Lawyers in Vancouver say they are seeing a substantial increase in B.C. court cases filed by Chinese companies seeking to seize real estate assets from Chinese immigrants in B.C.

The Chinese plaintiffs are asking B.C. judges to enforce monetary judgments awarded in Chinese courts. These Chinese rulings typically involve people found in China to have defrauded Chinese banks or business partners and then fled to Canada with the money and invested in real estate here.

The rapid rise in the numbers of Chinese cases in Canada and the U.S. — two preferred destinations, according to the Chinese government, for financial fugitives — has also been recognized by Dan Harris, a Seattle lawyer who advises international law firms on strategies for recovering assets from Chinese defendants.

Such cases have been trickling into B.C. courts for several years, including a 2015 B.C. Supreme Court award of $670 million to the Bank of China against money allegedly laundered through buying multiple homes and setting up bank accounts in Richmond.

But, according to Vancouver lawyer Christine Duhaime, a precedent-setting case in June appears to have opened the flood gates.

Duhaime says that after her client, China Citic Bank, won a so-called Mareva injunction from B.C. Supreme Court, prohibiting the sale of four Vancouver-area homes worth $7.2 million, calls from China poured in. The homes belong to a couple who were alleged to have “fled China” with an unpaid $10-million loan.

Duhaime says she understands this is the first case of a Mareva injunction, also called a freezing order, being won by a Chinese bank in North American courts. Such injunctions prevent assets from being sold before a court can rule on whether they should be used to repay a court award.

Based on the case, Duhaime says she has obtained information from China alleging that “billions of dollars” of bank fraud proceeds are invested in B.C. real estate. She said she could not share the documents for reasons of client privilege.

“The (Citic) Mareva case absolutely increased the interest in China, and caused a number of banks in China to reach out to us and say ‘We have all these cases. Can we do something in B.C., too?'” Duhaime said. “There is lots of cases coming down the pipe, and there is lots of appetite in China from the government, down to the banks, to come to B.C. to enforce judgments.”

In the Citic case, the defendant, Shibiao Yan, a citizen of China, is now seeking to overturn the Mareva injunction. Yan argues Mareva is a “harsh and exceptional remedy that should only be available in the clearest of cases,” according to B.C. legal filings. Yan’s lawyers did not respond to a request for comment on the case.

Duhaime says as the Citic case continues, her law firm is already working on new cases.

“One of our next projects is a Toronto house we are looking at, worth $100 million,” Duhaime said. “A guy went to a bank in China, defrauded them, got a loan and all the money in one day, and moved to Canada and got a mansion. And no one asked any questions, even though he never worked a day in Canada. It’s all the same type of story, where a foreign national doesn’t have a job, but is living in homes in Canada and owes money to a bank in China.”

The house at 2790 Chelsea Close, West Vancouver, that a Chinese company is naming in an effort to collect on a Chinese court award against the homeowners.

The defendants have responded, alleging that Lonking obtained their judgment through “fraud” in the Chinese court, and that as a major company in China, “Lonking has enormous power and influence,” so that the Chinese court was “biased against the defendants.”

Lonking, a maker of heavy machinery, including these models, is trying to recover a Chinese court award through the B.C. courts.

“What I can say generally is that I’ve seen and I’m anticipating seeing a lot more claims like this,” McGowan said in an interview. “The amount of inflow litigation from China is substantial. I think the Chinese are starting to appreciate there is an opportunity to make recovery on their losses in China … against people who have immigrated to Canada.”

Harris, the Seattle lawyer, said he agrees with the Vancouver lawyers “100 per cent” that cases from China are rapidly increasing.

“There is an influx of these cases because they are in some ways so easy to bring in the U.S. and in Canada,” Harris said. “And, more importantly, they are so easy to collect on, unlike in China, where winning a case is one thing but collecting on the judgment is another.”

Harris said his firm is often approached by Canadian and U.S. lawyers seeking to recover assets from companies and people in China. He advises these lawyers to avoid Chinese courts and instead find international assets owned by the litigation targets and take action “in other countries with more effective legal systems.”

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Legal experts and precedent cases say that as global trade increases, North American judges are increasingly willing to enforce commercial case judgments from China, even though Canada and the U.S. do not have treaties with China for reciprocal enforcement of judgments.

While the legal process without such a treaty is more challenging, if Chinese plaintiffs can establish that their court judgments were awarded in China following fair and due process, experts say that B.C. judges will enforce monetary awards. But Chinese defendants can avoid enforcement of Chinese monetary judgments in B.C. courts if they can show fraud or denial of natural justice in the Chinese court process.

The civil claim from plaintiff Lonking Machinery was filed in B.C. Supreme Court on June 23. It says that defendants Xingfu Zhao and Rentao Li, also known as Xing Fu Zhao and Ren Tao Li, are a married couple that “reside or have property within the jurisdiction of this honourable court.”

Lawyer Ross McGowan in front of BC Supreme Court in Vancouver, B.C., Sept. 8, 2016. Ross McGowan is one of the lawyers bringing a case against Chinese citizens who live in B.C. but lost commercial cases in China. These cases against B.C. property are on the increase.

In July 2014 the Chinese court, in Fujian province, awarded a judgment against Liaoning Mechanical, Zhao and Li for 30.5 million yuan (about $6 million), Lonking’s B.C. Supreme Court claim says.

Lonking says that the defendants have not appealed the Chinese judgment and that, in B.C., the Chinese verdict is “a valid and enforceable judgment and stands as a debt owing by the personal defendants to the plaintiff.”

The lawyer for Zhao and Li, Kathleen MacDonald, said her clients did not want to comment. She referred Postmedia to their legal response, filed on Sept. 1.

The response says the couple are permanent residents who arrived in Canada in 2011 as landed immigrants.

Title documents say that in 2011, “Ren Tao Li, housewife” purchased the West Vancouver residence named in Lonking’s Supreme Court claim.

Zhao and Li say Liaoning Mechanical was an exclusive wholesaler for Lonking machinery, and after a distribution deal went sour in 2012, Liaoning signed a new deal with Lonking to pay outstanding debts, and has continued to pay back Lonking. The defendants say they were not properly notified of Lonking’s action against them and did not have a fair chance to defend themselves.

Furthermore, the defendants claim they could not have a fair hearing in China, as “Lonking has enormous power and influence,” in Fujian, and in China as a whole, and the company’s president is a member of the elite National People’s Congress, and other political bodies linked to the Chinese state.

“Canadian courts will not enforce a foreign judgment,” that is contrary to Canadian notions of fundamental justice, the defendants stated, and “has been obtained through fraud (and) where the judgment is granted by a foreign court that is biased against the defendants.”

While Lonking’s B.C. claim only names one West Vancouver property, the claim cites various versions of the defendants’ names which are found in connection to a number of B.C. properties or loans, valued at about $11 million.

Xing Fu Zhao and Ren Tao Li are owners of a $2.2-million 100-block Wollny Court home in Anmore, documents show. Xingfu Zhao and Rentao Li are shown as owners of a $639,000 Metrotown condo. On July 12, 2016, Xing Fu Zhao, “retired” and Ren Tao Li “homemaker” of 2790 Chelsea Close in West Vancouver, paid $1.36 million for a home in Maple Ridge, title transfer documents show. The property was assessed at $817,400 in 2016.

Land title and mortgage documents show that Rentao Li, “business person” and Xingfu Zhao, “business person” of 5065 Whiskey Cove Lane in Belcarra, lent $3.6 million in a mortgage to a business person named “Didi Zhao” of 5065 Whiskey Cove Lane.

The mortgage document says the principal amount is $3.6 million, and it does not list any interest rates or payment dates, and says the balance is to be paid at 5065 Whiskey Cove Lane, “on demand.”

In another case, filed in July in B.C. Supreme Court, Beijing Jinxinrun Investment Co. and business person Huimin Li, are seeking enforcement of a 67-million yuan, or about $12.9-million, judgment awarded in a Beijing court in 2015 for defaulted loans. The defendants, Hebei Zhongli Industrial and Trading Group and business persons Ying Min Li and Dong Yan, have not paid the award in China legal filings say, but they are believed to have assets in B.C., according to the plaintiff’s Vancouver lawyer, Junzhong Cao. The plaintiff’s claim indicates no known Canadian addresses for Li and Yan. The defendants have not filed a response to the July 13 claim, and could not be located for comment in China or B.C.

scooper@postmedia.com

Mainland China buyers seeking to invest overseas are fleeing Vancouver and flooding Seattle.

Figures prepared for Postmedia by Juwai.com, a popular website in China that connects investors with international home sellers and real estate agents, shows buying inquiries for Vancouver property from investors in Mainland China dropped 81 per cent in August after B.C.’s government introduced a Metro Vancouver offshore investor tax. Meanwhile, buying inquiries for Seattle homes on Juwai.com surged by 143 per cent in August, compared to August 2015.

Realtors in Seattle and Vancouver said the data suggests growing nervousness among Chinese investors over increasing regulation of Metro Vancouver’s market. As a result, Seattle, with a similar quality of life, better wages, and homes generally at least 50 per cent cheaper, is overtaking Vancouver as a preferred destination for Mainland China buyers.

“The shift to other cities has actually been going on for months, with buyer demand momentum shifting to other cities with similar appeal but lower entry prices,” said Dave Platter of Juwai.com. “Right now, Seattle is the No. 1 city in North America for Chinese buyer inquiries, even displacing Los Angeles.”

Juwai’s figures on cooling interest from Chinese buyers are confirmed by Metro Vancouver MLS figures that show deep sales drops in August, especially in housing types and neighbourhoods most popular with Chinese buyers. And MLS data from Vancouver realtor Steve Saretsky shows sales drops are even worse in September, with weakness spreading from sales of luxury detached homes to broader portions of the market including townhouses and condos.

“September is horrible,” Saretsky said. “The sales are on pace for historic lows for the past 10 years.”

Compared to the first 11 days of September 2015, Multiple Listing Service data analyzed by Saretsky shows sales of detached homes in September 2016 in Vancouver West are down 51 per cent, Vancouver East is down 80 per cent, Richmond is down 67 per cent, and Burnaby is down 69 per cent.

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Saretsky said he believes Juwai.com figures on Vancouver buyer inquiries reflects on conversations that he and other agents are having with investors since the new tax was introduced. 

“My Chinese investor was in town, and he said ‘We can all afford the 15-per-cent tax, but it creates uncertainty,'” Saretsky said. “He said everybody in China is being told not to invest right now in Canada.” 

The sense from China buyers, Saretsky said, is that B.C. residents are “pissed off” about skyrocketing home prices driven by offshore investment, and that Canadian governments are starting to respond. 

In China, media coverage on the new Metro Vancouver tax has been widespread, Dave Platter of Juwai Limited said. While investors may be turned off by the Vancouver tax, most Chinese citizens seem to approve.

“Interestingly, most public comments left on the online news stories about the new tax are not complaints against Vancouver,” said Matthew Moore, president of the Americas for Juwai.com. “Quite the opposite, many people respect the decision to impose new taxes.

“They are coming from a situation where an apartment bought two years ago in Shanghai could be worth 75 per cent more today. So, many feel that more measures should be imposed to cool their own home markets and protect accessibility to property.”

Dean Jones, owner of Realogics Sotheby’s International Realty in Seattle, said he believes effects of the Metro Vancouver tax will accelerate already hot demand in Seattle from Mainland China buyers.

“We are seeing a rush into Seattle as the next market that matters,” Jones said. “I think for Chinese buyers it becomes like a self-fulfilling prophecy. As a group, they know they can move a market higher. It is definitely the most dominant new presence in the market.”

Jones said his company’s top sales in August were for Chinese buyers who set new prices in two Seattle neighbourhoods. They bought homes for about Canadian $6.5 million that would have cost about twice as much in comparable Vancouver neighbourhoods, Jones said. He said one of the buyers has multiple Vancouver properties. But some of his brokers are reporting that Chinese clients are dumping Vancouver property to reinvest at lower prices.

“My two big Vancouver clients are selling their assets there and coming here to do it all over again,” Seattle broker Lilli Shang said. “I have inquiries all the time from investors from China. Money is pouring in.”

Home sales in the Seattle area “continued to outpace year-ago activity,” Northwest MLS reported in early September, though across Western Washington, prices dropped slightly from early summer. MLS data shows that the Seattle neighbourhoods that have been most popular with Mainland China buyers for the past five years, according to Dean Jones, have experienced price rises from between 15 and 27 per cent in August over a year earlier. Jones said that Mainland China buyers represent 3o to 50 per cent of the market in these hot neighbourhoods, such as Bellevue. 

Just like Vancouver, Seattle has its stories about cash buyers from China. The Seattle Times reported the most expensive residence sold in 2015 was a mansion that went for Canadian $17.5 million to an unnamed buyer who paid cash and used a numbered company. Brokers confirmed the buyer was from China, the Times reported.

Dean Jones, owner of Realogics Sotheby’s International Realty in Seattle, said he believes effects of the Metro Vancouver tax will accelerate already hot demand in Seattle from Mainland China buyers.

