,

(a) in the case of securities, application has been made to list or quote the securities and other securities issued by the same issuer are already listed on an exchange or quoted on a quotation and trade reporting system; or

(b) the exchange or quotation and trade reporting system has granted approval to the listing or quoting of the securities or derivatives, conditional or otherwise, or has consented to, or indicated that it does not object to, the representation.

(Emphasis added)

[87] The necessary elements of the offence include

(1) the representation is made with the intention of effecting a trade in a security, and

(2) the making of any written or oral representation that the security or derivative will be listed on an exchange or quoted on a quotation and trade reporting system.

[88] For there to be a breach of s. 38(3), a representation is required to be made with a factual intention of effecting a trade in a security.

[89] In Merax Resource Management Ltd. (Re), 2011 LNONOSC 941, 34 OSCB 12476, at paras. 146 and 147, the commission determined that the accused's representation on a website that the company's securities would be listed on an exchange was made with the intent of effecting a trade in a security where the representation was "part of the whole fraudulent scheme which [the accused] directed or at the very least played a very significant active role and from which they directly or indirectly received the bulk of the proceeds of the sale of securities".

[90] In MRS Sciences Inc. (Re), 2011 LNONOSC 92, 34 OSCB 1547, at para. 203, the commission held that the statement that "[t]he company will seek to become public by way of amalgamation or filing of a IPO in order to maximize the value for its shareholder base" was insufficient to make out the allegation under s. 38(3) because it was a "very general reference to an amalgamation or public offering".

[91] In Al-tar Energy Corp., (Re), supra, the commission found that an alleged breach of section 38(3) was not proven on a balance of probabilities because the alleged prohibited representation was found to be too vague. The commission stated [at paras. 205-10]:

Unlike subsection 38(2) of the Act, subsection 38(3) does not require an undertaking. A representation (in other words a statement) is sufficient to trigger a violation of subsection 38(3) of the Act. For example, in the Limelight Merits case, the Commission found that evidence of salespersons stating that Limelight shares would be listed on an exchange constituted a breach of subsection 38(3) of the Act (Limelight Merits, supra at para. 181).

Therefore, we must determine whether the Respondents made any representations, either written or oral, that shares in Al-tar, Alberta Energy and/or Drago would be listed on any stock exchange or quoted on any quotation and trade reporting system.

ii. Analysis

Although Staff presented significant evidence in this case that the Respondents made representations about going public, we are not satisfied, in the circumstances of this case, that Staff has proven its subsection 38(3) allegations on a balance of probabilities.

The Respondents made a number of statements to investors that Al-tar, Alberta Energy or Drago would be going public in the near future. The investors testified that they relied on and were influenced by such statements when making their decisions to invest in the shares of Al-tar, Alberta Energy or Drago.

However, we find that these comments did not contain enough specifics to qualify as representations that are prohibited under subsection 38(3) of the Act.

We, therefore, find that there is insufficient evidence to find that the Respondents breached subsection 38(3) of the Act.

(Emphasis added)

[92] Similarly, in Global Partners Capital (Re), 2010 LNONOSC 633, 33 OSCB 7783, the commission found that an alleged breach of s. 38(3) was not made out in the absence of a specific representation that the company would be listed on an exchange for the purpose of effecting a trade [at paras. 235-37]:

For a breach of section 38(3), the Panel must be satisfied on the evidence that these respondents represented to investors that shares in Asia Pacific would be listed on a stock exchange for the purpose of effecting a trade in Asia Pacific shares.

Although investors were told that Asia Pacific was a pre-IPO opportunity, as evidenced by the excerpts from witness testimony and letters sent by Asia Pacific noted above, we did not see evidence that any specific representation was made to investors that Asia Pacific would be listed on an exchange.

Based on the evidence before us, we are not satisfied on a balance of probabilities that Gahunia or Toussaint represented that Asia Pacific would be listed on a stock exchange.

