DID ALBERTA SECURITIES COMMISSION ALLOW WALTON INTERNATIONAL A FREE PASS?

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What a last couple of weeks it has been for Walton International – the Alberta Securities Commission suspended Walton’s registration which prohibits them from selling any more of their investments.  And then they hired Ernst & Young to take them through the CCAA process in an attempt to re-organize their debt.   This sounds almost identical as the League Assets story we discussed last summer in this blog post.     One can conclude the Walton matter will have the same ending!   How can a company make hundreds of millions of dollars selling land be broke after 25+ years of being in business?  Rumor on the street is the company is being gutted and those (at the top) have already cashed out their millions…

WAS THIS ALL PREDICTABLE?

Back a few years ago I came across a Sales Representative that worked at Walton International at a Calgary Flames hockey game.  After chatting for a few minutes he suggested I look at his investment opportunity – it was a parcel of land down by Spruce Meadows (in the southern tip of Calgary).    Although I was not interested in the investment, I agreed to meet with him at his office a short while later.

I remember their office being really nice and it seemed like they had a ton of staff.  After receiving a brief sales pitch I was sent on my way with an envelope full of paperwork.   Some time later, I opened the envelope and (as part of the package) discovered a letter from a lawyer named Donald Boykiw from the fancy Bennett Jones LLP law firm.

The letter is short and cuts to the point – it indicates that Boykiw is writing to inform Walton that the Alberta Securities Commission had reviewed Walton’s business practice of selling undivided interest in land to purchasers and that this review had been done as a result of sanctions against Walton’s prime competition in Alberta land banking.    Boykiw goes on to state, “I would also advise that the Commission staff member who was involved in this matter has further advised that the ASC’s enforcement counsel would not be recommending any changes to the current forms of referral arrangements for both the mortgage referrals from Westmount Mortgage Corporation and the land referrals from Cordex Realty.   We have also received a follow-up call from the registration counsel at the Alberta Securities Commission indicating that they ave also completed their review of such referral agreements and were not proposing any changes.”    A copy of the letter:  

The significance of this letter is simple – Walton International’s business model sees them allegedly buying farm land for as little as $400 per acre and turn around only days later and sell it for up to 7000% increases to investors from all over the World – and the gang down at the ASC gave them a clean bill of health while sanctioning others in the same line of work.    And don’t forget – this happened during Ralph Klein’s duration as Premier of Alberta who’s daughter physically worked at Walton’s head office.

For those people that do not know who Walton International are (or were) – they purported to be the largest land banker (and then later land developer) in the nation.    They had many projects throughout Canada and the United States.   They had come under fire in some circles for paying huge upfront commission to their sales people and for having lavish spending sprees on chartered boats and trips for Staff.   In one instance, it was reported they had chartered a large ship and had the expensive Self-Help Guru Anthony Robbins as a guest to get their staff motivated to sell their product.

Facts are – may people have been reporting on Walton’s demise for years.   A simple google search has found us endless reports from press from all over the World suggesting Walton’s business plan had some distinct cracks and was leaking severally.   An article in the Ottawa Citizen from March 2013 suggests the land banking project in Ottawa was in trouble.

What happened in Singapore when they had several complaints about many Land Banking firms – even Walton International?   Out comes the huge Public Relations wheel and they brought an entire news crew to see their operations in Canada….

This video is so biased towards Walton but comes across as some bi-partial news telecast – We wonder how much more they raised after this video made the rounds…

Would this all have been avoided IF the ASC had not given them that clean bill of health back in 2002 – that they used as a sales aid for their sales people???  Shame on the ASC!   This story is going to be huge when the cards ALL come falling down – and this letter is going to be used in any case against the ASC!   How are they going to be able to protect the Walton Investors when they are complicit in allowing Walton to exist – even going as far as giving legal advice that their sales people used to close the unexpected investors?

 

3 thoughts on “DID ALBERTA SECURITIES COMMISSION ALLOW WALTON INTERNATIONAL A FREE PASS?”

  1. I’m a Walton’s investor that bought into Walton’s in December 2007 for property in the US, Pichacho View which is located in Eloy Arizona. Fanny Fay issue in the states hit in 2008 which saw this investment stalemated for years.. In 2015 everything seem to be back on track with forward vision, Phoenix Mart highways etc etc. It appeared exit was imminent. May 2017 Waltons announces bankruptcy in Canada. I ask and they (Walton) state no affect to my investment in the States. That was a Lie, restructuring of all Walton’s land resulted in re-valuations of all the projects some were dollar for dollar of RUC shares, mine in particular where only valued at 20cents on the dollar.. fast forward out of bankruptcy their website appears to be dormant, no new exit information etc etc.. Their business plan was to build vertically and horizontally with dividend payouts yearly if not twice yearly. Doherty and clan of Directors have 100,000 shares each in the new company. There are 71 million shares out there with 710 million in assets..(Land) For me to re-coop my investment dividend checks in the amount of 10.00 a share per year for 10 years would have to be issued by Walton’s.. Something stinks here, this company I bought into because it was a Canadian based family company with Bill DOHERTY as the owner, their prospectus was 14 percent annual return on investment with 4-6 year turn time.. I’ve yet to receive anything and feel my investment is gone.. This company I feel has defrauded investors and should be looked at by the Alberta Securities Commission for Fraud.. Investors need to be paid back in some form….