To illustrate market trends, Jones points to his firm’s use of the popular Chinese messaging app WeChat. Jones said his company can see “viral” interest in Seattle real estate stories on WeChat, and his brokers also use the app to facilitate direct home sales to buyers in China.

“One of our brokers just transferred a title and received a money transfer from China on WeChat,” Jones said. “We can get around China’s Internet block and directly to buyers.”

It is not hyperbole to suggest that Chinese real estate investment rushes have “gone viral” on WeChat.

The Wall Street Journal reported this week that in Shanghai some realtors are under investigation by police for using WeChat to spread false rumours of a supposed government intervention to limit credit for home purchases. The alleged rumours created a social media sensation that “sparked a home-buying frenzy in late August and led to instability in the city’s real-estate market,” WSJ reported.

Not everyone in Seattle is excited about growing crowds of Mainland China investors. Seattle real estate analyst Charles Mudede has warned that unless the city learns from Vancouver’s “real estate crisis,” Seattle will also have vacant condo towers, a housing market disconnected from local incomes and traditional laws of supply and demand, and young people forced to leave the city.

“Something totally insane and even monstrous is happening in this city,” Mudede wrote Aug. 3 in a report filed from Vancouver, titled “A City of Empty Towers.”

However, Jones argues that Seattle has a more balanced economy than Vancouver with high-paying technology industry jobs, and a new homes market that is more geared to purpose-built rental units than luxury condos aimed at offshore investors.

scooper@postmedia.com

Canada has good anti-money-laundering rules, but loopholes and lax enforcement leave Vancouver’s real estate sector vulnerable to transactions from criminals including corrupt Chinese officials, an international agency says.

In a new report, the Financial Action Task Force, a Paris-based intergovernmental group that makes recommendations for fighting money laundering, said Canada has improved standards since the agency’s last evaluation in 2007. But “law enforcement results are not commensurate with the money laundering risk, and asset recovery is low.”

The report highlights Vancouver for money laundering in the real estate sector.

And Canada was judged “non-compliant” with agency recommendations to increase oversight of the wealth sources and transactions of so-called international politically exposed persons.

“The real estate business is exposed to high risk clients, including politically exposed persons, notably from Asia, and foreign investors,” the report says. “For example, there are cases of Chinese officials laundering proceeds of crime through the real estate sector, particularly in Vancouver. Canada may be particularly vulnerable to such laundering as there is no extradition treaty with China.”

A major theme of the agency’s report is that compared to other countries, Canada is at significant risk for money laundering because in 2015 Canadian lawyers won a Supreme Court case exempting them from financial reporting rules that professionals such as bankers and realtors must follow. The constitutional challenge was launched by lawyers in B.C., using client confidentiality arguments.

The agency report suggests that money laundering in real estate and services provided by lawyers, such as creating investment vehicles that can shield true ownership of property, go hand-in-hand. 

“The legal profession in Canada is especially vulnerable to misuse for money laundering … due to its involvement in activities exposed to a high money laundering risk, e.g., real estate transactions,” the agency said. “The real estate sector is highly vulnerable to money laundering, including international money laundering activities, and the risk is not fully mitigated, notably because legal counsels … are not required to implement anti-money laundering.”

The agency says that Canada has both domestic and international money laundering problems, but criminal money flowing out of Canada is “moderate” compared to international crime proceeds flowing in. Canada’s multicultural society is a factor in the influx of international crime proceeds, the agency said.

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The agency also notes that privacy rules prevent free flow of information among various Canadian enforcement agencies and the country’s anti-money-laundering agency, Fintrac. And federal police resources are geared towards stopping terrorist financing,the Financial Action Task Force said, even though money laundering presents a bigger risk in Canada. 

Kim Marsh, a former RCMP international organized crime unit leader, said he and other critics have long been voicing the key criticisms made by the task force: that Canadian lawyers have opened a major hole in the anti-money laundering system, and that the RCMP does not focus adequate resources on money laundering enforcement.

“I think there are professionals that don’t care where the money comes from,” Marsh said. “I think lawyers are a significant cog in the process of sometimes illicit money flowing into B.C. real estate.”

Dave Jordan, spokesman for the B.C. Law Society, said in a statement that the society self-regulates and “has been actively engaged in the fight against money laundering and terrorist financing activities for over a decade.”

“Our profession is not engaging or assisting in money-laundering activities,” David Crossin, president of the Law Society of B.C., said in a statement. “There have only been a few instances of lawyers violating Law Society rules concerning these retainer arrangements, but nothing that detracts from the overall integrity of our profession in this regard.”

Crossin said any information suggesting a B.C. lawyer is involved in money laundering or breaking rules will be promptly investigated by the society.

Kim Marsh said that since the 9/11 terrorism attacks in the United States, the RCMP has dedicated most of its federal crime resources to national security, at the expense of investigating money laundering and organized crime. He said the RCMP has four national units focused on federal crimes, and that under the current “triage” system money laundering cases get little attention. He said given the scope of B.C.’s money laundering problem, a dedicated federal money laundering investigation unit should be stationed in the province.

B.C. NDP Housing critic David Eby, who has proposed a B.C. money laundering and tax evasion unit to investigate crimes in real estate, said the agency’s report bolsters his case.

“Clearly Canada is not inspiring confidence internationally, and B.C. is clearly leading the pack in concerns around enforcing money laundering laws in real estate,” Eby said.

Dan Zitting, an executive with financial software firm ACL and expert on catching fraud through technology, said the report shows that Canadian law enforcement agencies must share money laundering intelligence more freely in order to improve enforcement.

scooper@postmedia.com

The U.S. government has named a little-known Vancouver financial company as a “significant transnational criminal organization” that it alleges has worked for 20 years with “direct mailer” scammers to launder hundreds of millions of dollars defrauded from millions of vulnerable victims. 

In a news conference on Thursday, U.S. Attorney General Loretta Lynch named PacNet, a company with offices in a building in downtown Vancouver, as a financial linchpin in global money laundering. PacNet was the payment processor — a sort of banking system middleman — that allowed global criminals to deposit cheques scammed from mostly elderly victims, Lynch alleged. She said “the schemes involve a complicated web of actors located across the world.”

And in a stunning financial order that points to Vancouver’s growing reputation as a hub for global money laundering, the U.S government put PacNet on an international shortlist of about seven organizations that includes several of the world’s most dangerous criminal cartels, including Las Zetas from Mexico and the Camorra from Italy.

The U.S. says Las Zetas, for example, is an organization involved in drug trafficking, prostitution and arms dealing, and is “the most technologically advanced, sophisticated, vicious, ruthlessly violent and dangerous cartel operating in Mexico.” 

The executive notice, which freezes financial transactions, names 12 people, including several Metro Vancouver residents, and a number of PacNet associated companies with links to a global network of cities and countries including Vancouver, Ottawa, Italy, India, Ireland, Tokyo, Brazil, Chile, and the U.S. The notice also grounds a PacNet airline that the U.S. government alleges was used to deliver bulk shipments of criminal cash in Europe. 

“According to court filings made public today, PacNet has a 20-year history of engaging in money laundering and mail fraud, by knowingly processing payments on behalf of a wide range of mail fraud schemes that target victims in the United States and throughout the world,” Lynch said. “According to these records, in 2016 alone, PacNet has processed payments for the perpetrators of more than 100 different mail fraud campaigns, collectively involving tens of millions of dollars.” 

The scams typically targeted lonely seniors suffering from dementia who may have hoped to bolster their meagre retirement savings with promises of lottery prizes, CNN reported. Banking experts say payment processors can be used to hide the source of funds from disreputable or suspect organizations that could not otherwise access regulated banking systems.  

Vancouver anti-money laundering lawyer Christine Duhaime said she believes PacNet is the first B.C. company ever to make the select list of international criminal groups facing sanctions by a U.S. president’s executive order. 

“The shocking thing is the U.S. government has linked some people in Vancouver in this list to the worst criminal gangs in history.” 

Lawyer Tom Clare, a representative for PacNet in the United States, did not immediately respond to a request for comment from Postmedia. CNN said Clare has strongly denied that PacNet is involved in criminal activity. 

A Vancouver lawyer linked to a PacNet company also did not immediately respond for comment.

One of the companies named in the U.S. government freezing order, PacNet Holdings Ltd., was incorporated in 2000, and dissolved in 2006. Its address is the same fourth floor office of 595 Howe St., which is currently linked to PacNet companies, according to corporate records.

As part of Thursday’s action, the U.S. Department of the Treasury’s Office of Foreign Assets Control listed 12 individuals who serve as executives or directors of PacNet-linked companies, who, “in some cases, provided specific guidance as to how to hide the illicit nature of PacNet’s operations or deceive the financial institutions with which PacNet interacts.”

“PacNet has knowingly facilitated the fraudulent activities of its customers for many years and today’s designations are aimed at shielding Americans and the nation’s financial system from the large-scale, illicit money flows that are generated by these scams against vulnerable individuals,” the acting director of the office, John Smith, said in a statement.

One of the 12 names listed was Ruth Ferlow of West Vancouver, which the Office of Foreign Assets Control identified as “the director, manager, or company secretary of several PacNet-linked companies, including the manager of electronic payments for PacNet Services Limited.”

In a phone interview, Ferlow’s husband, Peter Ferlow, said Thursday that his wife and her colleagues were “in shock” following the announcements from the U.S. Government.

Ferlow said his wife told him Wednesday, a day before the U.S. Department of Justice’s announcement, that Vancouver police officers had shown up at PacNet’s Howe Street offices.

“Basically, you go to work and all of a sudden, VPD shows up,” he said.

“They’ve got 90 people in their office or something like that, and they’re all hardworking people that go to their job every day and do an honest day’s work,” he said. “They’re just regular working people. Everyone’s shocked.”

Roseanne Day, another Vancouver woman named by the Office of Foreign Assets Control and linked with a number of PacNet associated companies including Deep Cove Labs, could not be reached for comment Thursday at her 3900-block West 22nd Avenue home, which has an assessed value of $3,359,000. Day is also owner of two Sunshine Coast properties worth $1.45 million and $540,000, land title records say. Mortgage records say Day is a “manager.”

According to corporate records, Rosanne Day is the president of Deep Cove Labs, which, according to its website, develops financial software. Postmedia contacted Joerg Beekmann, who is listed as a secretary for the company. Asked to comment on the U.S. government allegations and to say what kind of business Deep Cove Labs is involved in and how it is related to PacNet, he said: “I have no comment.”

When PacNet Services was first incorporated in 1994 as Pacific Network Services, British Columbia was in the midst of an lottery ticket telemarketing industry that preyed on mostly elderly people in the U.S.

The telemarketing companies used a sophisticated web of local, national and international companies in multiple jurisdictions to frustrate law enforcement officials on both sides of the border who were inundated with complaints.

The allegations against PacNet and its affiliates contained in the U.S. Treasury Department’s Thursday press release are strikingly similar to the way the lottery ticket sellers worked 20 years ago in B.C. They include the use of offshore operations, multiple corporations in multiple jurisdictions, boiler rooms to call and mail to victims, and offshore banking services. 

In 2002, U.S. officials seized US$360,884 from two accounts Pacific Network Services had in New York state. The authorities alleged the money was proceeds of crime related to lottery ticket mail scams.

Until the lottery resellers were largely curtailed in the late 1990s, they used Canada’s weak mail, wire and fraud laws, which didn’t mesh well with U.S. laws, to operate with relative impunity. It was only after a series of investigations by The Vancouver Sun and parallel investigations by the U.S. Federal Bureau of Investigation and the U.S. Federal Trade Commission that B.C. officials began to take notice. 

There were many companies involved in the sophisticated schemes, in which telemarketers operating from boiler rooms would persistently call vulnerable targets.

Vancouver police spokesman Sgt. Brian Montague said Thursday in an email: ”We do have good relationships with other law enforcement agencies in both Canada and the U.S., but unfortunately I am not able to share any information about investigations unless criminal charges are laid — so not able to confirm if there has been or there is any investigation by the VPD.”

B.C. RCMP spokesman Staff Sgt. Rob Vermeulen said Thursday afternoon that any comment on the matter would have to come from the force’s national headquarters in Ottawa.

scooper@postmedia.com

With files from Jeff Lee, Kelly Sinoski and Dan Fumano

A Vancouver immigration consultant defrauded Chinese immigrants of $6.9 million that he used for personal expenses including renting luxury cars and paying his credit card bills, the B.C. Securities Commission has alleged.

In a notice of hearing posted on Monday, the Commission alleged that Paul Oei — a businessman featured in articles about Chinese investors in Vancouver by the New York Times and The New Yorker — used a number of companies to “perpetrate a fraudulent scheme,” involving 64 investments that raised a total of $13.3 million.

The fraud allegations have not been proven, the Commission notice states. And, in a response to a separate, but related, lawsuit filed by two people who allege they lost money, Oei and his wife, Loretta Lai, say they have not been “unjustly enriched,” in the deal and they “deny any conspiracy to defraud the plaintiffs.”

