A former prominent Vancouver stock promoter residing in California has been sentenced to four months in jail and one year of supervised release for committing securities fraud through companies he directed in the U.S.
In a federal court in Boston, Mass., on Wednesday, Avtar Singh Dhillon learned his fate from Judge Allison D. Burroughs after admitting in October 2022 to wilful failure to disclose stock sales, aiding and abetting the sale of unregistered securities and conspiracy to not disclose touting compensation.
Dhillon duped investors
Authorities had determined Dhillon and his corporate lawyer Daniel Martinez concealed ownership of shares for Boston-based Arch Therapeutics and New Jersey-based OncoSec Medical Inc. — two “fledgling” biotechnology companies Dhillon was chairman of the board for, between March 2011 and April 2020.
Specifically, the U.S Attorney’s Office stated, Martinez made “misleading representations” directly and indirectly to stockbrokers in order to make it appear as if the shares held by Dhillon’s nominees were eligible for unrestricted sale to retail investors.
Dhillon then clandestinely sold the shares for $2.1 million, profiting $1.5 million while Martinez gained just under $200,000. As such, Dhillon was ordered to repay $1.5 million as part of his guilty plea.
Dhillon also participated in a securities conspiracy involving the non-disclosure of what the U.S. Attorney’s Office called “sham consulting and service agreements” to promote Emerald Health Pharmaceuticals (EHP), a subsidiary of Dhillon’s B.C.-based investment firm Emerald Health Sciences.
Dhillon and the subsidiary (EHP) already settled fraud allegations in separate civil proceedings with the U.S. Securities and Exchange Commission (SEC) while Martinez pleaded guilty to criminal fraud in October 2023 and was sentenced to one year of supervised release.
Dhillon lied under oath twice but gained leniency from judge
Dhillon faced the prospect of up to 63 months in prison; however, his recommended sentence was lowered to 18 months after pleading guilty and testifying against his former business associates in a contemporaneous civil complaint launched by the SEC, in August 2021.
Assistant U.S. Attorney James Drabick noted Dhillon lied to the SEC twice under oath thus “digging his hole deeper.”
Drabick said Dhillon and Martinez “were not equal partners” and “to be sure, Dhillon directed Martinez to take certain actions at certain times throughout the course of their criminal activity” and Martinez also never lied under oath.
Drabick said Dhillon’s guilty plea and consideration for his two young children played a role in lowering the sentencing recommendation.
But Burroughs was much more lenient on Wednesday after hearing from Dhillon, who resides in a US$12-million, 9,300-square-foot, yacht-lined waterfront home in Long Beach, Calif.
“Avtar Singh Dhillon stands humbly before this Court, having reflected deeply on his conduct, anguished by the hurt to which he has exposed his daughter, son, and wife, and full of genuine remorse for the pain he has caused to his family, friends, and colleagues,” Dhillon wrote to the court in a pre-sentencing memorandum wherein he requested no prison time, no fine and two years of probation.
Dhillon stated how he was not a U.S. citizen, unlike his wife Diljit Bains, and that “this case may ultimately have immigration consequences.”
Bains stated in a letter to the court her husband’s crimes were contrary to the values she perceived himself to live by: “honesty, compassion, ambition, integrity, hard work, and the desire to make a positive impact on the world.”
Bains hails from a prolific farming family, the daughter of the late “Peach King” Didar Bains, who has operations in B.C.
Dhillon submitted, via his lawyer George W. Vien, that he wished to “rebuild and repair the relationships in his life, including within his family.”
A family doctor before working in Vancouver’s capital markets
Dhillon, 63, touted a rags-to-riches type story, telling the court how he was disadvantaged as an immigrant child from Punjab growing up in Canada due to discrimination and bullying as well as a father troubled by alcohol-fuelled violence.
But Dhillon overcame those disadvantages, working “in far-away fields under inhumane conditions” but ultimately graduating with a medical degree at the University of B.C. in 1988. However, after a short stint practising medicine, he turned to investment work in the 1990s and moved to the U.S. in 2001 before marrying Bains in 2004.
Dhillon’s corporate work occurred largely in the medical and biotechnology fields after graduating from medical school. He once claimed, after an initial career as a medical doctor, to have raised more than $1 billion from investors.
