RCMP Probes Shire International Real Estate Investment Ltd

I found an interesting article in the news last week regarding Shire International, a limited partnership real estate firm based in Calgary, Alberta (Canada).  The RCMP (Royal Canadian Mounted Police), the Canadian version of the FBI, is investigating allegations against the firm in regards to fraud.

A while back, there was a posting related to Shire on a popular Canadian forum, that I used to post on when I had a bit more time.  See here for post.  An individual had posted questions regarding investing with Shire International, which is what had drawn my attention to the news article.  Although this news article mentions an 8% regular payment, the forum poster mentioned 15% (which was likely a different project).  However 5-7% (and even 8%) is not uncommon for real estate limited partnerships, whereas 15% is quite high and likely to compensate for much higher project related risks.  The article and its original link is copied at the end of this post.


I am not too familiar with the particular case so I can’t comment on it specifically, but in general this event reminds us just how important it is to be fully knowledable in the area you are investing in. In relation to this incident, if an investor doesn’t have prior experience or familiarity with these types of real estate partnerships, then they really need increase their knowledge before investing in them.  There are a lot of conditions & fine print details that investors need to be aware of that affect the investment. For example, if the company overruns the budget there will likely be a vote or call for more capital from the investors.  An investor needs to know how that will affect their return, as well as how likely it is that such an event would occur.  This leads to being knowledgeable about the other more indepth areas including budget, finances, type of project, feasability, sales, market, construction schedules, delays, legalities, minimum investment, etc.

Investors should deal with well known and reputable companies. That also goes along with being able to completely trust the company you are partnering up with. If you know little about them, or not sure you can trust them, its better not invest with them.

In the end, risk comes from not knowing what you are doing, and not being able to properly assess the risks and resulting outcomes that affect a specific investment.  This principle applies to all types of investing whether it be real estate, stocks, or other businesses.


The RCMP are investigating allegations against Calgary-based Shire International Real Estate Investment Ltd.

Thursday, September 3, 2009 | 3:15 PM ET
CBC News

Sgt. Patrick Webb of the RCMP commercial crime unit said the force is trying to determine whether a crime has been committed.

“We’re collecting some information from the people trying to determine if there’s an offence here,” said Webb.

The police involvement follows an earlier investigation of the company by the Alberta Securities Commission, which resulted in a cease-trade order against the company amid allegations of misrepresentation and fraud.

Jennifer Lofgren, one of the investors involved in a $75-million class-action civil lawsuit against the company, said she invested almost $80,000 in two different condo projects in Fort McMurray and Hawaii in 2006.

“We were a little bit concerned about how things were going because we weren’t getting a lot of information,” said Lofgren. “But then on June 5 we received a letter from the company and they … let us know that there was a securities commission investigation and a temporary cease-trade order against the company.”
Payments ‘weren’t particularly regular’

“They didn’t tell us why. So I called the securities commission and looked up the information on their website and found that it was for fraud and misrepresentation.”

“There was an eight per cent interest payment we were supposed to be receiving and they weren’t particularly regular,” said Lofgren. “As well, we were to share in 50 per cent of the profits after the projects were complete.”

“The projects were supposed to take two to three years in Hawaii and I believe four years in Fort McMurray. Neither one has had any significant progress.”

In documenting a temporary cease-trade order against the company last June, the securities commission alleged that officers of the company and its subsidiaries Shire Asset Management Ltd., Hawaii Fund, and Maples and WhiteSands Investment Ltd. “made materially misleading or untrue statements, both to potential investors and to Commission investigators, and have engaged in an act, practice, or course of conduct relating to a security that they knew or reasonably ought to have known would perpetrate a fraud on investors.”

The interim cease-trade order was extended in late June and continues.
‘I strongly deny the allegations’: president

In a public statement the president of Shire International, Cleone Couch, said the firm cannot comment on the class action lawsuit because the matter is before the courts.

“But I strongly deny the allegations made and advise that I am currently working with Shire’s lawyers to launch a staunch defence,” Couch said in the statement.

“Shire has met with the Class Action Lawsuit Legal Counsel and has been co-operative with the process.”

Nothing has been proven in court.


Original Article Link:


Thanks & Happy Investing!
The Investment Blogger © 2009


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