According to the Commission’s notice, Oei raised investor startup funds for Cascade Renewable, a proposed Abbotsford recycling plant, between July 2009 and November 2012. 

“In 2009, Cascade management agreed with Oei that he would use his contacts in the Chinese community to raise money for Cascade to build a recycling facility,” the notice says.

But, “of the $13.3 million raised from the Cascade investors, Oei forwarded less than $6.4 million to Cascade,” the notice alleges. “He used the remaining approximately $6.9 million on expenses unrelated to Cascade, including transfers to his personal bank accounts, cash withdrawals, credit card payments, luxury car rentals, donations to charities, and payment of expenses of his immigration and insurance businesses.”

The Commission notice alleges Oei used bank accounts for his insurance and immigration company, Canadian Manu Immigration and Financial Services Inc., to receive funds from Cascade investors. And he used the numbered companies 0863220 B.C. Ltd. and 0905701 B.C. Ltd. to issue documents, “which purportedly entitled investors to Cascade shares.”

Dates for a Securities Commission hearing will be set in November.

Attempts to reach Oei, through Canadian Manu and through his lawyer, were unsuccessful.

In the lawsuit filed in B.C. Supreme Court, a Vancouver couple, Wei Chen and Junping Zhang, allege they were defrauded by defendants including Canadian Manu Immigration, Cascade Renewable, Oei and Lai, and 0905701 B.C. Ltd.

Their claim alleges that Chen and Zhang purchased automobile, home and life insurance from Loretta Lai in 2011. Oei and Lai then recommended that Chen and Zhang purchase $1-million worth of “preferred shares” in the Cascade organic fertilizing plant investment, according to the claim.

The defendants represented that “there was no risk investing in the (Cascade) project which was largely supported by the B.C. government,” the plaintiffs’ claim states. “Crude material for the (Cascade) recycling plant would be provided by the B.C. government … and the government would pay refuse disposal fees.”

In their response, Oei and Lai deny they represented that “that the B.C. government would necessarily support (Cascade).”

Chen and Zhang took out a mortgage against their Vancouver home to pay $1 million into a legal trust to invest in Cascade shares, the claim alleges, but the funds did not go to Cascade. “Oei and Lai used the trust funds for personal purposes,” the lawsuit alleges.

Oei’s lawyer, Tim Louman-Gardiner, did not return a call for comment on this story.

In her Facebook profile, Lai describes herself as a “director at Canadian Manu Investment Group.”

Oei and Lai maintain an active social profile among wealthy Chinese immigrants in Vancouver and political fundraising circles revolving around B.C. Liberals in Richmond. For example, Richmond-Steveston B.C. Liberal MLA John Yap has posted Facebook “selfie” photos of himself, Oei and Lai, and other fundraisers and investors mingling at a Liberal event in Richmond.

B.C. debt security documents show that in total, Lai and Oei have loans on six luxury vehicles, including five BMWs and a 2016 Aston Martin DB9. Five of the vehicle loans are in Lai’s name, and a 2014 BMW 335I xDrive is owned jointly by the couple, documents show.

Lai and Oei own four properties in B.C. title documents show, including a Point Grey property assessed at $2.5 million, and condos in Surrey, Port Moody, and Chilliwack, worth about $1.5 million in total.

In an article about so-called fuerdai — the super-rich children of Chinese magnates, who are now living the high-life in Vancouver, The New Yorker profiled Oei and his investor connections.

The story reported that in introducing himself to a reporter, Oei presented three business cards, including two for companies named in the B.C. Securities Commission fraud allegations — Organic Eco-Centre Corp., and Canadian Manu Immigration & Financial Services.

“Manu, which Oei founded a decade ago, provides advice on immigration strategies, investments, and assimilation for Chinese nationals moving abroad,” The New Yorker reported. “For fuerdai seeking to establish themselves in Vancouver, he is the go-to fixer and an unofficial ambassador.”

According to The New Yorker, Oei said that his clients represent the class “between the one and two per cent” of most wealthy in China, not the very top. “The tippy top of the pyramid have political backing or connections,” Oei was quoted. “They don’t need to export the wealth.”

And a recent New York Times story reported anecdotes of Oei and Lai and several fuerdai visiting a Lamborghini dealership in Vancouver, “where Paul Oei photographed his wife, Ms. Lai, with a new car,” according to a photograph caption.

On Monday, Postmedia contacted Canadian Manu Immigration and asked to interview Oei about the allegations in the Securities Commission notice and the civil claim.

“I will pass your information to him but I’m not sure he will call back,” an employee at Canadian Manu said Monday.

scooper@postmedia.com

A self-proclaimed immigration consultant accused of defrauding Chinese immigrant investors has donated about $67,000 to the B.C. Liberals.

On Monday, the B.C. Securities Commission accused Paul Oei of defrauding Chinese immigrant investors of $6.9 million.

Oei made the political donations along with his wife, Loretta Lai, and two companies, which were also cited by the Commission. 

The couple has also donated $8,477 to the federal Liberal party since 2014.

The couple — who married in 2012 and celebrated at a wedding banquet attended by B.C. Liberal fundraisers — frequently attend events for B.C. Liberal politicians, fundraisers and donors in Richmond.

Related

• Securities Commission accuses prominent Vancouver immigration consultant of fraud

Information about the couple’s ties to B.C. Liberal fundraising events, including one attended by Premier Christy Clark, were confirmed through election donations records, photos and accounts of events posted online by politicians and donors, and interviews with a politician present at many of the events in Richmond.

In a brief emailed response to a number of questions on the Securities Commission allegations, the political donations and circle of fundraisers surrounding Oei and Lai, B.C. Liberal party official Jillian Stead wrote: “If these allegations were proven true, we would return the funds — or forfeit to Elections B.C.”

In a notice of hearing posted on Monday, the Commission alleged that from 2009 to 2012, Oei used a number of companies to “perpetrate a fraudulent scheme” involving 64 investments for a proposed Abbotsford recycling plant that raised a total of $13.3 million. But, the Commission alleges, Oei only paid $6.4 million to the project company, Cascade Renewables, and used $6.9 million for personal spending on luxury car rentals, charity donations, deposits to his personal bank account, credit card payments, and expenses for his Canadian Manu Immigration and Financial Services Inc., an immigration and investment company.

In an interview Tuesday, Securities Commission spokeswoman Alison Walker said the agency can’t comment on whether the source of B.C. Liberal political donations made by Oei and Lai will be raised when the Oei case goes to a hearing.

The fraud allegations have not been proven, the Commission notice said. Also, in a response to a separate, but related, lawsuit filed by two people who allege they lost money, Oei and Lai said they have not been “unjustly enriched,” in the deal and they “deny any conspiracy to defraud the plaintiffs.”

Civil court filings, from investors who allege they lost money, claim that Oei and Lai told them that significant investments in Cascade projects would qualify Chinese citizens for resident status in Canada though the B.C. provincial nominee program.

In one response, Oei and Lai deny they represented that “that the B.C. government would necessarily support (Cascade).”

In a separate lawsuit, a Chinese man claimed that he was defrauded in a Cascade investment scheme and that in a pitch he was led to believe by Oei and Lai that they were well-known in B.C.’s Chinese community and “had connections with high-level officials in the government of British Columbia.” 

In a response, Oei and Lai denied any wrongdoing. 

Postmedia has repeatedly asked Oei and Lai to respond to the allegations in civil court filings and allegations from the Security Commission through their lawyer and through Oei’s company, Canadian Manu. In her Facebook profile, Lai describes herself as a “director at Canadian Manu Investment Group.”

The couple have not yet responded.

B.C. Election records show that from November 2011 to November 2015, Paul Oei donated $55,787 to the B.C. Liberals. Loretta Lai donated $10, 565 to the party from April 2012 to August 2014. Canadian Manu Immigration and Financial Services Inc. and Organic Eco-Centre Corp., both named in the Security Commission fraud allegations, donated $1,080 to the B.C. Liberals from 2014 to 2015. 

At one fundraising event at Richmond’s Continental Seafood Restaurant, MLA John Yap posed for photos with Oei and Lai and a number of party donors and politicians. 

He thanked party fundraiser and donor Cindy Chan for chairing the dinner, and fellow B.C. Liberal MLA’s including Suzanne Anton, Linda Reid, Jane Thornthwaite and Mary Polak, for attending an event of “almost 500 friends and supporters.” 

“What a tremendous annual dinner in support of our free enterprise government,” Yap wrote in a Facebook post.

Another 2015 fundraiser event photo posted online shows Yap and Premier Christy Clark posing with Oei, Lai, and B.C. Liberal donors Cindy and Pius Chan, among others. Premier Clark could not comment on fundraiser and donor questions for this story, her office told Postmedia on Tuesday.

At yet another event, Yap posted a “selfie” with the couple and wrote: “Nice to see Paul Oei and Loretta Lai!”

On Tuesday, Postmedia asked for comment from Yap through his riding office, but did not get a response. 

In an interview Tuesday, NDP MLA Selina Robinson said she believes the Oei case raises serious questions about the source of B.C. Liberal donations.

Oei and Lai also donated $1420 to the Vancouver South Conservative Association, elections records show.

Oei’s lawyer, Tim Louman-Gardiner, did not return a call Tuesday for comment on this story.

B.C. debt security documents show that in total, Lai and Oei have loans on six luxury vehicles, including five BMWs and a 2016 Aston Martin DB9. Five of the vehicle loans are in Lai’s name, and a 2014 BMW 335I xDrive is owned jointly by the couple, documents show.

Lai and Oei own four properties in B.C. title documents show, including a Point Grey property assessed at $2.5 million, and condos in Surrey, Port Moody, and Chilliwack, worth about $1.5 million in total.

Richmond MP Joe Peschisolido has been named in lawsuits filed by three Chinese immigrant investors, who allege he allowed money submitted to him in a legal trust to be wrongfully taken by a Vancouver immigration consultant accused of a $6.9-million fraud scheme.  

Paul Oei was accused of the fraud on Monday by the B.C. Securities Commission. Oei and Lai are clients of Peschisolido’s Richmond law firm.

The substance of the allegations against Peschisolido and his firm predate his election to Parliament in 2015.

Oei and his wife, Loretta Lai, are active in federal and provincial Liberal fundraising circles. Oei and Peschisolido have been photographed together at multiple political events and fundraisers.

Related

• Vancouver immigration consultant accused of fraud was a significant donor to B.C. Liberals, records show
• Securities Commission accuses prominent Vancouver immigration consultant of fraud

The Commission accused Oei of using a number of companies to “perpetrate a fraudulent scheme” to bilk investors. The agency alleges investors who kicked in a total of $13.3 million were told they would become shareholders in a Fraser Valley recycling plant, but that $6.9 million was diverted for Oei’s personal spending including expenses for Canadian Manu, an immigration and financial planning company run by Oei and also named in the scheme.

In three separate B.C. Supreme Court civil cases, immigrant investors who allege they lost money to Oei claim they were instructed to submit their investment money to a legal trust controlled by Peschisolido and his firm. In statements of claim filed in B.C. Supreme Court, the investors allege Peschisolido failed in his duty to ensure the trust money was directed to their promised investments. 

None of the allegations in the lawsuits nor the B.S. Securities Commission accusations have been tested in court.

The lawsuits claim Peschisolido, as a lawyer, is responsible because funds meant to be transferred from his firm’s legal trust to recycling plant investments went to Oei’s personal use instead.

“Peschisolido owed a duty to the plaintiff to guard against the trust account being used as the tool of an unscrupulous client and to guard against the trust account being used for a fraudulent purpose,” alleged Chinese citizen Yicheng Jiang, in one case.

And a claim from a plaintiff named Bao Xi Yang alleges: “The scheme of Oei and Lai and acting through Canadian Manu Immigration and Cascade was fraudulent, and would not have succeeded but for the assistance they received from Peschisolido and (Peschisolido’s law firm) … who received and disbursed Mr. Yang’s funds to Canadian Manu Immigration, well knowing that there had been no instruction to do so and that no shares or interest had been issued or conveyed.”

In an interview Wednesday, Peschisolido said that it is common for law firms to be targeted in litigation, and that he could not comment on any of the allegations made in legal filings. Peschisolido said the Security Commission allegations against Oei do not involve him, and he can’t comment. He said that he would not disclose whether he has a relationship with Oei and Lai outside of his firm’s business.

“They were not my clients, they were the firm’s clients, and the courts will do what the courts do,” Peschisolido said.

Common themes and allegations in these lawsuits are that Oei and his wife told Chinese investors the B.C. government fully supported the recycling plant projects the couple was raising money for, and that by investing in the projects they would be able to obtain Canadian resident status through B.C.’s provincial nominee program.

Elections records show that Oei and Lai have donated $8,477 to the federal Liberal party since 2014.

Postmedia asked whether Oei has donated funds directly to Peschisolido, or his riding association.

