In her decision, Justice Rosemary Nation detailed a business project that began legitimately in 2007 with McMorran’s Marcer Ranching Ltd. seeking to develop four plots of land on a 296-acre property known as Sweetwater Resort on Lake Koocanusa
Two Calgary men have been convicted of defrauding people who mistakenly thought they were legally purchasing property at an RV park in southeastern B.C.
Craig McMorran and Gus Kalabalikis, also known as Kosta, are both guilty of fraud in a scheme that scammed about 85 customers of a total of $2 million between 2014 and 2017, concluded Court of King’s Bench Justice Rosemary Nation in a Sept. 20 ruling.
In her decision, Nation detailed a business project that began legitimately in 2007 with McMorran’s Marcer Ranching Ltd. seeking to develop four plots of land on a 296-acre property known as Sweetwater Resort on Lake Koocanusa, 380 kilometres southwest of Calgary. Marcer held the land as security against an $8.5-million loan to what would become a numbered company.
In 2014, McMorran began marketing 50-year leases on unsubdivided lots there with an option to ultimately purchase and 17 prospective purchasers, who’d go on to become Crown witnesses, were given tours of the property.
Kosta, she noted, acted as Marcer’s salesperson at its Calgary office.
“The complainants who signed RV lot agreements were advised that subdivision and thus the transfer of title could not occur until the lots were serviced with water, power and sewage services,” Nation stated in her ruling.
“It was represented that servicing would occur soon, but the date kept on being delayed. In fact, the delay continued in some cases for years after the representation was made.”
But beginning in January 2014, the numbered company that held Marcer’s loans began proceedings to foreclose on the property.
Nation noted that the complainants testified they were never told of the foreclosure proceedings, that the lease was illegal under B.C. law or that Marcer had no permit for the RV park.
Once the foreclosure took effect, those who’d purchased interests in one section of the property lost their investment, she noted, adding those who sunk money into boat docking spots suffered the same fate.
“Everyone who purchased a middle terrace lot or an RV lease/lot received only the benefit of the use they made of it until the foreclosure was completed,” she wrote.
A legal attempt by the complainants to then have their interests recognized by the numbered company failed, noted Nation.
She also said McMorran’s efforts to raise money through other land sales to save the project failed and in no way excused misleading investors.
“McMorran throughout had set up and maintained the scheme to lease/sell cabin lots and RV lots. He carried on with it, knowingly and with intention,” stated Nation.
“He failed to ensure that his staff were providing proper disclosure of risks to the purchasers who were members of the public.”
She also said it’s clear McMorran used proceeds from Marcer Ranching’s corporate bank account to cover expenses for family holidays and his daughter’s tutoring.
While McMorran was acquitted of another count of fraud, he was also found guilty of theft and dealing of property as proceeds of crime, and Kosta was found not guilty of those additional charges.