The BC Securities and Exchange Commission says a Vancouver Island man conned an investor out of $1 million by lying about ownership of a legendary hotel.
A BCSC panel found that Timothy Craig Durkin misled an investor by falsely representing that SHH Holdings, through a subsidiary, owned all shares of the Sooke Harbor House hotel.
In a decision released Tuesday, the panel said Durkin raised $1 million from an investor between December 2015 and March 2016, promising them a 40 percent stake in the hotel by purchasing 40 percent of the shares of SHH Holdings.
The investor, a Chinese national seeking to emigrate to Canada, had already invested in a spa business in the Sooke area and was considering expanding his investments in the region.
The investor’s company advanced $1 million between December 2015 and March 2016 to purchase the shares. The money was spent and not recovered by the investor or his company, the ruling says.
According to the ruling, Durkin, a director of SHH Holdings, argued that the investor was not misled and did not intend to mislead her.
Durkin said he made it clear to the investor, especially through the delivery of an unsigned memorandum of understanding sent to the investor’s advisers, that SHH Holdings did not yet own the shares in the hotel.
The BCSC panel found that SHH Holdings and Durkin made false statements about the hotel’s ownership on three occasions.
The ruling included a 2015 email to the investor’s attorney that said SHH Holdings “owns 100 percent of the outstanding and issued capital stock of Sooke Harbor House Inc., the operating company.”
In response to a question about whether SHH Holdings was the hotel’s sole shareholder or would acquire shares later, Durkin told the investor’s attorney in a 2015 email that the shares “have already been acquired.”
“This exchange of questions and answers is very clear,” the ruling says. “It contradicts all of Durkin’s evidence and submissions to the effect that he believed the investor understood that Holdings did not own the shares of the hotel.”
The panel has ordered the parties to make submissions regarding the sanctions.
Legal battle for control of the hotel
Durkin spent years battling the hotel’s founders, Sinclair and Frederique Philip, for control of Sooke Harbor House, the legendary resort destination that has hosted Hollywood stars and royalty.
In 2020, Judge Jasvinder Basran awarded Philips $4 million in connection with a settlement they reached with Durkin and a partner in a failed hotel share purchase deal in 2014.
Philips reached a stock purchase agreement in 2014 that would have seen Durkin and a partner buy their stake in the hotel for $6 million.
The Philips believed they were to receive $2 million and, according to the judgment, Durkin assured them that SHH Holdings had the resources to cover the existing mortgage and interest owed to the Business Development Bank of Canada.
In fact, Basran found that despite promises from a “syndicate” or “gang” of investors from Tehran to Zurich, SHH Holdings never raised more than $54,000.
“[Durkin’s] vision of truth is what serves your interests at the moment. It is completely free from ordinary standards of morality, integrity and decency,” Basran wrote.
“He is a run-of-the-mill bully who preys on those he perceives to be weaker than him and vulnerable to his falsehoods and manipulation.”
In 2020, North Vancouver-based IAG Enterprises purchased the land, the Sooke Harbor House building and its associated assets in a court-ordered foreclosure sale for $5.62 million.
The hotel is closed for renovations and a reopening date has not been set.
The hotel was listed for sale last year for $13.3 million.
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