“I don’t know, but I believe the party is looking into that, but I don’t believe so,” Peschisolido said.

Peschisolido did not deny that he has been seen and photographed with Oei at multiple political and charity fundraisers.

“Absolutely, I meet with folks all the time,” Peschisolido said. “If you have said there are pictures of me with Mr. Oei, obviously I’ve taken a picture with Mr. Oei. I take pictures with a whole lot of folks at fundraisers, at community events, at breakfasts. That is what MPs do.”

In one case, plaintiff Yicheng Jiang says he is a resident of China who met Oei and Lai on a visit to Canada in 2009. 

In his statement of claim, he alleges the couple pitched him on a Maple Ridge fertilizer plant investment for a company named Cascade, and led him to believe an investment of at least $1 million would qualify for a B.C. provincial nominee program application, and investors would be “granted status as a Canadian permanent resident within six months.”

In the court documents, Jiang alleges Oei and Lai induced him to send investment funds to Canada and to introduce them to at least six more citizens in China who would also transfer funds to Canada, to invest in Cascade. In total, Jiang says, he sent $3.99 million to Canada for himself and the six other investors. These funds were wired by Jiang to an HSBC Bank of Canada account controlled by Peschisolido’s law firm, Jiang’s claim alleges.

Jiang claims the funds were wrongfully transferred from the legal trust of Peschisolido’s firm to Oei, and that he and the other Chinese investors have lost their money.

Jiang also alleges that, in 2013, Loretta Lai informed him that Cascade was going bankrupt, and “the cause of the bankruptcy was corrupt Caucasian members of the board.” 

In an interview, Peschisolido said he could not answer allegations made in Jiang’s legal filings.

In a legal response, Peschisolido’s law firm denies any wrongdoing and says “these defendants admit that substantial monies were deposited into a U.S. dollar trust account of Peschisolido and Company, ostensibly by Yicheng Jiang … at no time were these defendants advised that Yicheng Jiang was not the beneficial owner of those sums of money at the time the monies were deposited. Yicheng Jiang authorized payment out of the sums to Canadian Manu Immigration.”

The firm said it acted for Oei, Lai, and Canadian Manu Immigration, “and are not at liberty to disclose any information or documents which are covered by solicitor-client privilege.”

 The firm said “to the best knowledge of these defendants the money advanced by the plaintiffs was not misused by Paul Oei or any of the defendants.”

 scooper@postmedia.com

A few months before being elected prime minister, Justin Trudeau was the featured speaker at a Richmond business lunch sponsored by a company of a Vancouver immigration consultant accused of defrauding Chinese immigrant investors.

Paul Oei, accused Monday by the B.C. Securities Commission of perpetrating “a fraudulent scheme” through several investment companies, is the sole director of Organic Eco-Centre Corp. The company, which was named in the Securities Commission allegations, is the listed sponsor for a July 2015 Richmond Chamber of Commerce lunch featuring Trudeau.

Photos obtained by Postmedia show Paul Oei breaking bread with Trudeau at the luncheon’s head table, and introducing Trudeau to the sold-out crowd. Oei and Trudeau embraced before the future prime minister addressed a packed room of Richmond business and political figures. Attendees included B.C. Liberal MLA John Yap and key Richmond political fundraisers such as Cindy Chan and Pius Chan.  

The luncheon at Sheraton Vancouver Airport Hotel — tickets were $90 for non-Chamber members — was called a “non-partisan” event.

It was titled a “Luncheon with Justin Trudeau — Real Change: Restoring Fairness and Growth to the Middle Class.”

The message might have been lost on some in the crowd. Event sponsor Paul Oei has been featured in The New Yorker as a “fixer” and “unofficial ambassador” for ultra-wealthy Chinese clients looking for advice on how to immigrate to B.C. and invest their riches. Oei and his wife own six luxury vehicles and four homes, B.C. lending and title documents show.

In civil court cases that are separate from, but related to, the Securities Commission accusations, investors allege Oei and his wife, Loretta Lai, led them to believe investments in Fraser Valley recycling plant company Cascade were supported by the B.C. government and would let the investors apply for resident status in Canada.

Instead, the Commission alleged, Oei diverted $6.9 million of the $13.3 million raised for Cascade into his personal bank accounts, using that to fund his immigration-investment business, Canadian Manu, and to make charity donations, rent luxury cars and pay credit card bills.

It alleges that between June and August 2013, Oei told Cascade investors they could roll their Cascade funds into a new company called Organic Eco-Centre Corp., with a 15 per cent “top-up.”

“Oei did not disclose to the Cascade investors that he had given Cascade less than half of the money he raised from investors,” the Commission alleged. “He raised an additional $202,000 from 18 Cascade investors.” 

The Securities Commission allegations have not been proven and, in the related lawsuits filed against them, Oei and Lai have denied any wrongdoing.

Oei and Lai have donated $8,477 to the federal Liberal party since 2014.

Party spokesman Braeden Caley was asked if Trudeau’s party would return Oei’s donations, and if the party is concerned that Trudeau spoke at an event sponsored by Oei and Organic-Eco Centre.

Caley did not answer the questions about returning Oei’s donations.

“As one would expect, Mr. Trudeau and Liberal members of Parliament have their photo taken with thousands of Canadians each year in a wide variety of communities across Canada,” Caley wrote in an emailed response.

scooper@postmedia.com

The federal government will try to close a loophole in Canada’s anti-money laundering system that excludes lawyers from having to report suspicious transactions, Postmedia has learned.

In 2015, the Supreme Court of Canada ruled that, unlike other professionals such as bankers and real estate agents, lawyers do not have to report to Canada’s anti-money laundering agency, Fintrac. Lawyers in B.C. won that case based on a constitutional argument about solicitor-client privilege, and the argument that law societies already regulate lawyers to prevent involvement in money laundering.

But Canada faces increasing international scrutiny as concerns over money laundering in Vancouver real estate grow. In September, the Financial Action Task Force, a Paris-based intergovernmental group that makes recommendations for fighting money laundering, asked Canada to close the lawyer loophole. An agency report suggested there is a close relationship between money laundering in real estate and the services provided by lawyers, such as placing wire transfers in legal trusts and creating investment vehicles that can shield true ownership of property.

A number of sources confirmed to Postmedia that the federal government aims to bring lawyers under Fintrac’s oversight.

“The government is examining the impact and implications of the 2015 Supreme Court decision that excluded lawyers from Canada’s anti-money laundering regime and will announce next steps in due course,” Paul Duchesne of the federal Finance Department told Postmedia. “We will review (the task force) recommendations closely to ensure that Canada continues to combat money laundering … while respecting the constitutional division of powers.”

“After the Supreme Court decision, Finance Canada has been weighing next steps,” another official in Ottawa said. “You can’t appeal a Supreme Court decision. In Canada, the Supreme Court is the law of the land. But you can adjust the legislation.”

The federal government’s case will be bolstered by a Fintrac study that shows lawyers are often charged in money laundering cases. The 2015 study, obtained by Postmedia under freedom of information law, is based on Canadian court cases publicly reported from 2004 to 2014. 

“The second-largest profession in the sample are lawyers, representing 15 per cent,” the report states. “Based on court documentation, lawyers convicted of money laundering were willing to exploit reporting exemptions in order to launder funds … (and use) solicitor-client privilege to enhance money-laundering services.”

Cases in the study only represent a portion of the money laundering intelligence gathered by Fintrac, the report says.

Kim Marsh, of due diligence company IPSA International, said that before the 2015 Supreme Court case, the company was asked by the federal Justice Department to do a report on money laundering risks connected to lawyers.

“I think there are some people in the legal industry that are aiding and abetting money laundering, with impunity,” said Marsh, a former RCMP organized crime unit leader. “There is no other English common law country that has given lawyers this reporting exemption. So Canada is unique. And the problem is coming to light now with the huge amount of money flowing into the property market, some of it stinky.”

Marsh said he believes Canadian law societies neither provide adequate member training on money laundering nor have the internal auditing and investigation needed to crack down on bad apples.

“To tweak the legislation to include lawyers, I welcome it,” Marsh said. “But I say ‘good luck.’ The Supreme Court of Canada is composed of lawyers.”

NDP MLA David Eby, who is a lawyer, said that his reading of the Supreme Court’s ruling is that judges believed Fintrac’s legislation granted law enforcement too much power to search the legal trusts and offices of lawyers. But the ruling left the federal government room to rewrite anti-money laundering legislation, Eby said. 

For any new Fintrac legislation to pass a Supreme Court challenge, Eby believes, there likely must be evidence that law societies have failed to self-regulate. 

“I hope the Law Society in B.C. is paying attention to the public mood around accountability for issues of tax evasion and money laundering in real estate, and its impacts,” Eby said. “They could look to the example of other self-regulating industries in B.C. like the real estate sector, and the importance of diligently investigating any complaints.”

David Jordan of the B.C. Law Society says the society is an effective self-regulator on money laundering.

Postmedia asked the B.C. Law Society to provide a list of citations in connection to its money laundering rules. The society has cited six lawyers since 2004 for breaking a rule of handling cash transactions of over $7,500, according to Jordan. In one of the cases, a lawyer’s office received $40,000 in cash from a client in China who wanted to immigrate to B.C. The lawyer was fined $1,000. Jordan said in addition to “no cash” rule cases, the society will investigate complaints of suspicious transactions. 

The recent Financial Action Task Force report underlined money laundering vulnerabilities in Canada’s legal and real estate sectors.

 “The legal profession in Canada is especially vulnerable to misuse for money laundering … due to its involvement in activities exposed to a high money laundering risk, e.g., real estate transactions,” the agency said. “The real estate sector is highly vulnerable to money laundering, including international money laundering activities, and the risk is not fully mitigated, notably because legal counsels … are not required to implement anti-money laundering.”

The report pointed specifically to risks in Vancouver real estate.

“The real estate business is exposed to high risk clients, including politically exposed persons, notably from Asia, and foreign investors,” the report said. “For example, there are cases of Chinese officials laundering proceeds of crime through the real estate sector, particularly in Vancouver.”

scooper@postmedia.com

A Vancouver law firm that bears the name of Richmond MP Joe Peschisolido has removed from the firm’s website “inaccurate information about his level of involvement” with the firm, and photos of Peschisolido posing with Prime Minister Justin Trudeau.

Until last week, Peschisolido & Chung Law Corporation advertised that it is a Sino-Canadian business that provides foreign direct investment services for Asian companies seeking to “establish a presence in Canada,” and services for the B.C. provincial nominee immigrant investor program.

The firm is directed by Vivian Chung. Chung is a former employee of Peschisolido and Company, the Richmond law firm for which Peschisolido is the sole director.

Until last week, the website of Peschisolido & Chung Law Corporation prominently featured various pictures of Peschisolido, a lawyer who also served as MP for Richmond from 2000 to 2004, including one in which he stands arm-in-arm with Prime Minister Justin Trudeau, and one in which he is riding a bus with Trudeau.

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• Vancouver man accused of defrauding Chinese immigrants sponsored lunch with Justin Trudeau
• Richmond MP and lawyer named in fraud lawsuits filed by Chinese immigrant investors
• Securities Commission accuses prominent Vancouver immigration consultant of fraud

The pictures were a problem because they “can create, with members of the Chinese community, the impression that there might be preferential access to the prime minister,” a York University law professor, Richard Leblanc, said in an interview Wednesday. “The optics are just not good.”

The Peschisolido & Chung website advertised that “we will act as your legal interface between service providers and government bodies.” 

Directly under a picture of Peschisolido embracing Trudeau, the website said “we partner with you in all stages of your business development in B.C. Canada from start to finish.”

Under the photo of Trudeau and Peschisolido riding public transit, the firm advertised “we will provide you access to the leading Canadian subject matter experts and industry associations.”

Last week, Postmedia contacted the Liberal Party of Canada to ask questions about Peschisolido & Chung’s advertisements featuring photos of Peschisolido and Trudeau.

“Mr. Peschisolido has fully complied with the conflict of interest code for members of the House of Commons,” his spokeswoman, Olivia Tam, wrote in an email. “Mr. Peschisolido is not actively involved with the firm while serving as a member of Parliament.”

According to Tam, after Postmedia contacted the federal Liberals, “Peschisolido became aware this week that some of his campaign photos were being inappropriately used on the site, and that the site included factually inaccurate information about his level of involvement currently and since the (2015) campaign.”

Website makeover: The reworked website that removes content including pictures of MP Joe Peschisolido and the prime minister.

Tam said that Peschisolido “asked the firm to remove that content immediately … (and) will be taking further steps to ensure that this does not occur again in the future.”

Peschisolido was not made available to directly answer questions about his level of involvement with the firm.

Corporate records show that Vivian Chung is the firm’s director. Chung did not return a call for comment on Wednesday.

According to Chung’s LinkedIn profile, she is a former employee of Peschisolido and Company. Peschisolido is the sole director of Peschisolido and Company, corporate records show.