(Emphasis added)

[93] In Maitland Capital Ltd. (Re), 2012 LNONOSC 465, 35 OSCB 6489, the commission stated in relation to an allegation under s. 38(3) that there must be evidence to prove that the prohibited representation "was made during the process of selling or trading a share" [at para. 64]:

Subsection 38(3) does not require an undertaking with respect to the future listing. An oral representation about listing shares on a stock exchange is sufficient to constitute a violation of subsection 38(3) of the Act, provided that such representation was made during the process of selling or trading a share. For example, in Limelight, the Commission found that evidence of salespersons stating that Limelight shares would be listed on an exchange, with the timeframe given ranging from 10 to 12 days to a year, constituted a breach of subsection 38(3) of the Act (Limelight, supra, at para. 181).

(Emphasis added)

Analysis

[94] As I will discuss later in more detail, there is very little, if any, direct evidence of Lowman and/or Jarrett trading in securities or engaging in acts in furtherance of trading in securities. Consequently, the prosecution must rely, in large part, on circumstantial evidence from which reasonable inferences can be drawn with respect to whether Lowman and/or Jarrett were engaging in acts in furtherance of trading in securities. I agree with Mr. Fenton's submission that "where evidence on one or more elements of the offence is entirely circumstantial in order to convict, the trier of fact must be satisfied, beyond a reasonable doubt, that the guilt of the accused is the only rational inference that can be drawn" (see R. v. Griffin, 2009 SCC 28, [2009] 2 S.C.R. 42; R. v. Cooper, [1978]1 S.C.R. 860).

[95] Further, pursuant to R. v. Villaroman, 2016 SCC 33, [2016] 1 S.C.R. 1000, the Supreme Court held in assessing circumstantial evidence, inferences consistent with innocence do not have to arise from proven facts, but may equally arise from the absence of evidence, so long as the alternative inference is reasonable [at paras. 36 and 37].

I agree with the respondent's position that a reasonable doubt, or theory alternative to guilt, is not rendered "speculative" by the mere fact that it arises from a lack of evidence. As stated by this Court in Lifchus, a reasonable doubt "is a doubt based on reason and common sense which must be logically based upon the evidence or lack of evidence": para. 30 (emphasis added). A certain gap in the evidence may result in inferences other than guilt. But those inferences must be reasonable given the evidence and the absence of evidence, assessed logically, and in light of human experience and common sense.

When assessing circumstantial evidence, the trier of fact should consider "other plausible theor[ies]" and "other reasonable possibilities" which are inconsistent with guilt. I agree with the appellant that the Crown thus may need to negative these reasonable possibilities, but certainly does not need to "negative every possible conjecture, no matter how irrational or fanciful, which might be consistent with the innocence of the accused". "Other plausible theories" or "other reasonable possibilities" must be based on logic and experience applied to the evidence or the absence of evidence, not on speculation.

(Citations omitted; emphasis added)

[96] It was agreed by the OSC staff (written submissions, at para. 80) that the Asia Global website did not directly offer to sell shares to the public.

[97] It was agreed by the OSC staff there was no direct or circumstantial evidence of any direct or indirect contact or connection between Lowman and Jarrett and the foreign investors.

[98] There was no direct evidence of any connection between any of the purported sales representatives and Lowman and Jarrett. The OSC staff submitted there was circumstantial evidence from which reasonable inferences could be drawn that there was a connection between the sales representatives and Lowman and Jarrett. Further, there was no direct or circumstantial evidence Cleworth or Igbal had any connection with these purported sales representatives or the companies they purportedly represented.

[99] There was no documentary or viva voce evidence of any witness which demonstrated any connection or link between Lowman and Jarrett to the impugned sales of Asia Global or Asia Power shares. There was no evidence presented that Lowman or Jarrett took any steps in furtherance of the sale or disposition of Asia Global shares, such as preparing promotional materials, training or instructing the foreign representatives, or issuing shares of Asia Global for possible distribution to investors.

[100] On the evidence presented, there was no direct evidence respecting any of the acts in furtherance of trading as discussed or identified in the many decisions of the commission in Ontario and in British Columbia provided by both the OSC staff and the defence. For example, there is no direct or circumstantial evidence Lowman and/or Jarrett engaged in any of the following activities:

• issuing and signing share certificates;
• distributing promotional materials concerning potential investments;
• accepting money from investors and depositing investor cheques for the purchase of shares in a bank account;
• providing potential investors with subscription agreements to execute;
• paying referral fees to existing investors who referred new investors;
• preparing and disseminating forms of agreements for signatures by investors;
• preparing and dissemination of materials describing investment programs;
• conducting information sessions with groups of investors; or
• meeting with individual investors.

