About $3.5 million US will be returned to 451 investors duped in a Ponzi scheme run by a pair of Burnaby financial fraudsters following a B.C. Supreme Court order.

The money comes from about $10 million US frozen in bank accounts during a B.C. Securities Investigation into a fraud in which investors bought online advertising that turned out be a false business.

In 2014, the two fraudsters — Yan (Rachel) Zhu and Guan Qiang Zhang — were found to have violated B.C. Securities laws by a BCSC tribunal. In their ruling the tribunal said: “Their activities were at the most serious end of the range of misconduct under the (Securities) Act, caused serious harm to investors and damaged the integrity of our capital markets.”

In 2015, the pair were banned from B.C.’s capital markets and, along with their company Bossteam E-Commerce Inc., were issued penalties totalling $42 million US.

The pair have not paid those penalties.

Receiver Grant Thornton Ltd. was appointed to oversee the call to investors to apply for return of their funds and a plan to disburse the money.

“This is a major success for investors,” BCSC spokeswoman Alison Walker said in a written response Friday.

“The Court also granted the BCSC’s application to pay claims filed after the deadline and to pay interest to investors at five per cent. Interest was not originally contemplated by the court.”

However, applications from nearly 600 investors for millions of dollars were rejected.

Investors had to appeal in order to contest their rejected applications. Only three have done so.

Walker said the receiver followed a process that vetted the investor applications and pointed to the receiver’s report as to why claims were rejected. Those reasons include lack of supporting documentation, according to the receiver’s report.

B.C. securities regulator takes action in U.S. court to enforce major penalty

Grant Thornton noted that …read more

Source:: Vancouver Sun – Business


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