“It is always a wise practice for an elected member of any office … to discontinue all private directorships and memberships in outside professional service firms, such as a law firm,” said Leblanc, associate professor of law, governance and ethics. “This is for the reason that it creates a perceived conflict of interest. For example, a continued association or membership with a private firm could infer to a reasonable person that somehow the government might be part of the firm or has endorsed the firm.”

Peschisolido and Company has been sued by a number of Chinese immigrant investors who allege Peschisolido failed in his legal duty to ensure that funds transferred by them into a Peschisolido and Company legal trust were placed in a promised recycling plant investment. Instead, three civil claims allege, the funds were diverted to the personal accounts of Paul Oei, who is also facing action by the B.C. Securities Commission.

Peschisolido and Company deny wrongdoing in the cases. 

Meanwhile, expense records show that Peschisolido’s 2015 campaign paid $10,900 for office rental space to a Richmond currency exchange firm that was fined in 2013 for committing four violations under Canada’s anti-money laundering laws.

“Mr. Peschisolido, his campaign, and the Liberal Party of Canada were not aware of any administrative penalties that had been imposed upon the landlord company for this campaign office rental,” party spokesman Braeden Caley said in a statement.

scooper@postmedia.com

Related

• Vancouver man accused of defrauding Chinese immigrants sponsored lunch with Justin Trudeau
• Richmond MP and lawyer named in fraud lawsuits filed by Chinese immigrant investors
• Securities Commission accuses prominent Vancouver immigration consultant of fraud

A number of Chinese investors are facing big losses that a Law Society spokesperson says are unlikely to be covered by trust fund insurance after $7.5 million disappeared from a Richmond lawyer’s accounts.

Hong Guo, a prominent immigration and real estate lawyer in Richmond, has alleged in a B.C. Supreme Court lawsuit that two former employees conspired with accomplices to steal $7.5 million from her trust fund. 

The B.C. Law Society says that after Guo reported the trust fund shortage this summer, the society took control of the fund and related client files and is investigating.

The Law Society has a trust fund insurance program to cover money lost from legal trusts. But Guo’s clients may not be eligible. The Society’s insurance fund rules say clients are only eligible to recover trust fund losses if the lawyer steals the funds.

“Lawyer theft from a trust account is covered by this policy — employee theft from a trust account is not,” Law Society spokeswoman Vinnie Yuen confirmed in an email. When a lawyer steals client money from a trust account, under the Law Society’s trust protection coverage, the most compensation a claimant can receive is $300,000.

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• $7.5 million missing from Richmond lawyer's trust account disrupts real estate transactions

In order for B.C. lawyers to insure against employee theft, lawyers must purchase special fidelity insurance not included in B.C. Law Society insurance coverage.

But this coverage is not mandatory, Yuen said. 

In an interview with Postmedia this week Guo said her firm did not carry optional insurance to cover employee thefts.

Also, Yuen said professional liability insurance, which is also provided under the Law Society’s insurance fund, “covers lawyer negligence and ensures that clients receive the compensation to which they are legally entitled if a lawyer makes a mistake while providing legal services.”

“However, this insurance for negligence does not cover losses from a lawyer’s trust account in any way connected to a dishonest or fraudulent act,” Yuen said.

According to legal filings, at least five property transactions were affected in the Hong Guo trust fund case. Three Chinese citizens who hired Guo to complete their property sales allege they lost a total of $1.38 million in “holdback funds.” In real estate conveyances, the lawyer hired to transfer a property after it is sold will often keep a large portion of sale proceeds in trust until the Canadian Revenue Agency determines whether a non-resident investor tax bill will be issued. 

None of the allegations have been proven in court.

scooper@postmedia.com

A number of Chinese investors and B.C. real estate professionals are suing Richmond lawyer Hong Guo, alleging $2.1 million in losses, after Guo says more than $7.5 million was stolen from her trust account.

Guo is a prominent immigration and real estate lawyer in Richmond. The complainants, many of them investors from China, say Guo failed to pay taxes and complete real estate transactions with money held for them in the trust account.

Guo says she had trouble meeting her obligations because she was a victim of theft.

In court filing, Guo alleges her former bookkeeper and legal assistant developed a relationship beyond their office work and conspired with accomplices to unlawfully remove the money from her trust account. Some of the millions missing from Guo’s  account were converted to cash in a B.C. casino before the bookkeeper and legal assistant fled to China, a civil suit filed by Guo in B.C. Supreme Court alleges.

According to legal filings, at least five property transactions were affected in Guo’s trust fund shortfall. The Chinese investor cases involve $1.38 million in “holdback funds” that Guo is alleged by the investors to have retained in trust to pay her clients’ tax bills on Canadian real estate transactions.

In real estate conveyances, the lawyer hired to transfer a property often holds a large portion of sale proceeds in trust until the Canadian Revenue Agency determines whether a non-resident investor tax bill will be issued. Any such taxes would be paid from the holdback funds, with the remainder of sale proceeds later handed to the seller.

The CRA is seeking hundreds of thousands in tax bills that are unpaid because of the funds missing from Guo’s trust account, legal filings say.  Also, a number of local realtors and lawyers allege, in documents filed with the court, that they face big losses because Guo’s firm bounced cheques or failed to pay fees as a result of the trust fund shortfall.

Guo’s civil claim alleges that the two employees drained her trust account by forging her name on cheques, then laundered money in B.C. properties with help from accomplices, then deposited millions in bank drafts into client accounts at Gateway Casinos in Burnaby. Ultimately, players withdrew cash from the casino accounts and sent it to China where one of the suspects received the funds, Guo’s claim alleges. 

“It’s very interesting, one manager from this casino said that if a person deposits a bank draft, they could withdraw cash,” Guo told Postmedia in an interview.

B.C. Law Society spokesman David Jordan said that after Guo reported the trust fund shortage this summer, the society took control of the fund and related client files and is investigating.

“Guo has advised us that the shortage is the result of theft by one or more employees of the law practice,” Jordan said. 

Canada Revenue spokeswoman Heidi Hofstad said the agency does not comment on specific cases.

In an interview at her Richmond office, Guo told Postmedia “quite a few” of her firm’s property conveyances were affected by the alleged trust fund theft.

“But I covered (some shortfalls), and all the transactions closed because I put money in,” Guo said.

Guo was asked if CRA staff is seeking payment from her law firm of unpaid tax bills from the property transactions affected by the disappearance of money from the trust fund.

“They actually are looking for money from the clients,” Guo said.

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• Law Society insurance covers theft by lawyers, not by their employees

Guo’s lawsuit alleges that between February and April 1, 2016, funds were withdrawn from her firm’s trust account and the disappearance was discovered around early April. Starting in March and April 2016, Chinese investors and B.C. real estate professionals affected by the trust fund breach started to notice massive unpaid bills and financial liabilities in their bank accounts, according to legal filings, as Guo’s firm failed to make payments relating to a number of real estate transactions. 

In one of the missing holdback funds cases, Xiao Yong Sun is seeking $337,750 that she alleges was lost after she hired Guo as conveyancing lawyer for the January sale of a Richmond property. The CRA issued Sun a tax bill for $75,912 in March, but when Sun asked Guo’s office to use holdback funds to pay the CRA bill, “employees of the defendants provided a series of excuses for the defendants’ failure or refusal to use the holdback funds to pay the plaintiff’s tax liability,” Sun’s lawsuit alleges. Sun said she used her own funds to pay the CRA bill and alleges that on June 2 she learned funds disappearing from Guo’s trust account had caused a cash shortage at Guo’s law firm and affected a number of property transactions.

In another case, involving a West Vancouver home sale, a Chinese investor alleges she lost about $700,000 in missing holdback funds.

And in a Surrey land sale, a law firm claims it lost about $700,000 when a cheque from Guo’s law firm bounced.

B.C. Supreme Court legal filings since July by Guo and her firm explain a number of allegations against a group of defendants including her former employees.

According to her notice of claim, Guo alleges Zixin (Jeff) Li worked as a bookkeeper for Guo Law Corporation from 2014 until April of this year, and Qian (Danica) Pan was a legal assistant there in 2015. During that time, the suit alleges, “Jeff developed a relationship with Danica beyond work.”

The suit alleges that “as the bookkeeper, Jeff had access” to records of the law firm’s trust accounts and trust cheques, and alleges that around February of this year, Jeff, Danica, and at least one other accomplice, “conspired to steal, mishandle, convert, misuse, embezzle or otherwise misappropriate” funds in the trust account. Between February and March, the suit alleges, Li forged Guo’s signature on a series of trust cheques payable to Pan totalling about $7,580,000 and a $85,000 cheque to an accomplice alleged by Gou to be Ming Fu Wu.

Jeff Li, Danica Pan and Ming Fu Wu have not yet filed responses to Guo’s claim.

In early April 2016, Jeff Li and Danica Pan both left Canada for China within a week of each other, and Guo became aware of the missing funds, Guo alleged in court filings.

None of her allegations or those made in lawsuits filed against her company have been proven in court. 

A spokeswoman for Global Affairs Canada said that under terms of the Privacy Act, the department, previously called Foreign Affairs, could not provide details about Canadians in China.

Neither Zixin (Jeff) Li nor Qian (Danica) Pan face any criminal charges in B.C., said Dan McLaughlin, spokesman for B.C.’s Criminal Justice Branch.

In August, a B.C. Supreme Court judge issued an order freezing 10 Canadian bank accounts, accounts belonging to the defendants Zixin Li and Qian Pan as well as Li’s wife and brother and Ming Fu Wu and one casino account, and ordered the banks and B.C. Lottery Corporation to disclose records for the bank and casino accounts to Guo’s lawyer.  

In a related court application filed in October by Guo, she adds details alleging how Pan transported the misappropriated money to China. In the filing, Guo alleges Pan told her and the Chinese authorities that Pan used her client account with Gateway Casinos & Entertainment Ltd. in Burnaby, deposited “all or substantial part” of the misappropriated trust funds into her BMO bank account, and made bank drafts payable to Gateway Casinos. She then gave the BMO bank drafts to “various individuals (‘Danica’s accomplices’) who held accounts at Gateway Casino,” according to the filing, and “then received monies in China from the Danica’s accomplices.”

Guo alleges in her court filings the information disclosed by the BCLC “reveals that almost all if not all BMO bank drafts were deposited into Danica’s casino account.” However, the BCLC’s disclosure only included Pan’s “casino account records,” court filings show, and not her “playing records” at BCLC casinos, which, Guo alleges, would include, among other details, the records and transaction statements for Pan’s deposits and withdrawals of any funds.

The records are described in Guo’s court filings as “very important for the plaintiffs to advance their claim in this case and to trace the movement of the misappropriated trust monies.”

B.C. Lottery Corporation spokeswoman Jessica Gares, in an emailed statement, said BCLC complied with the first court order and has not received a court order to produce additional records, as the application was adjourned and no new hearing date has been set.

“None of these allegations have been proven in court and as this matter is presently before the courts, and BCLC is not a party in this matter, it would be inappropriate to comment further,” Gares said.

Guo’s notice of civil claim lists four Metro Vancouver properties, two in Richmond, and two in Burnaby, and claims the defendants applied “part of the misappropriated trust monies to the payment of mortgage, loans, repair” and other expenses related to the properties. In addition to former Guo employees Li and Pan, and the alleged accomplice Wu, there are two other defendants included in her claim, identified as Jeff Li’s wife and his younger brother, Jun Da Li.

Jun Da Li is the registered owner of one of the properties listed in Guo’s lawsuit, with an address on Brentwood Drive in Burnaby. Property records show Zixin Li, whose occupation is listed as “accountant,” and Jun Da Li, listed as “student,” purchased the Brentwood Drive property for $370,000 in June 2013. In October 2015, the title was transferred to Jun Da Li alone, for a consideration of $1 and “natural love and affection.” The transfer document was signed by Hong Guo, B.C. land records show.

The lawyer for Jun Da Li said his client and Jeff Li purchased the property with funds from their parents, who are successful business people in China.

Attempts to contact Zixin (Jeff) Li through his brother’s lawyer were unsuccessful, and emails to Pan, at two email addresses listed for her in court filings, were not answered.

So far, the only response filed to Guo’s claim is from a man claiming he has nothing to do with any of the allegations or other defendants. In September, a response and counterclaim were both filed by a Richmond man named Jun Da Li, who claims he was improperly named in Guo’s “bogus claims” because he is not Jeff Li’s brother and had no involvement with any of the parties.

His counterclaim alleges Guo “erroneously confused innuendo and speculation with fact and evidence in making claims against the defendant who is completely innocent,” and seeks damages for suffering, public humiliation and loss of enjoyment of life.”

Richmond real estate lawyer Hong Guo says she is making efforts to pay back clients who are facing major losses after $7.5 million disappeared from her legal trust.

Postmedia has reported a number of Chinese investors and B.C. real estate professionals are suing Guo, alleging $2.1 million in losses, after Guo says more than $7.5 million was stolen from her trust account in early 2016.

