Two Manitoba brothers’ shares in B.C. diamond exploration company don’t have promised tax benefits, according to lawsuit
Two prominent Winnipeg businessmen who bought shares in a B.C. diamond exploration company are suing the company and investment advisers for $700,000 in damages.
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Sandy Shindleman and his brother, Robert Shindleman, say in their B.C. Supreme Court lawsuit that they were told the shares they bought in Arctic Star Exploration Corp. in 2015 were “flow through shares” that would provide them with “significant tax benefits,” the lawsuit alleges.
But they received a tax bill in 2022 advising them the shares did not provide any tax benefit and they owed a “significant” tax liability and penalties, according to the lawsuit, which didn’t say how much they were assessed by Canada Revenue Agency.
They’re seeking damages from Arctic Star and Peter Nicholson, the Ottawa president of WCPD Advisers, which the lawsuit said represents itself as a boutique financial services firm specializing in tax reduction and structured flow-through financing for junior mining and mineral exploration in Canada.
Ontario-based WCPD is also named as a defendant, along with a professional adviser referred to as John Doe and John Doe Investment Firm, the claim said.
“The defendants fraudulently misrepresented to the plaintiffs that the shares would provide significant tax benefits when they knew that they would not,” the lawsuit alleged.
Or alternatively they were negligent when they provided the advice, it said.
The brothers allege that constituted a breach of contract and of the advisers’ fiduciary obligations, it said.
The advisers were paid for finding investors for the company and they “used their relationship with the plaintiffs to unjustly enrich themselves to the detriment of the plaintiffs,” it alleged.
The damages sought by the Shindlemans, who have built various developments through the commercial real estate company Shindico in Manitoba for 50 years, are for the tax liability, penalties and other costs, including professional fees, as well as for general damages, it said.
None of the allegations have been proven in court.
Messages left with Arctic Star, WCPD and the Shindlemans were not immediately returned.