$1.7M lost in fraudulent scheme to help Chinese students: BCSC
A woman defrauded investors of around $1.7 million that she said was intended to support Chinese students and tourists, the British Columbia Securities Commission (BCSC) has found.
Meiyun Zhang told investors she would use their money to support Chinese students and tourists coming to Canada, and in turn generate up to 10 per cent monthly returns without risk, the commission said in a decision Tuesday.
Between 2014 and 2016, the BCSC says Zhang defrauded three investors in Vancouver and Richmond, B.C., pressuring them into giving her more than $3 million.
She told the investors their money would be used for a variety of purposes, including being exchanged for Chinese yuan, helping Chinese students get or renew visas, and helping Chinese students prove to immigration officials that they had enough money to study in Canada.
But instead, the BCSC says, Zhang used the money to pay returns to other investors in Canada and China and pay off a personal loan to a Calgary realtor, as well as shopping, paying utilities and gambling at casinos.
The commission also said she used the money to pay a lawyer to dispute an immigration order that she leave Canada. CBC News has contacted the BCSC, Immigration, Refugees and Citizenship Canada and the Immigration and Refugee Board of Canada for more details about this order and whether the case is ongoing.
Exact place of residence unknown
The commission said Zhang paid back some of the money, but failed to return about $1.7 million. In the decision, the BCSC executive director compared Zhang's scheme to a Ponzi scheme, in which money from new investors is used to pay existing ones.
It's now up to the BCSC panel to determine penalties against Zhang, which could include fines and bans from market participation.
In an email to CBC News, a BCSC spokesperson said the securities watchdog doesn't generally comment on cases while they're still before the panel.
Zhang could not be reached for comment.
Zhang held a B.C. driver's licence and listed mailing addresses in Calgary, but her exact place of residence is not known to the BCSC.
While running the scheme, Zhang said she had many occupations, including homemaker, business owner, caregiver and investor, according to the commission.
'Calculated and even predatory'
The BCSC said Zhang met one investor through a mutual friend in 2014. The investor, referred to as "LD" in the document, worked as a cleaner at the Vancouver International Airport and as a translator.
Zhang allegedly treated the investor to an expensive dinner, during which she told the investor she was in the business of lending money to Chinese students who needed to show immigration authorities they had enough money to remain in Canada.
LD told the commission they were initially hesitant, but Zhang called them daily, pressuring them to give her money.
"There are additional factors ... which convince us that Zhang's actions were calculated and even predatory," the BCSC panel said in the decision. "One of these factors is the persistence Zhang demonstrated in convincing the initially reluctant investors to advance both their initial investments and then to continue investing more."
Eventually, LD gave Zhang $90,000 and, days later, Zhang repaid $50,000, the BCSC said. After that, the investor started following Zhang's directions. They took out a line of credit and several loans, to make a total of 102 payments to Zhang totalling more than $1.7 million.
The investor received about $760,000 in payments back from Zhang, but at the time of publication, still has not recovered almost $1 million.
The commission says Zhang also targeted a Metro Vancouver tailor and a businessperson in the hospital industry.
While the three investors spoke to BCSC investigators, Zhang did not participate in the proceedings and has not disputed the evidence against her. One of the reasons she did not participate was her refusal to provide updated contact information and place of residence to the regulator.
Zhang has been temporarily banned from participating in markets since April 2023.
The involved parties have until Oct. 25 to submit information before the panel decides what sanctions to impose.