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CHARLOTTETOWN, P.E.I. - A financial planner who was involved in a scheme that defrauded clients of more than $2.9 million was sentenced Wednesday to 54 months in prison.
Frank Harrison Dew, 50, appeared before Judge John Douglas in provincial court in Charlottetown for sentencing after previously pleading guilty to 26 counts of fraud over $5,000.
That 54-month sentence came after a joint recommendation from the Crown and defence in what Douglas said was one of the highest frauds in P.E.I.’s history.
Before sentencing Dew, Douglas said the emotional impact had a more serious effect on the victims than any money lost.
“It’s the breach of trust and the emotional aspect of being taken advantage of like this,” the judge said.
Along with Dew, a second person has been charged for his alleged involvement in the fraud, but has yet to enter a plea.
Dew was a financial planner and advisor working out of Morton Dew in Charlottetown.
Through his affiliation with London Life, Dew was able to sell that company’s products.
The fraud started in 2011 and involved Dew taking steps to collect commissions on life insurance policies.
In July 2015, a lawyer for P.E.I.’s Consumer, Corporate and Financial Services division approached Charlottetown police about complaints he received from clients.
London Life internal investigators were also conducting their own investigation at that time.
In total, clients were defrauded of $2,911,076.64.
The court heard London Life compensated most victims in full for the money lost.
As he made his sentencing submissions, Crown attorney Jeff MacDonald called it a major fraud with far reaching implications.
“People were concerned that they were going to lose everything,” he said.
MacDonald also said there was no indication Dew was struggling to get by, but no inference could be drawn other than he was trying to support a lifestyle he couldn’t afford.
Dew filed for bankruptcy in 2015.
Before hearing his sentence, Dew didn’t address the court, but his lawyer Brandon Forbes said his client accepted full responsibility and apologized to the people impacted.
Along with the prison time, Douglas issued a restitution order for $2,911,076.64 that will allow London Life to try to recover the money through the civil courts.
Dew’s bankruptcy doesn’t affect that order.
David H. Cudmore, who was also a financial planner with Morton Dew, is facing 26 counts of theft over $5,000 and 26 counts of fraud.
His matters were adjourned Wednesday until Aug. 3.
Anatomy of a fraud
A scheme to collect commissions on insurance policies is what landed Frank Harrison Dew a 54-month prison sentence.
According to an agreed statement of facts, the fraud started in 2011 involved clients writing cheques to Morton Dew that were meant to be deposited into their existing London Life insurance policies or investments.
Those funds didn’t go into the clients’ accounts.
Instead Dew was involved in a scheme that saw the clients’ money pay premiums on life insurance policies for which he and a co-conspirator collected commissions.
Clients also unknowingly had money taken out of their investments to fund premiums for life insurance policies so Dew and a co-conspirator could collect commissions.
An agreed statement of facts said clients were told they were buying an insurance policy with an annual premium, but in reality it had a monthly premium.
Commissions were high enough for Dew and a co-conspirator to pay a few monthly premiums.
Clients weren’t aware of the real circumstances because part of the plan involved changing their addresses on the policies.
In some cases, the premium value of life insurance policies were changed so the commissions would be higher.
The fraud also involved Dew and a co-conspirator submitting new life insurance applications for clients and letting other policies lapse so he could collect more commissions.
Clients weren’t aware the old policies lapsed and they accepted explanations given for the new ones.
Some clients received false investment statements they thought showed the performance of money entrusted to Morton Dew.
Actual statements from financial institutions never made it to the clients because addresses were changed to post office boxes Dew controlled.
The fraud in which Dew was involved totaled more than $2.9 million.
