British Columbia Securities Commission

British Columbia Securities Commission

October 19, 2006 09:30 ET

British Columbia Securities Commission: Nanaimo Pawnbroker Sanctioned by Regulator

VANCOUVER, BRITISH COLUMBIA--(CCNMatthews - Oct. 19, 2006) - The operator of a money losing Nanaimo-based pawnbroker and an individual who helped him solicit some of the $14.8-million illegally raised to invest in the business have each been banned from the province's capital markets for 20 years, by the British Columbia Securities Commission.

Daryl Joseph Klein, 63, and Douglas Arnold Clarke, 66, cannot buy or sell securities except in limited circumstances, cannot act as a director or officer of any issuer nor engage in any investor relations activities for 20 years.

The two Nanaimo men admitted in settlements with the BCSC that they violated securities laws when they traded securities without being registered and distributed securities without filing a prospectus.

Klein was the president and a director and officer of Kleincorp Mgmt. Inc., which operated as Insta-Cash Loans - a pawn-broking business headquartered in Nanaimo with branches throughout the province. Clarke operated Bick Financial Services Inc., and beginning in 2001 through Bick, he solicited investors to put money into Kleincorp.

Between 1998 and July 31, 2006, Klein and Kleincorp raised about $14.8-million from at least 54 investors (one of these investors was Bick). For his part, Clarke raised about $4.4-million of the $14.8-million total invested in Kleincorp. Clarke did so by soliciting funds from about 225 investors, most of whom were BC residents. Kleincorp used these funds to make loans to its pawn-broking clients, to pay for its operating expenses, and to pay back principal and interest to investors.

During this time, Klein did not prepare financial statements and was under the false impression that Kleincorp was a profitable business. In fact, Kleincorp incurred operating losses on the pawn-broking business and by 2005 had cumulative losses of $759,524. In November 2005, due to its financial difficulties, Kleincorp stopped making interest and principal payments to its investors.

Between 1998 and November 2005 when payments to investors stopped, Kleincorp paid investors about $13.9-million comprising $10.8-million in interest and $3.1-million in principal.

As of Dec. 31, 2005, Kleincorp owed investors about $17-million, made up of $11.7-million in principal and $5.3-million in interest.

In his settlement, Clarke also admitted to violating securities laws through unregistered advising and making misrepresentations about Insta-Cash Loans in a brochure he sent to potential investors.

The BC Securities Commission is the independent provincial government agency responsible for regulating trading in securities within the province. You may view the settlements on our website www.bcsc.bc.ca by typing in the search box, Daryl Joseph Klein and Douglas Arnold Clarke or 2006 BCSECCOM 589 and 591. If you have questions, contact Andrew Poon, Media Relations, 604-899-6880.

Contact Information

  • British Columbia Securities Commission
    Andrew Poon
    Media Relations
    (604) 899-6880 or (B.C. & Alberta) 1-800-373-6393
    Website: www.bcsc.bc.ca