A lawyer from Member of Parliament Joe Peschisolido’s now shuttered law firm has been suspended for three months by the Law Society of B.C., which has also barred her from practicing securities law indefinitely.
Lawyer Yvonne Hsu worked for Peschisolido and Co. in Richmond and reached a settlement with the society after admitting professional misconduct for her role in a $5 million fraud connected to alleged money laundering out of China for the purpose of an immigration scheme.
A contrite Hsu spoke briefly Friday before the society’s hearing panel consisting of Phil Riddell, Lindsay Leblanc and Brendan Matthews.
“I’m deeply sorry for my actions on this matter and I feel ashamed,” said Hsu, who declined to comment to Glacier Media after the short hearing that followed a settlement agreement made between Hsu’s counsel William MacLeod of MacLeod & Co. and disciplinary counsel William Smart, of Hunter Litigation Chambers.
“I was young, inexperienced and naïve … and I know that is no excuse,”
Smart told the panel that Hsu’s “misconduct played a significant role in the fraud.”
A three-month suspension carries significant costs and disruptions, well beyond just the three months, said MacLeod.
Smart outlined how Hsu, starting in 2009, deposited nearly $14 million from Chinese investors into the law firm’s trust accounts and then disbursed it to her client, who committed fraud, as determined by the BCSecurities Commission (BCSC) last year.
The society alleged Hsu had engaged “in activities that [she] ought to have known assisted in or encouraged dishonesty or fraud.”
With Hsu’s assistance, Oei withdrew money out of the trust accounts for his personal use.
Hsu failed to “acquire and apply relevant knowledge or skills of securities law and regulatory requirements,” the society’s June 7, 2018, citation added.
Oei raised funds on behalf two recycling and fertilizer companies, Cascade Renewable Carbon Corp. and Cascade Renewable Organic Fertilizer Corp. (collectively known as Cascade) through an indirect investment structure. Hsu facilitated money intended for Cascade to end up in bank accounts for Oei and his company Canadian Manu Immigration & Financial Services Inc. And Oei distributed so-called shares for Cascade via two numbered companies, incorporated by Hsu.
Exactly how Oei structured shares for Cascade is difficult to explain, noted a BCSC panel decision against Oei, considering the investment documents, prepared by Hsu and given to investors, are “nearly indecipherable from a legal perspective.”
Hsu’s citation notes how she altered disclosure documents, thus benefiting Oei’s scheme.
Smart noted Hsu had assistants do legal work without supervision. She herself had little professional development from the law firm, he added.
Smart said Oei was “obviously a con man,” but added that Hsu was “also a victim of his dishonesty.”
“Ms. Hsu was not aware of the fraud and it was not her intention to facilitate this fraud,” said Smart.
The former B.C. Supreme Court judge settled on a three-month suspension despite the significant misconduct and harm to investors because of several mitigating factors: Hsu is now practising on her own in Surrey doing simple legal work; she’s raising two small children; this was her first misconduct; her reputation has been harmed; and she admitted to her wrongdoing.
Meanwhile, Peschisolido, a Liberal MP for Steveston-Richmond East, has said he’s voluntarily wrapped up Peschisolido and Co. and ceased to be a member of the Law Society of B.C.
The fraud case has led to finger pointing between parties.
Chinese citizen Yicheng Jiang, one of Oei’s investors, has an active lawsuit against entities involved in the Oei fraud, including Peschisolido, however he is fighting deportation on humanitarian grounds so it’s uncertain if the suit will be heard in court.
Through Oei’s failed investments and fraud, Jiang lost $3.7 million plus untold costs and fees – money he raised himself from five other Chinese investors, who have successfully sued him in China.
Peschisolido countered Jiang’s lawsuit by claiming the law firm had no knowledge of Oei’s fraud. Furthermore, Peschisolido claims Jiang broke China’s anti-money laundering laws by using underground banks. Jiang himself told a BCSC panel at Oei’s April 2017 hearing he moved money via a “channel in the community” (translated from Mandarin to English in a transcript) from China to Hong Kong , then Korea and finally Peschisolido and Co. trust accounts.
Jiang testified that Oei said the investment would lead to Canadian citizenship, something that Jiang sought. Peschisolido performed immigration legal services and Oei used an apparent relationship with the politician as a selling point to Jiang.
Jiang also alleges that in 2013, Oei’s wife Loretta Lai informed him that Cascade was going bankrupt, and “the cause of the bankruptcy was corrupt Caucasian members of the board.”
Peschisolido has said he’s had nothing to do with the Oei case, which is not the only time he has distanced himself from the legal work of the lawyers who worked at his firm.
He also denies providing legal services for an alleged Chinese cartel “drug boss,” as reported by Global News.
The 2011 immigration case, as reported by Global News, involved Kwok Chung Tam, an alleged “heavyweight” in the Big Circle Boys gang, based on Canada Border Services Agency (CBSA) records.
A bare trust arranged by Peschisolido and Co. “allowed Tam to conceal his ownership stake in a $7.75-million purchase of a 3.7-acre property in Coquitlam, B.C., that sold for $14.8 million in 2015,” Global News reported June 11.
“I had nothing to do with that file,” said Peschisolido at the time.