Yan Zhu (a.k.a. Rachel Zhu) and Guan Qiang Zhang have paid the British Columbia Securities Commission $4.8 million in penalties over defrauding investors in a Ponzi scheme.
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Two Burnaby residents have paid the British Columbia Securities Commission $4.8 million in administrative penalties over defrauding investors in a Ponzi scheme.Hundreds of people lost their investments in Bossteam E-commerce Inc., which described itself as an online advertising business. Its website allowed advertisers to post links to their own webpages.The BCSC distributed $6.5 million to 464 investors with validated claims, including their losses plus an interest of five per cent.The penalty was paid from funds that remained after investors were reimbursed. The BCSC received a $3.1 million payment this week following a $1.7 million payment last July.The funds came from two bank accounts controlled by Bossteam co-founders Yan Zhu, also known as Rachel Zhu and Guan Qiang Zhang. The BCSC froze the accounts during investigation.The BCSC panel found that Zhu, Zhang and Bossteam created the false impression that members and businesses were paying to advertise on its website.The panel found in 2015 that ‘Zhu and Zhang committed fraud, illegally distributed securities, withheld information from BCSC investigators, and instructed employees and investors to do the same.’After imposing an administrative penalty of $14 million, the assets from the frozen accounts – along with $123,000 from the sale of land owned by Zhu – were transferred to a court-appointed receiver for distribution.The BCSC has not been able to identify any other assets belonging to Zhu and Zhang.Zhu, who was living in Burnaby in 2017, and Zhang, who was deported to China in 2012, are permanently banned from trading on the capital markets, including trading in securities (with limited exceptions), purchasing securities or exchange contracts, being a registrant or promoter, or engaging in investor relations.Accounting and advisory firm Grant Thornton Limited was appointed as the receiver and made the determination about investor claims and distributed funds to creditors, including the BCSC.BCSC is an independent government agency that regulates capital markets in B.C.Click here to learn how to protect yourself and become a more informed investor.