New lawsuit against Ethan Sun and Istuary group alleges immigration and financial fraud
27 investors want $18 million returned
A new lawsuit filed in B.C. Supreme Court claims the main operator of a once high-flying Vancouver high-tech business was running multiple schemes including immigration and investor fraud.
The suit filed by 27 investors against Yi An "Ethan" Sun, his wife Yulan Hu, and nine associates at the Istuary Group of Companies claims they committed immigration and business fraud far bigger than the more than $4 million previously alleged in a lawsuit filed last year.
- Lawsuits allege Vancouver tech company a Ponzi scheme and sham
- 'Not a Ponzi scheme': Vancouver tech company president defends himself
The suit claims the investors were collectively defrauded of almost $18 million they were encouraged to invest in developing "cutting-edge technology," including robotics, facial recognition technology and chipsets, a group of integrated circuits that work together that are in great demand by the Chinese government.
According to the statement of claim, Sun was so convincing, the investors bought in, expecting huge returns ranging from 120 per cent to five to eight times their investment in three years.
The claimants say they invested amounts ranging from $50,000 to $2.6 million.
Istuary was founded in Vancouver in early 2013, eventually growing to 31 companies.
Investors allege there were eight "limited partnership funds" used as "a vehicle for defrauding unsuspecting individuals."
Immigration fraud alleged
They also allege most of the 180 employees at the two-storey "upscale" downtown Vancouver office weren't employees at all but came from China, having paid as much as $130,000 each for "positions masquerading as legitimate employment."
"Nothing was being produced in the downtown Vancouver office, and the workers were not being paid on a regular basis," according to the lawsuit, which states that Sun has "fled to China," leaving behind "huge financial losses and civil claims."
The suit says Sun granted "limited partner" status for a fee to each investor in eight "partnership funds" but that was in breach of B.C.'s Partnership Act, because they never received financial statements to review.
Only one fund, the Istuary Platinum Fund I, which accepted investments from late 2015, paid out as promised in 2016. Of the remaining seven funds, the lawsuit says, one was partially paid out and the other six were never paid out.
There has been no statement of defence filed to this recent lawsuit and none of the allegations has been proven in court.
In the lawsuit filed last year by investor Joe Carangi, Sun denies all wrongdoing.
Carangi alleges he invested $138,000 into an Istuary fund that was supposed to pay out "substantial returns" but didn't.
In a legal defence filed in that case, Sun and his wife also deny they used investors' money to purchase real estate in Metro Vancouver and to "pay and maintain their personal lifestyles."
B.C.'s Employment Standards Branch started investigating Istuary in June 2017 after it received "numerous complaints from individuals of unpaid wages."
It found the "primary director [Sun] is personally liable for $2.5 million of the nearly $3 million owed to workers."
In an email to CBC, it said "the Branch is working to recover the funds owing. That said, only a small amount ($70,000) has been recovered so far from asset auctions and seized funds."
"A judgment on a multi-million-dollar property is still going through the legal system. The Branch has contacted all former employees to provide an update, and has mailed each employee their share of the amount collected to date.
Cheques ranged from roughly $60 to $1,000."
With files from Eric Rankin