ALBERTA SECURITIES COMMISSION NOTICE OF HEARING. Citation: Re Optam Holdings Inc., 2014 ABASC 505 Date: Docket: ENF

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1 ALBERTA SECURITIES COMMISSION NOTICE OF HEARING Citation: Re Optam Holdings Inc., 2014 ABASC 505 Date: Docket: ENF Securities Act, R.S.A. 2000, c. S-4, as amended (Act To: Notice: Location: Optam Holdings Inc. Infinivest Mortgage Investment Corporation Wade Robert Closson (the Respondents The Alberta Securities Commission (the Commission will convene at 2:00 p.m. on Wednesday, the 11 th day of February, 2015, at Calgary, Alberta, to set a date for a hearing regarding the allegations in this Notice. At the hearing, the Commission will consider whether it is in the public interest to make an order against you under sections 198, 199, and 202 of the Act. Alberta Securities Commission, 5 th Floor, th Street SW, Calgary, Alberta. Procedure: 1. You may obtain disclosure and particulars of the allegations in this Notice from Garner A. Groome, c/o Alberta Securities Commission, 600, Street SW, Calgary, Alberta, T2P 0R4, telephone , garner.groome@asc.ca. 2. You may be represented by legal counsel and you or your counsel may make representations and introduce relevant evidence. 3. If you or your counsel fail to attend on February 11, 2015, at 2:00 p.m., or as directed, the hearing may proceed in your absence and an order may be made against you without further notice. See attached sections 29, 198, 199, and 202 of the Act and Commission Rule Rules of Practice and Procedure for Commission Proceedings.

2 Allegations Summary of Breaches 1 Staff of the Commission (Staff allege that, between approximately January 1, 2009, and April 2, 2013 (the material time, Wade Robert Closson (Closson, Optam Holdings Inc. (Optam and Infinivest Mortgage Investment Corporation (Infinivest (these two corporations collectively referred to as the Issuers, or either of the Issuers, engaged in illegal trades and distributions of securities to investors in Alberta and elsewhere. 2 Staff also allege that Closson authorized, permitted or acquiesced in trades and distributions of the securities of the Issuers, or either of them, that violated Alberta securities laws. 3 Staff further allege that Closson made misrepresentations to investors as to the use of their investments in the Issuers, the source of their interest payments, that their investments in the Issuers, or either of them, were secured, and that the source of payments made to Closson in the investment schemes came from income generated on the investments. Closson also failed to disclose material facts to the investors regarding the financial health of the Issuers and himself. 4 Staff further allege that Closson directly or indirectly engaged in fraudulent activity by operating a Ponzi scheme, using investor funds for personal purposes, and diverting investor funds to purposes not authorized by the investors. 5 Staff further allege that the Respondents acted contrary to the public interest. Parties 6 Closson is an individual residing at or near St. Albert, Alberta. At the material time he was not registered to trade in securities. 7 Optam is a body corporate pursuant to the laws of Alberta, which was not a reporting issuer and was not registered to sell securities at the material time. 8 Infinivest is a body corporate pursuant to the laws of Alberta, which was not a reporting issuer and was not registered to sell securities at the material time. Circumstances 9 At the material time Closson was an officer and director of the Issuers. Illegal Distributions & Unregistered Activity 10 During the material time, Closson, in breach of Alberta securities laws, raised on behalf of and for the benefit of the Issuers between approximately $11 million and $24 million from approximately 75 to 125 investors residing in Alberta and elsewhere. Funds were raised by Closson during the material time in two ways:

3 Investors provided between approximately $6.3 million to $19.3 million to Optam and in return received promissory notes issued by Optam, with the money to be used for the purpose of funding mortgages (the Optam Scheme; and 10.2 Investors provided approximately $4.6 million to Infinivest in return for preferred shares (the Infinivest Scheme. 11 Infinivest was ostensibly in the business of mortgage lending as a mortgage investment corporation, administered by Closson through Optam or, alternatively, Closson administered the investment funds provided to Optam through Infinivest and other entities controlled by him. 12 In the Optam Scheme, funds were pooled for a common enterprise and promissory notes were issued to investors by Optam providing for generally an 18% per annum rate of return from the profits or earnings of the purported mortgage investment enterprise over which the investors had no control. In the Infinivest Scheme, cash dividends from the profits of the purported mortgage business were to be provided to the investors holding shares (Optam s notes and Infinivest s shares collectively referred to as the Securities. 13 The sale of the Securities to the investors constituted trades as that term is defined in the Act. Further, as trades in securities of the Issuers that had not been previously issued, the sales of the Securities were also distributions as that term is defined in the Act. 14 Neither of the Issuers filed a prospectus or preliminary prospectus with the Executive Director of the Commission in respect of a distribution of its securities, or received a receipt for the same, between 2006 and the date of the within Notice of Hearing. No offering memoranda or exempt market qualifications are applicable to the Securities and, except in very few cases, the investors did not qualify for the accredited investor exemption under Alberta securities laws. 15 No effort was made to properly qualify the investors or otherwise comply with registration and prospectus exemption requirements in National Instrument Prospectus and Registration Exemptions and National Instrument Registration Requirements, Exemptions, and Ongoing Registrant Obligations. 16 Closson, acting as a director or officer of the Issuers, authorized, permitted, or acquiesced to the illegal distributions of the Securities as described above. 17 On or about the material time, Closson solicited or acquiesced to the trading of the Securities continually and regularly with the expectation of remuneration or compensation. 18 Some interest, principal, and dividends were repaid to the investors in accordance with the schemes and in many instances investors reinvested their principal into new Securities of the Issuers; however, approximately $9.7 million in principal remains outstanding to the investors in the Optam Scheme and approximately $4 million is owing to investors in the Infinivest Scheme. Misrepresentations 19 In the course of raising funds for the Issuers during the material time, Closson made the following material representations to investors:

4 That their investments would be used to fund mortgages; 19.2 That interest payments to investors came from income generated by mortgages; 19.3 That investor funds were secured by real estate; and 19.4 That his fees were to be paid from income generated by the mortgages. 20 In fact, the following was the case: 20.1 After approximately August 15, 2008, no additional mortgages were funded through investor funds and Closson diverted funds for uses not authorized by the investors; 20.2 From approximately August 15, 2008, interest paid to investors came from funds provided by other investors; 20.3 Aside from one or two investments made very early in the Optam Scheme, none of the investments were secured by any encumbrance on any real estate in favour of the investors; and 20.4 Closson was paying himself from investor funds and using investor funds for his own purposes at his own discretion. 21 Closson knew or ought to have reasonably known that the foregoing representations in paragraph 19 were misleading or untrue and that they would reasonably be expected to have a significant effect on the market price or value of the Securities. 22 Further, without disclosure to investors, Closson sold some of the Securities when he knew or ought to have known that he, Optam, and Infinivest, or any of them, were insolvent or on the cusp of insolvency. 23 Closson, Optam, and Infinivest declared bankruptcy on or about March 28, Closson knew or ought to have reasonably known that the status of the financial health of himself and the Issuers was a material fact and that his failure to disclose the actual or impending insolvency would reasonably be expected to have a significant effect on the market price or value of the Securities. Fraud 25 After approximately August 15, 2008, no additional mortgages were funded by the Issuers. Notwithstanding, Closson continued to raise money, expressly or impliedly, for that purpose past the date mortgages were last funded with investor funds. During the material time, Closson raised between approximately $6.3 million to $19.3 million by these fraudulent means under the Optam Scheme and approximately $4.6 million under the Infinivest Scheme.

5 During the material time, Closson diverted investor funds intended for mortgage lending to several unauthorized purposes, including but not limited to: 26.1 Paying approximately $4.7 million in returns to investors from funds provided by new investors rather than from profit earned by mortgages in what is commonly referred to as a Ponzi scheme; 26.2 Diverting approximately $3.9 million of investor funds to offshore and other projects outside the scope of the express or implied purpose of the investments; 26.3 Removing from the pooled investor funds approximately $1.7 million for his own use, including but not limited to: payments to himself, transfers to personal, spousal, and other bank accounts controlled by Closson, withdrawals of cash, payments of personal and spousal credit cards, residential mortgages, condominium fees for himself and his family, and car leases, and purchases towards dining and entertainment, sports and recreation, household utilities, home improvements, and other personal expenses; and 26.4 Such further and other misuses of investor funds in such additional amounts as may be proven at the hearing of this matter. 27 In so doing Closson knew or reasonably ought to have known that he was perpetrating a fraud upon the investors. Breaches 28 As a result of the above, Staff allege that the Respondent Wade Closson: 28.1 breached subsection 92(4.1 of the Act by making statements or omissions which were materially misleading or untrue, or required to be stated, that would reasonably be expected to have a significant effect on the market price or value of a security; and 28.2 breached subsection 93(b of the Act by directly or indirectly engaging or participating in an act, practice, or course of conduct relating to a security that he knew or ought to have reasonably known would perpetrate a fraud on any person or company. 29 As a result of the above, Staff also allege that the Respondents Wade Robert Closson, Optam Holdings Inc., and Infinivest Mortgage Corporation:

6 breached subsection 75(1(a of the Act by trading in securities of Optam and Infinivest without being registered in accordance with Alberta securities laws and without an exemption from that requirement for some or all of those trades; and 29.2 breached section 110 of the Act by trading in distributions of securities without having filed and received a receipt for a preliminary prospectus or a prospectus, and without an exemption from that requirement for some or all of those distributions. 30 Staff also allege that the Respondents misconduct as described in the above breaches of Alberta securities laws constitutes conduct that was contrary to the public interest. Calgary, Alberta, December 18, ALBERTA SECURITIES COMMISSION Original Signed By David C. Linder, Q.C. Executive Director