    1. Neil, let me first say I am very sorry you feel your investment is gone. This is never an easy scenario for anyone to go through. I am not sure what Walton paid for any of their land holdings in the USA but in Canada it was very much public record for a long time. I have friends in Asia (whom invested in Walton) that to this day still reach out to me and ask if I can help them ascertain what has happened to their investment dollars. Its a tough one – like I said in my post, Walton was trying back in the mid 2000’s to unload mortgages they had on their own properties. This to me was a major red flag – why would they be selling the paper of their own investments/holdings? It doesn’t make sense! It is some peoples opinion that Walton was a huge PONZI SCHEME that many people knew about – in that they had to bring in “new” investors to pay out the old. This was rumoured for a long time, specifically back in the late 90’s and early 2000’s as they did not have a lot of projects mature in the time frames they agressively offered.

      The Alberta Securities Commission (in my opinion) won’t do anything to Walton. Like the BCSC, the ASC appears to be a “racket” and they would probably have to admit wrongdoing if they went after Walton. My reason for concluding this is that they appeared to give Walton a green light on many of their offerings – and as the letter in my blog indicates – they gave them a clean bill of health whcih their staff used as a marketing tool. The regulators are NOT allowed to give this blessing to any company – specifically if it is to be used to market their shitty land deals.

      Neil, I wish things were different for you. But I do not see this ending well for the little guys – the big guys have already had their snouts in the trough for far too long.

      RW

  2. Walton International
    This is a company I have dealt with for approximately twenty years or more. Initially they were very ethical and performed very well so for many years I was happy. This investment was primarily for raw land for which you received a title and held while the proceeded to get land approvals to where the property became ready for immediate development. The property was then sold in its entirety with all investors being paid out on their prorate shares. Then about nine years ago the government forced them to change whereby they were selling securities and individual investors purchased interests in the entire project. At that time Walton had a client base in excess of 90,000 that were regularly investing.
    During this time Walton’s owners became billionaires from its activity but kept pushing forward getting ever bigger. After the market crash of 2007, things became very slow and Walton’s overheads were very high but never once did they mention there was a problem. Also during this there were relatively few properties sold and paid out. Walton tried many approaches to getting access to additional funds through existing clients or partnering but appeared to not be successful. During the last year before the problem surfaced and they defaulted, Walton indicated they would be selling and paying out in excess of $400,000,000 USD. In reality they ended up with about 10% of that. Those funds would then have been distributed directly to investors without further deductions. Under the new forced program RUC (roll up corporation) Walton owners are entitled to two separate commissions of 1% and 2% of the entire selling price in addition to receiving ample compensation for managing the company during the liquidation period.
    In some of their communication after the default happened they indicated if we voted for the RUC option they would have many more tools at their disposal with which to make deals and recover our money. At one point, I was told they would recover 100% of our invested money and possibly a bit better but that we would not likely make much in the way of gains for having the funds tied up for nine years. That really hurt as I am in my seventies and on government pensions so was relying on this to enjoy my retirement. After the RUC was voted on and approved there was a barrage of other information much of it very unclear or confusing. Now that the dust is settling it appears that not only are we not going to recover what was originally invested but also the investments were made with USD but are being paid back in CAD and conversions do not seem to be accounted for or equitable.
    What was done is that all properties were revalued into current market values and then prorated shares were allotted to each investor. The problem is that first of all they had accountants revalue all individual land parcels rather than a Real Estate Appraiser with specific raw developable land experience. Then it appears that some of the investors made money of the investments through higher allocated values while others seemed to be valued well below market. This was especially true in Arizona and Texas. In Arizona two years ago Walton sold a small portion of land in the Toltec development (the sale was for two acres of some of the least valuable land) and it sold for $90,000 USD per acre. The market in Arizona has since been fairly brisk and yet the rest of the more valuable land in the project was valued well below that number. Even common sense would tell anyone that this in not right. I know Walton has interests in many of the properties and am wondering if they have bigger interests in projects that got valued so high that they made money while others were valued far less below prices that were paid nine years ago but with recent sales showing a much higher value.
    It just seems grossly unfair and unethical that owners who made so much from their clients should participate in what appears to be self-serving manipulation to enrich themselves further while devastating so many of their loyal clients. Try to get specific or more detailed information from them on specific questions seems impossible so I am hoping with your investigative abilities and connections you may chose to assist with something that could help more than 90,000 investors.
    Since they Walton now seems to be even more self-serving I also have concerns that the land they are now selling off to return a small amount of investor’s investment, that such sales my involve a partnership, joint venture agreement or some other such benefit accruing to Walton’s benefit and to the investors detriment.
    Should you wish to contact me for further information or any other assistance I can provide you may contact me directly at; 604-200-7417

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