British Columbia

B.C. securities commission receives $4.8M penalty payment from partners in Ponzi scheme

The British Columbia Securities Commission (BCSC) says it has collected $4.8 million in administrative penalties from two former Burnaby, B.C., residents who defrauded hundreds of investors in a Ponzi scheme.

Online advertising business defrauded hundreds of investors, says BCSC

Two former Burnaby, B.C., residents orchestrated a Ponzi scheme to defraud hundreds of people, according to the BCSC.

The British Columbia Securities Commission (BCSC) says it has collected $4.8 million in administrative penalties from two former Burnaby, B.C., residents who defrauded hundreds of investors in a Ponzi scheme.

A Ponzi scheme is a fraudulent investment operation that pays returns to investors from their own money or money paid by other investors rather than from any actual profit earned from investments.

In 2015, a BCSC panel found that Yan Zhu and Guan Qiang Zhang, co-founders of Bossteam E-Commerce Inc., described as an online advertising business, committed fraud, illegally distributed securities and withheld information from BCSC investigators.

According to a BCSC news release, Bossteam's business revolved around a website where advertisers could post links to their own websites. But, the panel said, the company created a false impression that well-known businesses were paying to advertise on the site.

Zhu and Zhang also paid about $6.5 million to 464 people who lost money investing with Bossteam.  

Every investor with a validated claim was reimbursed for all their losses, plus five per cent interest.

A $14-million administrative penalty was imposed on Zhu and Zhang, with the money being collected from the pair's bank accounts, which were frozen during the investigation. 

The BCSC says Zhu, who was living in Burnaby as of 2017, and Zhang, who was deported to China in 2012, have been permanently banned from various investment activities, including purchasing or trading in securities and engaging in investor relations. 

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