According to legal filings, at least five property transactions were affected in Guo’s trust-fund shortfall. The Chinese investor cases involve $1.38 million in “holdback funds” that investors allege Guo retained in trust to pay her clients’ tax bills on Canadian real estate transactions.

Guo has advised Postmedia that she put her own money into deals affected by the trust-fund shortfall, and that no deals fell through.

“The real estate transactions were not disrupted, all the transactions closed,” Guo added in an interview Monday. “And I’m making all the efforts to pay off the liabilities. Even though the insurance doesn’t cover (losses) and the amount is quite large, I have the ability to pay it off. But it takes time.”

Guo says that her law firm completes about $700 million in real estate transactions a year, and she owns enough assets to pay back anyone claiming losses against her and her firm in this case. She said that she is in the process of selling three personal investments including a B.C. home, a farm in Saskatchewan and a $15.8 million investment property to raise cash.

“I am able to pay. I’m selling my assets, but it takes time,” Guo said. “I paid a few million already.”

“If my business shuts down, it really doesn’t help anybody,” Guo added. “I have 20 people (working for the law firm), I need to support them. I have two children, I need to support them.”

In a B.C. Supreme Court civil suit, Guo has accused two former employees of conspiring to steal over $7.5 million from her trust account with forged cheques, before laundering funds in a B.C. casino, and ultimately sending cash to China. In legal filings, Guo says she personally pursued the alleged suspects to China and questioned her former employees.

Guo alleged the Zhuhai police are detaining her former employees but have not yet charged them.
 
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Related

• $7.5 million missing from Richmond lawyer's trust account disrupts real estate transactions
• Law Society insurance covers theft by lawyers, not by their employees

Over three decades ago a silent investment in a Chilliwack retirement home allowed Abdul, Shamim and their son, Azim Jamal, to start what would become the largest chain of retirement homes in B.C., Retirement Concepts. Along the way, they became influential in the health-care industry, winning many lucrative contracts with the provincial government to provide subsidized care for seniors.

By last year, they had won annual Health Ministry contracts worth more than $86 million. 

And over the decades, the Jamals, wealthy members of B.C.’s tightly knit Ismaili community, also judiciously invested in dozens of other properties across Canada and the U.S., including grocery stores, hotels, apartment buildings, office buildings and malls, and even a chicken farm.

Now, at least part of their empire, which may be valued at more than $1 billion, is being sought by Anbang Insurance, the massive but shadowy Chinese company that earlier this year bought a majority stake in Vancouver’s Bentall Towers complex and which has been on a buying spree in Canada and the States.

On Monday, a statement from Retirement Concepts acknowledged that a Canadian subsidiary of Anbang, Cedar Tree Investment Canada Inc., has offered to buy a majority interest in the company, which operates 24 retirement homes in B.C., Alberta and Quebec.

Although Retirement Concepts won’t say how large the deal is, it’s massive enough to trigger a review by the federal government’s Investment Review Division, which examines all foreign-ownership offers that exceed $600 million. The purchase, if approved, would be the first major foray into the Canadian health-care service industry by a Chinese investment firm. 

Since 2004, Anbang, which has a reported US$300 billion in assets, has raised eyebrows with a spree of offers for international property and insurance assets. This is also the second time the company’s investments have come under federal scrutiny; in April 2015 Ottawa approved its plan to buy a 66-per-cent stake in the four Bentall towers in Vancouver for an estimated $660 million. But just a month later, it bought the rest of the property from the outstanding shareholders.

Retirement Concepts says it “will retain a minority stake and will continue to manage the day-to-day operations” of all its seniors’ communities, and that there will be no changes to care, policies, procedures or operating standards. Anbang officials didn’t respond to a request for comment.

Along with building a business model that supplies subsidized housing for seniors, the Jamals have been strong supporters of the B.C. Liberal Party. Since 2005 they have contributed more than $70,000 to the party, both individually and through several corporations, provincial election financing records show.

The B.C. government said it’s aware of the proposed deal with Anbang and that it must be approved by the federal government. It said the sale of any care facility in B.C. also results in a review by the Health Ministry or local health authority. 

“This (facility) review is conducted to ensure that the purchasing company or individuals is able to meet the needs of patients and provide quality care. If the review is successful, it results in the facility receiving a licence to operate,” Kristy Anderson, a Health Ministry spokeswoman said in an emailed statement. “Should the federal government approve this sale, and medical health officers grant the requested licence, we expect the change would be seamless, and that the patients residing in these facilities will continue to receive the same quality of care. ”

Spokeswoman Stéfanie Power of the federal Investment Review Division confirmed a federal review of the offer for Retirement Concepts is underway, but Power didn’t respond to questions from Postmedia on Monday about whether review parameters would include questions of financial transparency or public health impacts in B.C.

“Due to the confidentiality provisions of the Investment Canada Act, we cannot comment further on the timing of the review,” Power said.

However, Anbang’s foray into B.C.’s health-care industry is raising eyebrows. 

B.C. NDP leader John Horgan said he only learned on Monday from news reports about Anbang’s application and wants to make sure the giant Chinese firm isn’t just interested in flipping or sitting on property owned by Retirement Concepts.

NDP leader John Horgan.

“It strikes me that when you have a real estate company getting into the business of taking care of our seniors that is cause for pause at the provincial level, and we will make sure that the federal government does a thorough review of the company’s intentions and how it will impact seniors in B.C.,” Horgan said.

“We have an aging population and if foreign companies that are not interested in health care are purchasing those facilities, we’d better make darn sure they have the capacity to deliver the services they are contracted for.”

Anbang has generally kept its structure out of the public, but an investigation by The New York Times earlier this year showed the company is largely owned by a core of about 100 investors from Pingyang County, China, most of whom are relatives of the chairman, Wu Xiaohui, or his wife, Zhuo Ran, the granddaughter of former Chinese leader Deng Xiaoping. Another major investor is Chen Xiaolu, the son of one of Communist China’s founding generals.

Some of the company’s takeover offers in the U.S. have been probed by regulators looking at questions of national security and financial transparency. In one case, Anbang initially withdrew its US$1.6-billion application in New York State to buy Iowa-based Fidelity & Guaranty Life after regulators “asked about ties between several shareholders with the same family names,” The Times reported. 

Next to Anbang’s massive heft, the Jamal family’s investments may pale by comparison. But they’re still significant, with the retirement-home properties alone worth hundreds of millions of dollars. 

A review by The Vancouver Sun and The Province shows that the assessed value of Retirement Concepts’ seniors homes is more than $380 million. That doesn’t include three properties in Alberta and Quebec, or nearly a dozen properties amounting to over 30 acres, most of them in the Lower Mainland held by the company.

It is also not clear whether the deal also includes any of the dozens of commercial and investment properties the Jamal family holds under the umbrella of Pacific Reach Properties Ltd. That company, formed by Azim Jamal and his uncle, Joe Moosa, controls more than a dozen properties in Los Angeles and Phoenix. It also owns a dozen properties in B.C., including the Westin Grand, Radisson Vancouver Airport and Sheraton Vancouver Guildford hotels. The assessed value of the B.C. properties alone approaches $100 million.

The Jamals didn’t respond to a request to clarify if the deal includes Pacific Reach Properties.

Horgan said so far, “the federal government is being quiet,” about Anbang’s plans and the public has been offered no information on a takeover that could have major public-health ramifications.

“The public should be made aware as quick as possible when a major takeover like this is happening,” Horgan said. “And the government should be as transparent as possible at both levels, federal and provincial, on what steps they plan to take to ensure the public interest is protected.”

Horgan said B.C. NDP MLAs, including housing critic David Eby and Selina Robinson, spokeswoman for seniors, will probe the ramifications of Anbang’s plans. B.C. NDP MLAs will work with federal NDP MPs from B.C. to correspond with the federal government, Horgan said. 

“Our responsibility as legislators is to make sure first and foremost the public’s interest is being protected, and not the investors nor the company that’s being purchased.”

NOTE: This story was modified at 9:15 am on November 29 to correct the state location of Fidelity & Guaranty Life. 

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New Coast Realty, a fast-growing Richmond-based real estate firm, has been fined $7,500 by B.C.’s Real Estate Council two years after an auditor discovered that the company’s director and other staff were involved in unlicensed services.

A September, 2016, Real Estate Council consent order states that an investigation into New Coast Realty began in April, 2014, and found that the director at the time (identified as Y.W.) and two other unlicensed staff were engaged in real estate activities that require a licence. In one case, brokerage records showed that Y.W. signed a commission agreement for a Vancouver home. In another case, Y.W. offered free rental services to the owner of a Richmond home.

The consent order states that in 2014 Y.W.’s picture was shown on New Coast’s website — as the “Real Estate Investment Marketing Director” — without indicating he was unlicensed. Another advertisement image showed Y.W. with a number of unlicensed staff.

“These images effectively held these unlicensed staff members out as people who provide real estate services,” the Council’s consent order states. The Council found New Coast paid unlicensed staff for providing real estate services.

The Council also found New Coast had committed professional misconduct by carrying a trust fund liability. 

In June, 2013, after a Maple Ridge home sale, a New Coast licensee deposited a $50,000 bank draft into the company’s general account rather than its trust account, the consent order states. The transaction was a “mistake”, but New Coast did not notify the council of the trust fund liability or take steps to eliminate the negative balance until four months later, the consent order states.

According to New Coast Realty’s website the business has experienced explosive growth, claiming it made 352 deals in 2013, 955 deals in 2014, and 2,357 deals in 2015, for $2.7 billion in total homes sales. 

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A Vancouver neighbourhood group has asked a B.C. Supreme Court judge to review B.C. Assessment’s decision to drastically reduce the appraisal value for Oakridge Centre, a massive redevelopment site.

In 2014, after Vancouver council approved a site rezoning that would conditionally allow developers to build a mixed-use village, including 45-storey towers and about 3,000 condos, the property was assessed at $867 million. Site owner Ivanhoe Cambridge successfully appealed to the Property Assessment Review Panel, and the eight-block Cambie Corridor site was reassessed at $500 million. Under B.C.’s assessment act, land owners and the review panel can come to private agreements on reassessed value, which don’t have to be made public.

The South Vancouver Parks Society believes that B.C. Assessment’s procedures weren’t transparent and didn’t fairly account for the development value of the site. The society is arguing that Vancouver citizens have lost significant property-tax revenue with the reassessment decision. President Glen Chernen said the society estimates the annual tax revenue lost will be about $1.94 million. Chernen said he believes there are a number of similar cases involving reassessments of lucrative development properties in Vancouver.

“This is much more than a single, privately arranged, $367-million value reduction,” Chernen said. “It’s a small piece of a wider B.C. problem, where government-owned land interests are traded, valued and dealt, without public knowledge or involvement.”

The society challenged the Oakridge Centre reassessment with the Property Assessment Appeal Board this summer, asking to know the reasons behind the site’s value reduction. The board rejected the disclosure request, saying the reasons weren’t relevant.

The board upheld the assessor’s decision to revalue Oakridge Centre at $500 million. Now, the society has applied in B.C. Supreme Court for a review of the board’s ruling.

The society’s lawyer in the case, Bob Kasting, said he will argue the board failed to acquire the proper evidence to fulfil its purpose of finding the true value of Oakridge Centre. 

“The board is supposed to get the true value of the property. But the assessment act allows for the property owner and the assessor to make a deal that doesn’t go public. And that is really what they’ve done here,” Kasting said. “Somehow the $867 million went down to $500 million. We don’t know why. And in this case, the board said, ‘I don’t even need to know why.’ ”

A central point to the board’s ruling this summer, Kasting said, was the board had two accepted ways of assessing the “highest and best-use” value of Oakridge Centre: either as vacant land with redevelopment potential or in its current commercial usage as a rent-producing mall. Chernen argued to the board that Oakridge Centre should be valued for its maximum rezoning potential. Using the estimate of an independent assessor, Chernen said the site’s true value was between $750 million and $1.1 billon.

Generally, in B.C.’s assessment system, the “theoretical focus of highest and best-use analysis is on the potential uses of the land as though vacant,” the board wrote in its ruling. The board, however, ruled that Chernen and the independent assessor didn’t support their rezoning-value case with reliable evidence, including feasibility studies.

“It may have been helpful to the board to have had a highest and best-use analysis that reflected the subject’s reality as a transitional property that was continuing its successful operation over the course of its planned development,” the board wrote. 

The society will argue that the board should have asked for such an analysis or agreed with Chernen’s request for the board to review B.C. Assessment’s original 2014 analysis valuing the Oakridge Centre site at $867 million.

“We’re saying that is not good enough,” Kasting said. “They, the board, have the right to go back and ask the parties to provide that evidence.”

Ivanhoe Cambridge is expected to make applications in early December to have the case tossed out, Kasting said. If the society proves its right to argue the case in B.C. Supreme Court, the case will be heard next spring.

A spokesman for Ivanhoe Cambridge said the company will not comment on the case.

