'Not a Ponzi scheme': Vancouver tech company president defends himself
Letter from Ethan Sun of Istuary Innovation Labs Ltd. promises employees' salaries will soon be paid
A Vancouver tech company owner, accused of bilking investors and employees, says his firm is not a Ponzi scheme and he will continue to seek new funding, "despite current difficulties."
Yian "Ethan" Sun, president of Istuary Innovation Labs Ltd., posted an open letter on the company's website Wednesday in response to allegations that, among other things, he misappropriated investors' money for personal use.
"We have been made aware of many malicious attacks on our organization, myself and my family, I can tell you that there is no truth to these attacks. Rest assured these attacks will not go unanswered, and we will be vigorously defending our company and our reputation," Sun wrote in the letter to employees and investors.
He did, however, acknowledge that Istuary had missed salary and bonus payments to employees and said rectifying the situation was his highest priority.
"Please believe me when I say we are doing our best. Indeed, we are. For those of you who know me, you know I work almost 20 hours a day, seven days a week. I do not buy luxury goods. I do not spend money lavishly. When I travel (which is all the time), I do not stay at luxury hotels," Sun wrote.
'A legitimate technology company'
As CBC News reported last week, Sun and his wife, Yulan "Amy" Hu, are currently being sued by former workers, contractors and investors in six civil and small claims actions launched since August. A seventh suit was filed this week.
Former employees have also claimed they are owed four months of wages. One former worker, who is suing the company in small claims court, alleged Istuary "is a Ponzi scheme."
Sun forcefully denied that claim.
"We are not a Ponzi scheme; we are a legitimate technology company that has accomplished tremendous amounts of success in an extremely short period of time," he wrote.
Sun apologized for how "difficult and heart breaking" the last few months have been but said the company is learning from its mistakes. The letter was written in Beijing, where Sun is still promoting the company to investors, he said.
This isn't the first time that Sun or other Istuary representatives have promised employees that success was just around the corner and their missing paycheques would soon arrive, according to emails obtained by CBC News.
The first documented instance was on April 13, when Istuary's chief financial officer, Brian Chen, informed employees the company was working on an important acquisition in China, meaning that "significant financial resources need to be frozen." He promised workers would be paid their missing salary in two weeks.
Again on June 14, Chen wrote that the next paycheques would be late by a few days, but, "hopefully funding and payroll will be stabilized in a few weeks."
But two weeks later, Chen told employees they would have to wait even longer.
"Unfortunately, one major investor (who claims to have funding transfer challenges last week) changed his mind so the funding we expected to receive this week has been unavailable now," he wrote.
And then, in a June 30 email, Sun admitted that Istuary was experiencing "certain payroll-related issues" but said all unpaid wages would be received by July 31.
"What doesn't kill you make you stronger; these common experiences of fighting together during such difficult time will make us more united, and we assure you that Istuary will be a great Canadian company to work for and a name you will be proud of," Sun wrote.
The former employees who spoke to CBC News allege the pay they were promised in June still hasn't arrived.
Reversal of fortune
Earlier this year, Istuary was approved by the Canadian government as a designated "business incubator" under the Start-up Visa pilot program, meant to attract immigrant entrepreneurs to the country
YouTube videos from Istuary showed Sun standing alongside prominent Canadian politicians including Justin Trudeau, Stephen Harper and Christy Clark.
Now, some employees allege Istuary has closed its Vancouver office. At its height, the company had 400 workers in North America and 1,100 in China.
But Sun insisted this week his company is not bankrupt.
"We are continue to operate despite current difficulties, and we have full confidence we will be successful," he wrote.
None of the allegations against Istuary, Sun and his wife have been proven in court.
With files from Eric Rankin