[101] The only act in furtherance of trading that the OSC staff pointed to relates to the creation of the websites for Asia Global and for Asia Power. Of course, the issue here, as discussed above, is whether the OSC staff can prove beyond a reasonable doubt that the purpose of creating the website was for the purpose of "exciting the interest" of investors to purchase shares.

[102] Before dealing with that issue, I want to first address the OSC staff's submission that there exists, on the evidence, "numerous pieces of evidence that suggest Lowman and Jarrett were aware of and involved in the ongoing marketing of the shares of Asia Global, as distinct from Asia Power".

[103] Mr. Feasby pointed to an e-mail from Jarrett to Buchanan, dated September 26, 2012, from which he argued "Jarrett had reason to urgently email Buchanan to make changes to the technical information on the website because people were viewing the website every day'." The OSC staff argued if Jarrett was not aware of the shares of Asia Global being sold to investors there would be no reasonable explanation for his urgency. It is my view there is another, alternative reasonable explanation for Jarrett requesting Buchanan to make changes to the technology section of the websites ASAP, based on the evidence of Cleworth, who testified he wanted the website up and running in August 2012, as he wanted to have governments, such as in Nepal, review the website and give him the opportunity to negotiate a PPA, which would have provided the funds necessary for the company to move forward. Cleworth further testified it was his belief and understanding that Lowman had contacts which he hoped would provide private investment in the waste to energy technology. Additionally, when Jarrett sent this e-mail to Buchanan in September 2012, none of the foreign investors had been "cold called" by the purported sales representatives. Also, none of the investors had been directed to the Asia Global website by the purported sales representatives. This also supports Cleworth's evidence that the website was created to be used in marketing the waste to energy technology to target governments and not investors.

[104] Mr. Feasby argued "the bank records of Saxon Securities and two of the investors make it clear there was an ongoing relationship between Lowman and Jarrett and the parties who distributed securities to the investors". He referred to the investors, Ranchod and Sept, who dealt with IQ Division Holding Ltd. in Switzerland to purchase Asia Global shares. Ranchod provided funds to a banking institution in Switzerland on November 15, 2012 (EUR 2,400), December 27, 2012 (EUR 7,000), February 4, 2013 (EUR 5,000), March 22, 2013 (EUR 10,000) and July 31, 2013 (EUR 12,000). Sept provided funds to a banking institution in Switzerland on December 20, 2012 (EUR 9,744). The OSC staff then point to a wire transfer paid to Saxon Securities on January 29, 2013, in the amount of EUR 9,275, from IQ Division, British Virgin Islands. The OSC staff argued this payment demonstrated an ongoing relationship between IQ Division and Saxon Securities, Lowman's company. I disagree.

[105] No evidence was presented respecting this wire transfer, other than the Saxon Securities bank statement for January 2013. The documents underlying and supporting the wire transfer were not entered into evidence. It is unknown who sent this amount of money. The reason this wire transfer was sent is also unknown. This is a significant gap in the evidence as any inference to be drawn would be nothing more than speculation. The wire transfer to Saxon Securities came from the British Virgin Islands' office of IQ Division. The investors dealt with IQ Division in Switzerland and sent money to the IQ Division office in Geneva, Switzerland. It is my view it is rank speculation to suggest this wire transfer provides any evidence linking Lowman and Jarrett to IQ Division's selling of Asia Global shares to the public. The OSC staff seem to be suggesting the timing of this wire transfer is somehow connected to Sept's payment to IQ Division for Asia Global shares. Both the amounts and timing are different. Further, there was only one wire transfer of money sent by IQ Division to Saxon. It is my view all this demonstrates is that moneys were sent to Saxon Securities by IQ Division BVI on January 29, 2013; however, without some documentation or viva voce evidence to explain the reason this money was sent and who sent it, there are no reasonable inferences available in relation to the issues that arise in this case. I agree with Mr. Fenton's written submissions, at para. 51.