Dhillon is the past chairman of the Cannabis Canada Council and is a former member of the securities practice advisory committee to the B.C. Securities Commission. The commission has taken no regulatory action against him, to date.
Dhillon part of $1B fraud scheme alleged by SEC and FBI; associated with David Sidoo
But south of the border, Dhillon had been subject to an intensive, widespread investigation from the SEC and Federal Bureau of Investigation for his part in an unprecedented and widespread $1-billion stock fraud scheme orchestrated, in part, from Vancouver, between 2011 and 2019, according to the authorities.
In August 2021, the SEC filed a civil complaint against Dhillon, who initially pleaded the fifth only to finally admit to his part in the scheme and agree to testify against his associates, allowing him to avoid further criminal charges of obstruction.
Dhillon testified in the civil trial that involved seven other B.C. residents since found liable of committing fraud. Some are facing criminal fraud charges in the U.S.
Chief among them is former Vancouver lawyer and West Vancouver resident Fred Sharp.
Sharp was deemed to be the “mastermind” of the scheme, setting up offshore shell companies to conceal shares for so-called “control groups” of individuals who secretly obtained vast amounts of shares of otherwise low-value public companies they secretly controlled.
Dhillon testified in 2023 how he raised money for another of his companies OncoSec Biomedical from B.C. residents Paul Sexton, Mike Veldhuis — who face criminal fraud charges — as well as another former prominent Vancouver stock promoter David Sidoo. Sidoo is allegedly part of a separate control group led by former B.C. resident Ronald Bauer, who pleaded guilty last month to what the U.S. Attorney’s Office called a “sprawling ‘pump-and-dump’ scheme involving the shares of numerous U.S.-based issuers that preyed on ordinary, retail investors.”
The SEC charged Sidoo with civil fraud offences in April 2022, nearly two years after he was sentenced to jail for criminal wire fraud for his participation in the U.S. college admissions and bribery scandal.
Sidoo’s own case involves other companies not associated with Dhillon. The SEC complaint alleges Sidoo conducted a “pump and dump” through B.C. company American Helium, which sold shares in U.S. markets. The allegations against Sidoo remain unproven. His case is adjourned by the U.S. Attorney’s Office to clear up criminal cases of alleged co-conspirators (one of them being Bauer).
Sidoo continues to reside in a home valued at about $35 million on Belmont Avenue in Vancouver’s West Point Grey neighbourhood near UBC; he has not been pursued by Canadian authorities.
Eight B.C. residents owe over US$110 million in monetary orders stemming from the SEC fraud complaint, albeit some are currently appealing the amounts and Sharp never responded to the SEC claiming he was not properly served.
The residents are also contesting efforts by the SEC to seize B.C. assets under civil forfeiture claims.
Sharp has since been banned by the B.C. Securities Commission and owes the SEC US$52.9 million.
As for Dhillon, in September 2023 he was ordered to pay back US$9.1 million, representing the net profits gained as a result of his fraud through OncoSec. He is also to pay US$1.3 million in interest. Of the US$10.4 million, US$1.5 million will be offset from his criminal sentence.
Dhillon is also permanently banned from participating in penny stock trading (defined as any equity or security below a price of $5) and related business activity with public companies and stockbrokers in the U.S., although he is still free to conduct business in Canada.
Organized crime links to Dhillon’s Canadian company
Dhillon also directed Vancouver-based medical marijuana company Emerald Health Therapeutics in the Lower Mainland before running afoul with the SEC in 2021. The company operated out of Richmond, where Dhillon leased land to it, according to company filings. Therapeutics was controlled by Emerald Health Sciences, whose shareholders include companies alleged to be controlled by Sharp, Sexton, Taylor and Delta resident Jackson Friesen (also facing criminal charges).
One of Emerald Health Sciences’ co-founders is Dhillon’s cousin Yadvinder Singh Kallu, a U.S.-convicted drug trafficker who was sentenced to nine years in a New York federal prison in 1999 after being caught running drugs and cash in Los Angeles for a transnational organized crime network.
Kallu was able to obtain Health Canada medical marijuana growing licence for Emerald on his parents’ property in Richmond, according to court documents filed by the provincial government.
Meanwhile, Dhillon touted the company’s controversial proposal to build cannabis greenhouses on his Richmond farm property.