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A Chinese man who has sued Richmond MP Joe Peschisolido in connection with an immigration-investment fraud case claims a group of seven investors were induced by a B.C. immigration entrepreneur to use illegal underground banking transactions in China to wire about $4 million into Peschisolido’s legal trust fund.

In interviews with Postmedia from China, plaintiff Yicheng Jiang explained details of his civil suit allegations against the immigration entrepreneur Paul Oei and Peschisolido’s law firm, Peschisolido and Company.

In the case, the B.C. Securities Commission accuses Oei of perpetrating “a fraudulent scheme” to bilk Chinese investors of $6.9 million in a Fraser Valley recycling plant project. The alleged scam involving 64 investments and a number of Oei’s companies took place between 2009 and late 2012. In separate but related B.C. Supreme Court civil actions, Yicheng Jiang and other Chinese investors allege losses and have sued Oei and his wife Loretta Lai, plus Peschisolido and Peschisolido’s law firm. 

According to Jiang’s B.C. Supreme Court claim, investors were told Oei and Lai “had connections with high-level officials in the government of B.C.” and that any person investing $1 million in Oei’s recycling plant project would be granted Canadian permanent resident status.

Jiang told Postmedia that immigration to B.C. was his main goal and that of other investors in Oei’s scheme. According to Jiang, Oei told the Chinese investors that by investing through Peschisolido’s legal trust fund they would get an extra layer of confidence in the immigration-investment scheme due to Peschisolido’s reputation “as an MP and big-name lawyer.”

In total, Jiang’s claim alleges, he wired $3.99 million for himself and six other Chinese citizens to an HSBC Bank of Canada account controlled by Peschisolido’s law firm. Funds from the Chinese investors were then wrongfully transferred from Peschisolido’s legal trust to Oei, the claim alleges.

Jiang, through his lawyer, provided to Postmedia documents showing Jiang’s wire transfers to Peschisolido’s HSBC Canada legal trust account. The documents are signed by Peschisolido. 

The legal response by Peschisolido and his firm deny any wrongdoing and states that he was unaware of any fraud or breach of trust.  The trust money was advanced to Oei’s company “pursuant to the clear and unequivocal instructions from the plaintiffs.”

Underground banking explained

According to Jiang, Oei said investors needed to pool their funds for the recycling plant project, “like the crowdfunding concept we have in China,” before sending money to Peschisolido’s trust fund. 

The money gathered from seven investors in Hangzhou would be wired to Canada under Jiang’s name only, with six so-called “beneficial” — meaning hidden investors — not named on official transfer records, Jiang’s legal claim states. The individual investors are named in Jiang’s legal filings, along with the amounts each contributed. In an interview, Jiang explained this method would make it easier to get money out of China, and into Canada.

“We just had to provide a list of the investors involved, then (Oei) would take care of the immigration for us,” Jiang said. 

China has strict rules barring citizens from sending more than $50,000 U.S. abroad per year. Underground banking is illegal in China, but is widely used by investors. The New York Times has reported hundreds of millions are transferred out of China every day via underground banks.

“Now, it’s hard for us to transfer the money out of China individually, because of the capital movement limits placed on outbound Chinese capital,” Jiang said. “So it’s best to concentrate our cash into one place, then to go through an underground bank — which looks for opportunities to transfer funds out to Canada whenever they can.”

Jiang said he transferred Chinese currency from himself and the six other investors to “a point-person representing the Chinese underground bank.” The underground banker, who Jiang met through a relative, changed the yuan to U.S. dollars at a pre-arranged exchange rate.

“So I transferred (yuan) either to that person directly, or to whichever account he wanted us to direct the money to,” Jiang explained. “Then, the bank would work their magic — I don’t know how — to get the money out of China. U.S. dollar funds would be transferred either to my HSBC account in Hong Kong or in Canada.”

Jiang said the Hangzhou investor group “originally wanted to go through government-approved means, but you had to get incorporated,” and official applications would take over a year. 

“We talked to Paul (Oei), and he said there’s a rush to invest in this project,” Jiang told Postmedia. “This (underground banking) is very common in China, for real estate buys outside of the country.”

The New York Times, Reuters and Bloomberg have reported on various underground banking methods. Often in Chinese cities that border Hong Kong or Macau, reports state, underground banks are run out of small electronics, tea or liquor stores which have bustling backroom cash exchange shops. The underground bankers in China have colleagues, often relatives, that either work in casinos in Macau or financial institutions in Hong Kong. The relatives on each side of the border basically operate rudimentary currency exchange operations. Transactions work like this: Customers deposit yuan in China, and receive a credit slip or numerical code. The customer or a customer agent crosses the border and submits a credit, in a casino VIP room for example, to get a payout in Hong Kong dollars. In another example, the Chinese underground banker will receive a yuan deposit from a customer, and the banker’s colleague in Hong Kong will deposit equal Hong Kong or U.S. dollars in the customer’s Hong Kong bank account. The customer or a customer agent can then easily deposit the funds in an international bank, and send it across the world. 

Oei guaranteed immigration, says plaintiff

Jiang’s legal filings say part of Oei’s alleged scheme was promoting his political connections.

“(Oei) told me that he is taking care of a problem for Canada,” Jiang explained. “So the government provides some benefits as a thank you, (Oei) said. He guaranteed that we can immigrate, and it’s our main goal. That was his promise; the project would take care of our immigration for us.” 

Jiang said that when he met Oei in 2009, Oei and his wife presented an image of wealth and sophistication. Jiang recalled that Oei picked him up in a Bentley and drove him to a Richmond office. And Oei showed a What’s In magazine article featuring a picture of Premier Christy Clark presenting a B.C. Liberal award to Oei. The article — with information about two of Oei’s businesses named by the B.C. Security Commission in the case (Canadian Manu Immigration and Cascade Renewable) — also showed Oei and his wife Loretta Lai posing with Donald Trump. Oei is also pictured with Richmond MLA John Yap. Through his lawyer, Jiang provided the magazine clippings to Postmedia.

“They mentioned their ties to government, very clearly. (Oei) mentioned the premier and high-level federal ministers have “very special” relations with him,” Jiang said. “He mentioned Christy Clark, and he mentioned some MPs, including Joe Peschisolido.”

Oei and his wife have donated over $67,000 to the B.C. Liberals and they are active in Richmond political fundraising circles. Oei and Lai have donated $8,477 to the federal Liberals since 2014. In July 2015 Oei’s company Organic Eco-Centre Corp sponsored a pre-election luncheon in Richmond featuring Justin Trudeau. The company has been named in B.C. Securities Commission allegations against Oei. At the Richmond luncheon Oei introduced Trudeau and embraced him.

In fall 2015 Chinese investors pressured Oei to return their money in the failed immigration-investment scheme, Jiang said. At that point, after Trudeau’s Liberals had won the federal election, Jiang said Oei sent the investors messages and photos on WeChat, of Oei “hugging Trudeau and all these celebratory photos.”

“To me, the intention was obvious; it was to tell me to not mess with him in Canada,” Jiang said. “It was like, ‘Look at my relationship with the prime minister. We are like buddies. You are just a Chinese man without even an immigrant status in Canada; don’t dare come to Canada to cause trouble’.”

Premier Christy Clark’s office reviewed some of Jiang’s statements, given to Postmedia.

Office spokesman Stephen Smart said the What’s In magazine picture of Clark presenting Oei a B.C. Liberal contribution award “was one of 11 certificates to thank those who contributed to a specific event for the Chinese community.”

“The premier takes seriously and follows, with an abundance of caution, the Conflict of Interest Guidelines for MLAs,” Smart said.

Regarding Jiang’s statement that Chinese citizens commonly use underground banking to get money offshore and invest in Canadian real estate, Smart said: “Our government has been clear and consistent about ensuring investments, particularly in real estate, made in British Columbia are not made with illegal monies.”

Jiang said he met Peschisolido in connection to Oei’s investment scheme.

“It was very important, because that’s where our money is going,” Jiang said. “So he had to meet us, especially with his background in law and government.”

“(Oei) said they (Oei and Peschisolido) have been friends for many years, and that they’ve cooperated in investment and business ventures. (Oei) said: ‘Look at him being an MP and a big-name lawyer.’ It means, from a legal point of view, this project is very trustworthy. ‘You can suspect me, but you can’t suspect an MP, right?’ he told us.” 

Peschisolido was provided transcripts of Jiang’s statements to Postmedia and Jiang’s HSBC wire transfer documents. 

Peschisolido did not respond to multiple requests for comment sent to his MP email account and through his MP offices in Richmond and Ottawa. 

In a previous interview with Postmedia, Peschisolido said he could not comment on Jiang’s allegations. Peschisolido acknowledged he has been photographed with Paul Oei at political functions, but he maintained Oei and Lai were not his clients.

“They were not my clients, they were the firm’s clients, and the courts will do what the courts do,” said Peschisolido.

In a legal response to Yicheng Jiang’s allegations, Peschisolido’s law firm denies any wrongdoing and said “these defendants admit that substantial monies were deposited into a U.S. dollar trust account of Peschisolido and Company, ostensibly by Yicheng Jiang … at no time were these defendants advised that Yicheng Jiang was not the beneficial owner of those sums of money at the time the monies were deposited.” Peschisolido and Company claimed any transfers made from the trust account were made at their client’s request. 

Federal Liberals respond

Braeden Caley, spokesman for the federal Liberal Party, was asked to comment on Jiang’s statements that alleged Chinese underground bank transactions were sent to Peschisolido’s legal trust fund.

“These appear to be private transactions with a law firm that Mr. Peschisolido is no longer involved with, from a time before he started this term as a Member of Parliament,” Caley said. “As this matter is currently before the courts, the party is in not a position to be able to comment further.” 

None of the allegations in Jiang’s lawsuit, nor the B.C. Securities Commission accusations against Oei, have been tested in court. On Oct. 26 the Insurance Council of B.C. announced a suspension of Oei’s licence until the Security Commission’s “serious” allegations have been tested.

Oei and Lai have denied all allegations against them in the Securities Commission and related civil court cases. Oei and Lai have not responded to requests for comment on this story, made through Oei’s lawyer Tim Louman-Gardiner.

HSBC Canada spokeswoman Aurora Bonin said for privacy reasons she could not speak directly to the information provided to Postmedia by Jiang.

“We absolutely do expect our customers to be in full compliance with all relevant laws and regulations including those related to Chinese currency controls,” Bonin said. “However, we go beyond just expecting them to be compliant … and we will exit relationships deemed inappropriate in light of new information.”

In legal claims Jiang said other investors in China have successfully sued him for their losses in Oei’s project. 

“They went over to Canada and saw nothing was happening with the project. Everything was in shambles, and the investors said it’s obvious it will not be operable,” Jiang said. He said his life has been ruined, and all of his bank accounts and company assets in China have been frozen. 

“I now rely on friends, who give me some money every month for my costs and the expenses of my two children,” Jiang said. 

The worst part, Jiang said, is that after years of stress over the B.C. immigration-investment scheme, his wife divorced him.

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Critics say the B.C. government must work to close loopholes that allow homeowners in the province to hide their identities behind false fronts such as shell companies.

NDP housing critic David Eby and Green MLA Andrew Weaver called for changes after reading about a Transparency International report that slams Canada for failing to close loopholes that allow homes to be owned through shell companies, trusts and nominees. The report shows almost half of Vancouver’s 100 most expensive houses were bought using shell companies or other methods that obscure the identity of the owners.

Report author Adam Ross found that use of tactics to obscure ownership has increased in the past five years in B.C.  He also concluded the prevalence of opaque ownership in B.C. luxury real estate makes it impossible to measure how much offshore cash is invested in B.C. homes, even though B.C. is attempting to collect data on foreign ownership.

“I hope (the B.C. government) acknowledges that the information they collect now is of limited value,” Ross said.

In examining Vancouver’s 100 most valuable homes, his report found that 46 per cent — amounting to more than
 $1 billion in assets — have opaque ownership. Of the 100 properties, 29 are held through shell companies, at least 11 are owned through nominees (listed as students or housewives on land titles), and at least six are disclosed as being held in trust for anonymous beneficiaries, the report says.

Image plots some of the high-end City of Vancouver homes that are not directly owned.

For its part, the B.C. Ministry of Finance pointed to B.C. government changes to the property transfer tax form this year that require foreign buyers to disclose their citizenship. Property buyers are also asked to disclose one particular form of ownership transfer, a so-called bare trust, and whether any of the trustees involved are foreign. And corporations must also provide identification and citizenship for directors, a statement from the ministry said.

But Ross said there are many ways to get around the reporting requirements outlined by the Finance Ministry. For example, some trusts do not have to be disclosed or revealed on land titles. They are private contracts, administered by lawyers adhering to anonymity clauses.

Its believed millions of trusts exist in Canadian companies and property ownerships which even the Canadian Revenue Agency is not informed of, Ross said. Therefore, his research suggests that trusts can be layered on top of ownership structures that are reported to government agencies, providing another layer of anonymity. Ross said a “one line” citizenship disclosure for property transfer documents required by Victoria “is insufficient.”