[106] There is no doubt a number of the foreign investors were specifically directed by the purported sales representatives to look at the Asia Global website and that they reviewed it along with other promotional materials, namely, the RCI select report, purportedly prepared by these sales representatives' companies. The OSC staff argued the similarities between the RCI select report and the Asia Global website were a "strong indication of a connection between the distributors of the RCI Select Report and Lowman and Jarrett". There is no evidence that any of these promotional materials sent by the representatives to the investors were found in the possession of Lowman and Jarrett. The evidence demonstrated the OSC investigators had access to Jarrett and Lowman's computers, where drafts of the Asia Global/Asia Power websites were located. Yet, no documentation pertaining to the creation of promotional materials was discovered. Further, no evidence of e-mails, texts, correspondence or records of telephone communication between these purported sales representatives and Lowman and Jarrett were presented in evidence to demonstrate a connection or link between them.

[107] The OSC staff argued the fact that the purported sales representatives included the Asia Global e-mail address and contact information from the website in their promotional materials demonstrated a connection between the purported sales representatives and Lowman and Jarrett. They submitted it would be inexplicable if these sales representatives were operating without the knowledge of Lowman and Jarrett. They submit the representatives providing the contact information in their promotional materials led to a reasonable inference Lowman and Jarrett would not be surprised to be contacted by investors.

[108] I do not agree with these submissions. None of the investors ever contacted the Asia Global e-mail address, despite the investors page advising that investors must send all correspondence in writing to the company address or e-mail. The investors were clearly dealing only with the purported sales representatives and taking their direction from them. Further, there was no evidence presented to indicate who was operating the virtual Asia Global office in India or who was receiving any investor inquiries that were sent to the e-mail address. Buchanan was unaware if the e-mail address was operational as he never sent any e-mails to it. There was no evidence presented that e-mails sent to Asia Global would be coming to Lowman and/or Jarrett and none were found by OSC investigators in their of Lowman and Jarrett's computers.

[109] It is my view there is an alternative reasonable inference that the purported sales representatives, as part of their fraudulent scheme to defraud the investors, created these documents without any knowledge of Lowman or Jarrett. The fact that this report contained information not found on the Asia Global website supports this view. In my view, there is a significant gap in the evidence the OSC staff submitted demonstrates a connection or link between Lowman and Jarrett to any of the purported sales representatives, their companies or to the solicitations and representations the sales representatives made to the seven investors. In the vast majority of decisions of the commission provided, there was extensive evidence of the accused's involvement in preparing promotional materials, directly soliciting investors, receiving money from investors and signing share certificates. On the evidence presented in this case, there was no such evidence and therefore there is a substantial gap which, in my view, does not permit drawing the inferences urged by the OSC staff.

[110] I find there is a further equally reasonable inference available on the evidence, namely, that the purported sales representatives found the Asia Global website, saw an opportunity and created a scenario of their companies being a preferred underwriter of Asia Global Energy pre-IPO shares, which they were offering as a result at substantially reduced prices. This scenario allowed the purported sales representatives to make "cold calls" and representations, which were designed to induce investors to purchase Asia Global shares that, in fact, did not exist. I find these activities were done without any knowledge or involvement of Lowman or Jarrett.

[111] The OSC staff pointed to the fact that investors who purchased Asia Global shares from the purported sales representatives were ultimately provided Asia Power shares and many of these investors' names were on the Asia Power Solutions shareholder list. No evidence was presented as to who issued or signed the Asia Power share certificates or the shareholders list, other than Cleworth, who indicated in his evidence this was something that was done by Niemira. Igbal also testified Niemira was responsible for preparing the paperwork necessary for the company to go public and he signed many documents she had prepared.