The subsidiary Therapeutics has since been absorbed by Skye Bioscience Inc., a company now being investigated by California law firms, including Schall Law Firm, for alleged securities fraud after being sued by a whistle-blowing employee.
Two years prior to the Skye takeover, the Kallu property associated with Emerald was raided by Delta police in October 2020 under “Operation Big Smoke” and is now subject to a civil forfeiture claim by the provincial government after police asserted an illegal marijuana grow-op was taking place under the guise of a medical marijuana company. Police have linked the grow-op to organized crime, including the Hells Angels.
Notably, one Hells Angel member has been alleged to have operated a control group with Sharp; Courtney Vasseur now faces extradition to face criminal securities fraud charges.
Evidence tendered by the SEC purports to show text messages from Sharp to an associate cautioning the associate to the risk of leaving evidence of money laundering for the Hells Angels: "On aug 12 u wrote a draft for grand yachts against cash. Cld u pls explain to me how this is legitimate payment? My concern is money laundering: hells angels gives us cash, we give them a draft to buy a boat. Later, boat is seized, polic investigate, find out charterhouse paid for it; visit us and ask why. What will u say?"
Dhillon’s family feud continues in B.C. courts
With respect to Dhillon’s family, it is his cousin Kris Kallu who is suing Dhillon and Emerald Health Sciences, claiming the firm was a “sham” to serve as a “conduit for undisclosed payments” for chosen shareholders.
Kris Kallu claims he was Emerald's co-founder and cultivator, using his blueberry farming skills. Kallu noted he had obtained a Health Canada medical marijuana growing licence for research purposes for Emerald.
However a falling out took place in 2018 over share compensation and Kris Kallu departed the company.
It was the September 2021 indictments against Dhillon and Sharp that also led Kris Kallu to use a 2019 Emerald securities registry to email shareholders about the proceedings. As a result, Emerald filed for an injunction against Kallu, claiming he violated privacy provisions, but was unsuccessful.
Dhillon's estranged cousin issues statement
While Kris Kallu’s medical marijuana licence had also been cited in the government’s forfeiture claim, as previously reported, Kris Kallu provided the following statement to Glacier Media on Dec. 13 after publication of this article (content in square brackets has been added by Glacier Media):
“With respect to the Article published by Glacier Media on December 5, 2024, I would like to correct and clarify certain facts stated in that Article. When I co-founded Medna (now Emerald Health Sciences), it was on the land that has been mentioned in a number of newspaper Articles as being part of a huge [allegedly] illegal cannabis raid called the “Big Smoke”.
“7480 Sidaway Rd Richmond BC is jointly owned by my estranged father and his younger brother. The December 5 Article, as well as a previous one published on November 18, 2024, suggests that I am somehow connected or involved in the illicit grow up [allegedly] found on the Sidaway property. I have no involvement in anything that happened on that property. I had obtained a grower’s licence just ahead of cannabis legalization and for the purpose of conducting research and development for Medna. My grower’s license has been expired for years and I am unsure how it could’ve been displayed in that facility when it’s in my possession. I have never been contacted or questioned by any law enforcement.
“I confirm that I am estranged from my family, including my parents, my brother and Avtar, who is my cousin. My role with Medna in terms of founding the company, providing research and development as part of a team on the ground can and will be substantiated by proper evidence. My lawsuits make it clear that I had a legitimate role at Medna and, most importantly, one that was not in complicity with my family members and the other defendants leading to wrongdoing not just affecting me but affecting other legitimate investors as well.
“This is important in light of Avtar’s recent sentencing. Law enforcement and regulatory agencies in the US have proven his wrongdoing. I am hopeful that justice will prevail in my cases as well. Because of him and his close friends, I lost my company which was set up for legitimate purposes, and I have suffered personal hardship that has affected my wife and two young children for the past few years.
“The suggestion in the December 5 Article grouping me with people who have wronged me and broken the law was not acceptable and, for that reason, I was compelled to issue this statement.”
Kallu is not named as a defendant in the province’s civil forfeiture claim. The allegations in that claim (some of which are no longer being pursued by the province) are denied by the defendants, and have not been proven in court. Kallu’s allegations in his civil proceedings are denied by the defendants/respondents, and have not been proven in court.
