Immigration investment fraud leads to $5M civil judgment

Paul Oei has been ordered to pay $5 million back to Chinese citizen and prospective immigrant Yicheng Jiang after fraudulent misrepresentations

Paul Oei and Loretta Lai were often seen in luxury vehicles. | Richmond News file

A B.C. couple has been ordered to pay $5 million to a Chinese citizen after committing fraud against him in relation to an immigration-related investment connected to a former Liberal member of Parliament.

Richmond resident Paul Oei and his wife Loretta Lai were found liable for fraudulent misrepresentation against prospective immigrant Yicheng Jiang, according to a June 1 ruling by B.C. Supreme Court Justice Kevin D. Loo.

Oei was already found to have defrauded Jiang and his associates of just over $5 million, according to a B.C. Securities Commission panel ruling in December 2017.

The high-profile case saw Oei and his companies raise approximately $13.3 million for two startup companies, but not direct all of the investors’ funds toward startup costs, as investors were told, according to the commission.

While Lai was not party to the commission’s proceedings, the judge ruled her “liable for false or misleading representations together with Mr. Oei.”

Lai remains actively licensed by the Insurance Council of BC.

In 2008, Jiang endeavoured to emigrate from China to B.C. through the British Columbia Provincial Nominee Program, which essentially requires a monetary investment in exchange for Canadian citizenship.

Through a friend, Jiang became connected to Oei, who proposed investments in his purported composting company Cascade Renewable Carbon Corp.

By May 2010, Jiang and various other investors had transferred approximately $3.7 million to Peschisolido & Company, the law firm of former Liberal MP Joe Peschisolido.

By 2013, the company declared bankruptcy and Jiang’s immigration application eventually failed to qualify, according to the court ruling.

Jiang launched the civil lawsuit against Oei, Lai, Peschisolido, Desjardins Financial Securities Investments Inc. and Desjardins Financial Security Life Assurance of Canada, in November 2015, and reached a settlement with all parties aside from Oei and Lai, the judge noted. (Desjardins was a designated company to the federal immigration program and the Quebec immigration program, the judgment noted.)

The saga led to Peschisolido’s colleague Yvonne Hsu being suspended for three months by the Law Society of BC for professional misconduct. In this case, Hsu had claimed Jiang had no case, claiming his money transfers were part of an international money laundering arrangement.

Jiang told the court transferring more than the permitted $50,000 out of China could be done by “request for approval to the Chinese provincial government, which would pass it on to a department in Beijing.”

However, Jiang told the court the investment needed to be processed more quickly, so he used a “private currency exchange service,” the ruling stated.

Jiang sent his money to China-based entities that had affiliates in outside jurisdictions in Hong Kong and Singapore, for example, that then transferred equivalent funds to Peschisolido’s firm, the court heard.

In their self-represented defence, Oei and Lai proposed Jiang’s alleged illegal transfers discredited his claim but the judge found no authority “that circumventing Chinese currency controls as the investors did is contrary to Canadian or British Columbia law, or to Canadian or British Columbia public policy.”

Since Oei was fined $4.5 million by the commission, the judge ruled there was no need for punitive damages.

In 2019, Jiang applied for asylum status with the Immigration and Refugee Board of Canada on grounds that he is being persecuted for political reasons in China. No decision has been posted on that application, to date.

Meanwhile, last year the BCSC filed an application to ICBC — the first of its kind — to prevent Oei from renewing his driver's licence for failing to have a repayment plan for his penalties.

Oei unsuccessfully appealed the application. In April, the commission announced almost $70,000 had been repaid to Oei’s repayment account by a third-party it has not disclosed. Investors such as Jiang are entitled to apply for those funds, the commission said.

Glacier Media asked the commission who paid the money on behalf of Oei but commission spokesperson Brian Kladko said the commission has “no plans to disclose that information.”

With files from Richmond News

gwood@glaciermedia.ca