[112] In examining some of the Asia Power share certificates, for example, exhibit 1, tabs 37 and 38, which are Asia Power share certificates in favour of investor Wilding, dated June 6 and July 11, 2013, and exhibit 1, tab 57, Asia Power share certificates in favour of investor Ranchod, dated July 11, 2013, the signature on these Asia Power share certificates appears to be that of Igbal. With respect to exhibit 1, tab 92, the Asia Power share certificate in favour of Kang, dated February 20, 2014, the signature appears to be J. Cleworth, Duncan Cleworth's son. There was no evidence that Lowman or Jarrett signed or issued Asia Power share certificates to the investors or that they instructed someone else to sign the Asia Power share certificates. If that evidence had existed, it could have provided a basis for arguing there was a connection between Lowman and Jarrett and the sales representatives and the foreign investors. Niemira could have been called as a witness who could very well have provided evidence of who was involved in the preparation of these share certificates, the circumstances under which they were prepared but she was not called as witness on this trial.

[113] Mr. Fenton in his written submissions, at paras. 61-65, argued I should draw an adverse inference against the OSC staff for not calling any of the foreign sales representatives and for not calling Niemira. First, I agree with the OSC staff as to the reason why the purported sales representatives were not called as witnesses, given their identity was unknown. This was an agreed fact in exhibit 5. Certainly these individuals, if their identity had been known and they were able to be located and compelled to testify, their evidence could very well have been extremely important to addressing the issues raised on this trial. However, they could not be called as witnesses given their identity was unknown. In those circumstances, it would not be an appropriate case to draw an adverse inference.

[114] With respect to the evidence of Niemira, her evidence with respect the incorporation of Asia Power Solutions and having this corporation listed on the GXG Exchange would have shed considerable light respecting who provided the instructions for the issuance of the Asia Power share certificates to a number of the foreign investors. Igbal testified he often was called by Niemira to attend her office to sign documents. He testified there were occasions Lowman called him to sign documents that Niemira had prepared and she needed Igbal to sign as a director and signing officer of Asia Power. In R. v. Ellis (2013), 113 O.R. (3d) 641, 2013 ONCA 9, in paras. 48-49, Watt J.A. held:

The "adverse inference" principle is rooted in the soil of ordinary logic and experience. As a consequence, the inference can only be drawn where there is no plausible reason for nonproduction, in other words, where it would be natural for the party to produce the evidence if the facts exposable by the witness had been favourable.

In a criminal case, a trial judge should draw, or instruct a jury to draw, an adverse inference from the failure of a party to call a witness only with the greatest of caution. To draw, or to instruct a jury to draw, an adverse inference against an accused in a criminal trial risks imposing a burden of adducing evidence on the accused, thereby shifting the onus of proof.

(Citations omitted)

[115] In dealing with this issue, it is important to note that the OSC staff submitted I should draw the reasonable inference Lowman and Jarrett were involved with the sales representatives who sold Asia Global shares to the foreign investors because the investors were provided Asia Power share certificates after Asia Power was listed on the GXG Exchange. Although Igbal signed some of the Asia Power share certificates, his evidence was not clear as to who gave the instructions for him to sign the different documents he did. He had no awareness of signing the Asia Power share certificates that were provided to the foreign investors as he testified he often signed documents without knowing what he was signing. It was Igbal's evidence he signed any documents that were put before him by Niemira. Both he and Cleworth testified Niemira was responsible for preparing documentation and paperwork relating to the incorporation of Asia Power Solutions, the registration of Asia Power on the GXG Exchange and preparing documentation relating to that listing.

[116] Mr. Fenton's extension of Justice Watt's analogy of "the adverse inference' principle being rooted in the soil of ordinary logic and experience" by submitting the OSC Staff had "sowed the seeds" of the significance of Niemira's testimony in my view is appropriate" (emphasis added). It is my view the OSC staff cannot submit, on the one hand, that there is a reasonable inference to be drawn respecting Lowman and Jarrett's involvement and connection with the purported sales representatives as a result of Asia Power share certificates being provided to the foreign investors, and, on the other hand, not calling a witness, Niemira, who would have provided cogent evidence on this very issue, where the OSC staff were fully aware of her role and did not provide any explanation for not calling her as a witness. Mr. Fenton submits I should draw an adverse inference and find the failure to call Niemira as a witness, without providing an explanation, leads to a finding her evidence would not have been favourable to the OSC staff's case. As I have already indicated above, there is no evidence Lowman and/or Jarrett had anything to do with the Asia Power share certificates provided by the purported sales representatives to the foreign investors. Whether an adverse inference is drawn in my view is not the operative issue. What is significant is that there is a huge gap in the evidence, which forecloses the reasonable inference sought by OSC staff.