“An influx of overseas capital is one of several causes of rising property prices (in Vancouver and Toronto), but the extent and impact of foreign investment remains unknown since very little data is collected on property owners,” the report says. “Individuals can use shell companies, trusts and nominees to hide their beneficial interest in Canadian real estate.”

4833 Belmont was bought in 2016 for $31.1 million to a student, most likely a nominee for the true ‘beneficial’ owner, the report says.

“You could own a company through a trust, and that trust could be controlled by your lawyer as a director, and so on, and there is no way for the government to identify you as the beneficial owner,” Eby said. “The simple way to fix this is the change recommended in the Transparency International report. Change the Land Title Act and require the beneficial, meaning the actual owner, has to be named on the title.”

Green MLA Weaver said that investors still have ways to evade Victoria’s land title and bare trust disclosure requirements.

“A lot of the disclosure is voluntary, and you can get around that,” Weaver said. “What really needs to be done is to track where the money is coming from, more efficiently.”

The majority owner of a Point Grey mansion at 4833 Belmont that sold earlier this year for a record $31.1 million is a student, property records show.

Transparency International is a non-government coalition that studies global corruption and advocates legal reforms to fight financial crimes. Its report says that compared to other advanced economies, Canada has weak transparency laws.

“Though Canada is not known as a global hub for money laundering 
and tax evasion, our legal framework and lax enforcement environment make it easy for individuals to misuse private companies and trusts,” it says. “Anonymous companies and trusts are the getaway cars of financial crime. … Canada is an increasingly attractive destination for those looking to park and invest the proceeds of crime.”

Trusts and shell companies can be used in B.C., the report states, to avoid property transfer taxes. Ross said there are legitimate reasons for commercial real estate to be transferred through companies without triggering property tax. But this “tax loophole is also available to owners of residential property that is held through shell companies,” the report states.

Ross said crime groups in Canada are believed to hide ownership with the means outlined in the report, and a host of factors he looked at suggest the methods are also used by foreign buyers.

It is also impossible, the report states, to judge how many nominees are represented in the sample of 100 luxury homes.

A nominee is a person who appears as owner on title of a home but is not the real buyer. For the purposes of the report, Ross classified people listed on the land title as either “student” or “housewife” as nominees. 

Of the 42 of the 100 luxury properties that changed hands in the past five years, 26 per cent were owned on paper by students or homemakers, the report says. But “only one of the 58 homes bought before 2011 is owned through an obvious nominee,” the report says. 

5695 Newton Wynd is owned by a B.C. numbered company with only one director listed, a lawyer. That, the report says, shields the true owner behind lawyer-client privilege. 

“Though the value of the transaction was unique, the deal is part of a wider trend whereby unemployed individuals are acquiring luxury property in the city with other people’s capital,” the report says. “These individuals have no source of employment income and are likely nominees for family or friends.”

The use of nominee owners is a common tool for laundering money through real estate, according to an RCMP case study, the report says. Also, “beneficial owners can use nominees to avoid or evade tax by claiming principal residence or first-time homebuyer exemptions,” the report says.

“A recent study found that of 60 countries around the world — including known tax havens and secrecy jurisdictions — only in Kenya and a select few U.S. states is it easier to set up an untraceable company than it is in Canada,” the report states. “In Canada, more rigorous identity checks are done for individuals getting library cards than for 
those setting up companies.”

The report recommends the federal government establish a central registry of companies and trusts and their true beneficial owners, which is a measure already taken in the United Kingdom and due to be established in other first-world economies.

“Anonymous companies and trusts deprive treasuries of billions of dollars in tax revenues each year, add considerable cost to law enforcement, and hinder asset recovery,” the report says.

The majority owner of a Point Grey mansion at 4833 Belmont that sold earlier this year for a record $31.1 million is a student, property records show.

Another major theme of the report, Ross said in an interview, is the “gatekeeper” role that Canadian lawyers have in obscure ownership structures.

Lawyers are involved in setting up most shell companies and trusts, and frequently act as nominee shareholders and directors, and hold money in trust for clients, and “are therefore in a unique position to know what they are used for and who they benefit,” the report states.

The report highlights lawyers are exempted from reporting to Canada’s anti-money laundering agency, Fintrac, under a 2015 Supreme Court of Canada ruling.

Canadian lawyers won the case by arguing that attorney-client privilege prevented them from reporting transactions to Fintrac.

One of the case studies in the Transparency International report suggests lawyers are often central to money-laundering schemes. 

In 2009, Toronto lawyer Simon Rosenfeld was convicted of money-laundering charges, the report says. He was arrested after laundering hundreds of thousands through shell companies for an undercover police officer posing as a Columbian drug cartel operative. Rosenfeld bragged to the officer that for lawyers Canada was “20 times safer” than the U.S. to launder money in, and it was a “La La” land where financial crime went unpunished. Rosenfeld also claimed five Vancouver lawyers were running major money laundering operations. The judge noted that Rosenfeld exploited attorney-client privilege “to enhance his money laundering services.”

And the undercover officer testified, “in almost every case we are doing, lawyers are central.”

Ross said that he believes the federal government must find a way to include Canadian lawyers in Fintrac reporting, or many of the loopholes his report reveals, will remain open.

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The NDP has asked Prime Minister Justin Trudeau to investigate the case of Richmond MP Joe Peschisolido, who has been sued by Chinese investors in connection with an immigration investment fraud case.

Plaintiff Yicheng Jiang alleges a group of seven investors were persuaded by B.C. immigration entrepreneur Paul Oei to use illegal underground banking transactions in China to wire about $4 million into a trust account at Peschisolido’s law firm. 

The B.C. Securities Commission accuses Oei of perpetrating “a fraudulent scheme” to bilk Chinese investors of $6.9 million in a Fraser Valley recycling plant project. The Chinese investors alleged losses and sued Oei, Peschisolido and Peschisolido’s law firm in separate, but related, B.C. Supreme Court lawsuits. 

The lawsuits claim Peschisolido, as a lawyer, was responsible because funds meant to be transferred from his firm’s trust fund to recycling plant investments went to Oei’s personal use instead.

“These are serious allegations, and I would call on the prime minister to start looking into this,” Vancouver NDP MP Don Davies said in an interview Wednesday. “The allegations are unproven, but at least from a political point of view, a lot of bells are ringing in this case.” 

According to the plaintiff Jiang, Oei told the Chinese investors that by investing through Peschisolido’s legal trust fund they would get an extra layer of confidence in the immigration-investment scheme due to Peschisolido’s reputation “as an MP and big-name lawyer.”

Jiang’s B.C. Supreme Court claim says investors were told Oei “had connections with high-level officials in the government of B.C.” and that any person investing $1 million in Oei’s recycling plant project would be granted Canadian permanent resident status.

“They mentioned their ties to government, very clearly. (Oei) mentioned the premier and high-level federal ministers have ‘very special’ relations with him,” Jiang said in an interview with Postmedia News. “He mentioned Christy Clark, and he mentioned some MPs, including Joe Peschisolido.”

The legal response by Peschisolido and his firm denies any wrongdoing and states that he was unaware of any fraud or breach of trust.  

Peschisolido did not respond this week to multiple requests for comment from Postmedia reporters in Ottawa and Vancouver. In a previous interview with Postmedia, Peschisolido said he could not comment on Jiang’s allegations. Peschisolido acknowledged he has been photographed with Paul Oei at political functions, but he maintained Oei was not his client, but his firm’s client.

“The courts will do what the courts do,” said Peschisolido.

Corporate registry records for 2016 show that Peschisolido is the sole director, president and secretary of the firm named in the case, Peschisolido and Company.

Oei denies any wrongdoing in all of the cases.

NPD MP Davies said in addition to breach of trust allegations, the case seems to have parallels to the so-called “cash-for-access” questions that opposition parties have recently been hammering Prime Minister Trudeau and his party with in Parliament.

“We have allegations of breach of trust, and now on top of that (in the case) we have donations to the Liberal Party of Canada,” Davies said. “Given the general issue that has been in Parliament all fall, the question of access to politicians and money involved, I think all of this means that the Prime Minister needs to look at this right away.”

Oei and his wife have donated over $67,000 to the B.C. Liberals, and they have donated $8,477 to the federal Liberals since 2014. In July 2015 Oei’s company Organic Eco-Centre Corp. sponsored a pre-election luncheon in Richmond featuring Justin Trudeau. The company has been named in B.C. Securities Commission allegations against Oei.

Liberal party spokesman Braeden Caley did not respond by deadline Wednesday to the NDP’s call for an investigation.

“As this matter is currently before the courts, the party is in not a position to be able to comment further,” Caley has said previously of Peschisolido’s case.

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The B.C. Law Society has taken over part of the practice of a Richmond real estate lawyer, Hong Guo, and continues to investigate after $7.5 million disappeared from her firm’s trust account.

Postmedia has reported a number of Chinese investors and B.C. real estate professionals are suing Guo, alleging $2.1 million in losses, after Guo says more than $7.5 million was stolen from her trust account in early 2016. The trust fund shortage affected property transactions and left a number of Chinese investors unable to pay tax bills on Canadian real estate transactions, legal filings say.

The Society has taken custody of the affected trust account, at CIBC, and has imposed conditions on Guo’s firm, documents filed in B.C. Supreme Court say. One of the conditions is that Guo can’t make payments to affected clients except through the Society’s custodian. Also, for any new client matters Guo must use “only specific trust accounts” and payments must be signed by a second lawyer that is approved by the society.

“The Law Society’s investigation of Hong Guo’s conduct is ongoing and it would be premature to speculate as to the outcome of that investigation,” spokesman David Jordan stated in an email.

Meanwhile, several of the Chinese real estate investors affected by the trust shortage have obtained judgments against Guo, legal filings say.

In a letter to the lawyer of Zhaoyan Wang, one of the clients who has sued Guo, B.C. Law Society manager of custodianships Michael Rhodes says: “The powers of the custodian are limited … and the custodian has no power to pursue assets of Ms. Guo or the law practice.”

The letter says that, “at this point, the total shortage in the account is $5.5 million … if we receive funds, we intend to distribute them pro-rata among those who have suffered a loss.”

Rhodes also writes that, “at least two (clients) have obtained judgments and at least one has begun taking steps to execute on their judgment … if those parties are successful in obtaining funds from Ms. Guo … their actions may reduce options or opportunities for other parties wishing to recover from Ms. Guo.”

Supreme Court foreclosure documents say that in August, Guo client Xiao Yong Sun obtained a default judgement against Guo for $338,835. The judgement has been registered against land titles to a number of Richmond properties owned by Guo and her law firm, legal filings say, including a 5000-block Linfield Gate home, a 6000-block Francis Road home, and two Richmond offices.

In a B.C. Supreme Court civil suit, Guo has accused two former employees of conspiring to steal over $7.5 million from her trust account with forged cheques, laundering funds in a B.C. casino, and ultimately sending cash to China. Guo claims, in court documents, that the employees are jailed in China.

Court transcripts show that in September, Xiao Yong Sun’s lawyer examined Guo in efforts to discover her interests in various investment companies and properties, and also asked Guo to provide documents to prove her former employees are jailed in China.

Responding to questions from Sun’s lawyer, Guo said the trust fund shortage affected 60 of her clients.

Guo said after the trust shortage, she paid $2 million to a number of affected clients, because she judged that they urgently needed the money to complete real estate transactions. And in one case, Guo said, a woman needed to fix her leaking roof.

“That’s why I’m not allowed to pay any more, and (the Society) said I cannot decide which one I pay to,” Guo said in the examination.

Guo was asked by Sun’s lawyer if she could provide a list of the clients that she paid back. Guo responded, examination documents show, saying “it’s just impossible … that is a problem for us … we really don’t know who used that money. So that’s why we’re using a forensic accountant.”

Sun’s lawyer asked Guo if she was aware of “fraudulent preferences” and if she saw “any problem with the idea that you would pay some clients in preference to others?”

“Yes, I do,” Guo answered.

Guo was questioned about her interests in a number of companies and properties, including “a few thousand acres” of farmland in Saskatchewan, and a number of B.C. properties, and several vehicles including a BMW X5.

Regarding her background, in the examination Guo said she has an interest in a law firm in China, and she is a former employee of the People’s Republic of China.

In the examination by Sun’s lawyer, Guo offered more details on her allegations against two former employees.

Guo claimed that her former book-keeper forged her signature to steal funds, and Guo said that “we think he was working with (another female employee) and (the female employee) had a boyfriend in CIBC. But we just suspect, we don’t have solid evidence yet. But we are going to sue CIBC.”

In the transcript, Guo says that she first reported the alleged theft to the RCMP and then pursued the alleged suspects to China in April.

“Since April 3, I have been my own police,” Guo said, in the transcript. “This (female employee) left Canada on April 6, arrived in China, in a hotel, and I was waiting outside the hotel.”

Guo said that the female employee escaped Guo and went to another hotel, “but at the end, we caught them, on June 27.”

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