$3.3M in penalties for woman who defrauded B.C. investors with Chinese student claim

Canadian cash is shown: (iStock)

A woman who defrauded investors of millions of dollars by claiming the funds would be used to help Chinese students and tourists has been fined nearly $3.3 million and banned from investment markets for life.

In a decision issued this week, a panel of the B.C. Securities Commission ordered Meiyun Zhang to pay a $2.5-million administrative penalty and a $791,642 disgorgement, representing the traceable amount of her ill-gotten gains from the fraud.

From 2014 to 2016, Zhang raised more than $3.2 million from three investors who were born in China but resided in Vancouver and Richmond. According to a previous BCSC decision, Zhang made various different claims about what the money would be used for, often tailoring her messages to the specific interests and sympathies of the investors.

At different points, she claimed that the money would be provided to Chinese students and tourists in exchange for U.S. dollars and Chinese Yuan; to help Chinese students immigrate to Canada to study; or to provide loans to students from China so that they could show Canadian authorities they had enough money to qualify for visas.

Zhang promised her investors returns ranging from six to 10 per cent per month, and presented the investment as risk free.

In fact, BCSC investigators could not find any evidence that the money was spent for any of the purposes Zhang said it would be. Instead, Zhang used the investors' money to pay returns to other investors in Canada and China, repay a personal loan to a Realtor in Calgary, make purchases, pay bills, gamble at casinos and pay an immigration lawyer to dispute a removal order against her, among other things.

While each of the investors did get some of their money back, they ultimately lost a combined total of roughly $1.7 million.

"Zhang’s conduct amounted to a wholesale and widespread deceit to investors," the panel's latest decision reads.

"Zhang never operated a legitimate business in connection with the fraudulent representations. Instead, she used investors’ funds for other purposes," it continues. "Zhang’s high-pressure tactics and predatory conduct demonstrate a character lacking in integrity."

Any disgorgement funds collected can be distributed to Zhang's victims, the BCSC said in a news release announcing the panel's decision Friday.

While Zhang participated in the early, procedural stages of her case, she did not participate in either the panel's hearing on her liability for the fraud, nor in its hearing on determining what sanctions she should face.

In addition to the administrative penalty and the disgorgement order, the panel imposed a permanent ban on Zhang's participation in investment markets, with a limited exception allowing her to maintain personal accounts operated through a registered dealer.