[117] A small number of the investors communicated with someone at the Asia Power investor's e-mail address. No evidence was presented as to who this person was and no evidence was discovered on any computer operated by Lowman or Jarret respecting e-mail exchanges concerning Asia Power with these investors. Given the timing of those contacts it is probable those investors were contacting Jeffrey Cleworth as he and Sager took over as directors and officers of Asia Power in January 2013.

[118] For all of the reasons stated above, it is my view there was no evidence presented to support the OSC staff contention that Lowman and Jarrett were aware of Asia Global shares being sold to foreign investors by these purported sales representatives, who purportedly worked for European investment companies.

[119] Cleworth testified there was no intention or plan to sell shares of Asia Global, as this was an early name given to the joint venture company, which ultimately changed to Asia Power Solutions Ltd., as a result of Asia Global's name already being in use. The defence argues the name of the joint venture company was a work in progress, having gone through several iterations from Bermco to Enviro Global NRG to Asia Global Energy. I find the evidence supports this view. Further, according to Cleworth, there was no intention or plan to sell shares in Asia Power after it was incorporated on October 10, 2012, until it was properly registered and listed on a stock exchange, which did not occur until May 2013 when Niemira obtained the listing on the GXG Exchange.

[120] It was the evidence of Cleworth and Igbal the project would only begin to sell shares following a legitimate listing of the project on a stock exchange. The various drafts and the final change of the project's name to Asia Power Solutions demonstrates in my view that this was a progressive developmental process. I agree with Mr. Hamm's submission that this "indicates the intention of the creator of those representations had no clear timeline, or indeed an established mechanism for listing". This was reflected in the different drafts of the website, which reflected that the anticipated quarter for listing kept changing. It is my view the final draft of the Asia Power website, which sets out the only technology ultimately licensed by Cleworth and the project name, Asia Power, that was ultimately listed on the GXG Exchange, supports the evidence of Cleworth and Igbal that the website's purpose was not to "excite investors" to purchase shares but, rather, was to attempt to market the waste to energy technology with governments as opposed to a website created in anticipation of trading in Asia Global shares.

[121] Mr. Feasby argued direct contact or solicitation with investors is not required in order to find an act in furtherance of a trade; however, the decisions of the commission provided to me describe exactly those types of activities occurring where there is a finding that a website was created to "excite the reader". It is my view there needs to be some evidence which supports the inference the website was designed for the purpose of "exciting the reader" to purchase shares for it to be an act in furtherance of trading. Both the Asia Global and Asia Power websites, through the investors page, clearly indicated there were no shares available to be purchased, the company was not listed on a securities exchange, a listing would be sought at some point in the future, and the effective date of the listing when it was granted would be posted by press release and on the website. This is completely different and dissimilar to the websites referred to in the decisions where there was a finding by the commission that a website was designed or created for the purpose of "exciting the reader" to purchase shares, which clearly qualifies as an act in furtherance of trading.

[122] As discussed in a number of the cases referred to above, for example, American Technology Exploration Corp. (Re), supra; Xi Biofuels Inc., supra; First Federal Capital (Canada) Corp. (Re), supra; First Global Ventures, S.A. (Re); and Moncasa Capital Corp. (Re), supra, the websites developed in those cases were directly soliciting investors to purchase shares and providing instructions on where and how those shares could be purchased. The individuals charged with not being registered pursuant to s. 25(1) of the Securities Act were directly soliciting and pointing investors to their company's website and engaging in many other activities, which were found to be acts in furtherance of trading, for example, signing share certificates, meeting with investors, preparing promotional materials as in reports, depositing funds received from investors for the purchase of shares into bank accounts they had opened, and using some of those funds for their personal use. There is no evidence of any of these activities being engaged in by Lowman or Jarrett.

