BCSC panel finds B.C. sisters committed fraud and engaged in illegal distributions
29 Jun, 2016, 13:00 ET
VANCOUVER, June 29, 2016 /CNW/ - A British Columbia Securities Commission (BCSC) panel has found Siu Mui "Debbie" Wong, Siu Kon "Bonnie" Soo, and three joint venture companies they created engaged in illegal distributions and committed multiple acts of fraud. Wong and Soo are sisters and residents of B.C.
The panel found that Wong and Soo illegally distributed securities in a joint venture company called Wheatland Industrial Park Inc., which has never filed a prospectus in B.C. The sisters created the company to buy and develop land in Wheatland, Alta., and sold units in the company to investors. The panel found that the sisters and Wheatland illegally distributed $2,000,000 in securities to 25 investors who did not qualify for exemptions under the Securities Act.
The panel also found that the sisters committed fraud by transferring 33.5 Wheatland joint venture units to companies owned by their adult children and husbands without consideration and without obtaining investor approval.
The panel found that the sisters committed a further fraud by misappropriating investors' subscription proceeds to fund two related company loans totalling $1,208,000 without the investors' permission. In relation to these loans, the panel stated "the sisters had knowledge of the prohibited act and that a consequence was the risk of deprivation… They knew that if these loans were not repaid, Wheatland would lose money and its investors would be deprived."
The panel found that the Soo, Wong, 1300302 Alberta Inc. and D&E Arctic Investments Inc. also illegally distributed securities. Neither company has ever filed a prospectus in B.C.
Similar to Wheatland, the sisters set up 1300302 and D&E Arctic to buy and develop land in Rocky View, Alta., and sold units in the companies to investors. The panel found that the sisters and 1300302 illegally distributed $2,785,000 in securities to 44 investors, and the sisters and D&E Arctic illegally distributed $1,105,000 in securities to 19 investors. None of these investors qualified for exemptions under the Act.
The panel also found that the sisters committed multiple acts of fraud through 1300302 and D&E Arctic. The panel found that the sisters inflated the purchase price of the Rocky View lands and lied about it to investors. The sisters used a company they controlled called LCco to initially buy the land for $5,540,000 and then sold it to 1300302 and D&E Arctic at an inflated price of $10,271,300 in an artificial transaction. The sisters sold joint venture units to investors based on the inflated price, not the initial purchase price.
The panel found the sisters also committed fraud when they used mortgage proceeds for purposes other than the development of the Rocky View lands without consent from investors. In February 2009, 1300302 and D&E Arctic obtained a $1.65 million mortgage loan without seeking approval from investors. The sisters claimed the loan was used to repay family members who had used their own funds to pay for Rocky View expenses. However, the panel found that the amount advanced to the family exceeded the amount the family was owed at any one time, meaning a portion of those funds was used to benefit the Wong and Soo families.
Finally, the panel found that the sisters withheld information about potential delays in development of the Rocky View lands from an investor. On December 12, 2007, Wong received a memo from an engineering firm the sisters had hired, stating that rezoning of the Rocky View lands was speculative. On December 21, 2007, she received a memo from the firm giving notice that applications were being put on hold.
All distributions but one were fully paid for before the December 12 memo. The sisters accepted money from one investor after December 21, but did not tell the investor about the potential delays detailed in the two memos. By not disclosing the contents of the memos to the investor, the panel found the sisters committed an act of fraud.
The panel directed the parties to make submissions on sanctions according to the schedule set out in the findings.
You may view the findings on our website www.bcsc.bc.ca by typing Siu Mui "Debbie" Wong, Siu Kon "Bonnie" Soo, Wheatland Industrial Park Inc., 1300302 Alberta Inc., D&E Arctic Investments Inc. or 2016 BCSECCOM 208 in the search box. Information regarding disciplinary proceedings can be found in the Enforcement section of the BCSC website.
Please visit the Canadian Securities Administrators' Disciplined List for information relating to persons and companies disciplined by provincial securities regulators, the Investment Industry Regulatory Organization of Canada (IIROC) and the Mutual Fund Dealers Association (MFDA).
About the British Columbia Securities Commission (www.bcsc.bc.ca)
The British Columbia Securities Commission is the independent provincial government agency responsible for regulating capital markets in British Columbia through the administration of the Securities Act. Our mission is to protect and promote the public interest by fostering:
- A securities market that is fair and warrants public confidence
- A dynamic and competitive securities industry that provides investment opportunities and access to capital
Learn how to protect yourself and become a more informed investor at www.investright.org
SOURCE British Columbia Securities Commission
For further information: Media Contact: Alison Walker, Media Relations, 604-899-6713; Public inquiries: 604-899-6854 or 1-800-373-6393 (toll free)
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