[123] A decision of the commission I find particularly applicable to the facts of this case is Brown (Re), supra, where the commission held that for a person (in this case, Lowman and/or Jarrett) to act in furtherance of a sale or disposition of security that is in fact being sold or disposed of by someone else (in this case, the purported foreign sales representatives), there must be at a minimum something done by that person (Lowman and/or Jarrett) for the purpose of furthering or promoting the sale or disposition of the security by the one engaged in that activity (the purported sales representatives). All the OSC staff can point to on the evidence presented is the creation of the Asia Global website, which they alleged was created to excite the reader. I find there is nothing on the Asia Global website which would support a finding that Lowman or Jarrett were promoting the sale or disposition of shares, which did not even exist. Further, both Cleworth and Igbal testified there was no intention to sell shares of Asia Global. The purported sales representatives were defrauding the investors by selling them pre-IPO shares not yet in existence. There were no activities engaged in by Lowman and/or Jarrett that in any way assisted or aided the illegal activities of these sales representatives. As I have already found, Lowman and Jarrett had no knowledge or awareness the Asia Global shares were being sold overseas.

[124] There can be no doubt these purported sales representatives were not registered and did not offer a prospectus to the foreign investors as required by the Ontario Securities Act. They were engaging in multiple acts in furtherance of trading in securities as discussed in the commission decisions provided to me. If there had been any evidence connecting or demonstrating a link between Lowman and Jarrett and these purported sales representatives, in my view the OSC staff would be able to prove beyond a reasonable doubt Lowman and/or Jarrett were engaging in acts in furtherance of trading without being registered and without a prospectus. However, there is no evidence to support such a finding.

[125] Mr. Fenton submitted the OSC staff's position that merely "exciting the reader" is sufficient to constitute an act in furtherance of trading is not a correct statement of law respecting "an act, advertisement, solicitation, conduct or negotiation directly or indirectly in furtherance of a trade". He submits as "a matter of statutory interpretation, conduct vaguely described as "exciting the reader" about a product or service fails to fall within the definition of trading, unless the statement is directly or indirectly related to the "sale or disposition of a security". Mr. Hamm also argued there must be some substantive connection between the intended acts of the accused in relation to the sale or anticipated sale of shares such that the purpose of "exciting the reader" is clear from the context of the accused's creation and development of the website as it relates to the investment scheme set out. I agree with those submissions. All that existed, on the evidence presented, was Jarrett was developing a website for a company that ultimately it was hoped would be listed on an exchange, a website where the content was in a state of revision and where the company's name was changed at least four times in the space of two months. No shares existed at the time the purported sales representatives solicited the foreign investors. I find there was not a sufficient proximate connection to an anticipated trade to constitute an act in furtherance of a trade.

[126] A final area to address respecting the offence pursuant to s. 25(1) of the Securities Act is the requirement the person shall not engage in or hold themselves out as engaging in the business of trading in securities. The OSC staff submitted the majority of the "business purpose" factors were strongly present of the evidence presented. I disagree with this submission, particularly as a result of my findings set out above. The Asia Global website was not created or developed for the purpose of "exciting the reader" to purchase shares in Asia Global. As indicated above, respecting the development of the website for the waste to energy project, the various drafts and the final change of the project's name to Asia Power Solutions demonstrates this was a progressive developmental process. At the time the Asia Global website was created, Lowman and Jarrett were not engaged in or holding themselves out as engaging in the business of trading in securities. According to the evidence of Buchanan, he was requested by Jarrett to change the name of the Asia Global website to the Asia Power Solutions website. This occurred within a month of the Asia Global website going "live". No questions were asked by either side as to why when Buchanan made those changes and substituted Asia Power for Asia Global, the Asia Global website continued to remain active. Buchanan was the web designer and based on his evidence respecting the changes he made in changing Asia Global's website's name to Asia Power Solutions, the Asia Global website should have ceased to exist. It is my view this oversight by Buchanan allowed the purported sales representatives to take advantage and utilize the Asia Global website to perpetrate their fraud on unsuspecting investors.

[127] Consequently, it is my view there are significant and substantial gaps in the evidence presented on this trial such that the inferences sought by the OSC staff, namely, that Lowman and Jarrett were involved in the actual trades of Asia Global shares to foreign investors, those inferences are not available. Further, it is my view the evidence does not prove beyond a reasonable doubt the websites were created for the purpose of exciting the reader to purchase shares and I find the creation of the website was not an act in furtherance of a trade. Consequently, count 1, the breach of s. 25(1), is dismissed.

[128] As discussed above, similar considerations arise under s. 53(1) in terms of the essential elements of "trading in a security" and "distribution of a security" and given my findings of fact, I find the OSC staff has not proved this charge beyond a reasonable doubt as there is no evidence that Lowman and Jarrett engaged in acts of trading in a security or in distributing a security. Consequently, count 2, the breach of s. 53(1), is dismissed.

[129] With respect to the offence contrary to s. 38(3) of the Securities Act, Mr. Fenton argued the representation in the Asia Global website was quite vague. I do not agree with this submission as the Asia Global website clearly indicates in writing that "Asia Global Energy Ltd shall be effecting a Stock Exchange listing of its common shares in conjunction with a dual listings on the European Stock Quotation System, Fourth Quarter 2012". It is my view this written representation is quite specific and is in violation of the second essential element of s. 38(3).

[130] However, given my findings above respecting the offences contrary to ss. 25(1) and 53(1) that there was no evidence presented in this trial that Lowman and/or Jarrett engaged in any acts of trading in securities or any other acts in furtherance of trading in securities, the OSC staff have failed to prove beyond a reasonable doubt that this representation, concerning the future listing of Asia Global shares on a stock exchange set out on the investor page of the Asia Global website, was made with the intention or purpose of effecting a trade in a security.

[131] Consequently, count 3, the breach of s. 38(3), is dismissed.

[132] Finally, Mr. Hamm, on behalf of the defence, argued for this court to have jurisdiction over the alleged offences there must be a sufficiently real and substantial connection between the offences and Ontario (see R. v. Libman, [1985] 2 S.C.R. 178, at paras. 48, 72 and 74; and Gregory & Co. v. Quebec (Securities Commission), [1961] S.C.R. 584, at pp. 587-88 S.C.R.). He submitted that connection to Ontario did not exist on the evidence. Given my findings of fact above and my dismissal of the three charges, it is my view it is not necessary for me to deal with this issue.

Disposition

Charges dismissed.

Notes

1 ASIA POWER SOLUTIONS LTD. A NOTICE OF OFFICER POSITION CHANGES AND NEW OPERATING ADDRESS

October 2013

Asia Power Solutions Ltd. "APS" (GXG:APS) would like to announce the officer position changes for Mr. Jeffrey Cleworth and Mr. Frank Sager. Mr. Cleworth has been appointed as Vice President of Business Development and Mr. Sager has been appointed as President and Secretary. APS believes that these changes better describe the roles of Mr. Cleworth and Mr. Sager and is better suited to their individual skills and experiences. APS would also like to announce the opening of our Australian office. This new location will become the primary operations center and will be focused on development of new business in that region. Mr. Cleworth will be managing this location and will use his experience and contacts to develop new projects. APS will also continue with the current development of Waste to Energy projects in the Caribbean region.

Address: 1 Bronberg Court, Suite 35, Southport, Queensland, 4215 Australia

Contact: Jeffrey Cleworth Email: jeff@@ asiapowersolutions.com

ARCHIVED PRESS RELEASES

September press release August press release

All investor or shareholder correspondence should be sent to investors@@ asiapowersolutions.com

2 I have referred to the foreign sales representatives and foreign investment or brokerage firms as "purported" because the sales representatives were never identified, no evidence was presented as to the nature and status of the various investment firms. No connection was ever shown between Lowman and Jarrett between any of the sales representatives. Two of the investment/brokerage companies were sold to Tokai prior to any shares in any company (Asia Global or Asia Power) being issued. The sales tactics of the sales representatives were all "cold calls" and efforts were made in respect of most of the investors to convince investors to purchase additional shares to complete their portfolio. It is my view there is a reasonable inference on the evidence that these sales representatives were operating in "boiler rooms" and were selling shares in Asia Global that did not exist. The promotional materials used by two of these companies were the same, with different names, and included information designed to induce persons to purchase what they termed as pre-IPO shares of Asia Global. In my view, there were reasonable inferences available on the evidence to describe these foreign investment brokerages and the foreign sales representatives as "purported" as opposed to legitimate.