Two former Burnaby residents breached multiple securities laws by operating a company the B.C. Securities Commission allege was a Ponzi scheme.
Yan Zhu (also known as Rachel Zhu) and Guan Qiang Zhang were found to have committed fraud, illegally distributing securities and withholding information from investigators while running their Burnaby-based company Bossteam E-Commerce Inc., according to a press release from the securities commission.
In 2012, the executive director of the B.C. Securities Commission issued a temporary freeze order and notice of hearing against the two Burnaby residents, alleging their unregistered company was really an internet-based Ponzi scheme. In a release from the commission, it was revealed that between October 2011 and January 2012, nearly $700,000 was deposited into two bank accounts held in Zhu and Zhang’s names.
Later that same year, the commission denied an order to revoke the freeze against the two and the company.
Today (Aug. 19), a commission panel found that the two former Burnaby residents and their company committed fraud, among other violations against the Securities Act.
“The prohibited acts caused deprivation. The purchasers of Bossteam securities paid over $14 million for ad packages, shares and consumer credits. They risked losing all they paid because Bossteam had few paying advertisers and little actual advertising revenue,” read a statement from the panel.
According to the commission, Bossteam described itself as an online advertising company, which offered public shares in its company but not before members sold $2,000 worth of advertising.
Furthermore, the panel found that the company was misleading its customers by giving them the impression big-name local and international businesses were advertising on their website, the release added.
The panel also discovered that Zhu and Zhang were instructing staff and clients not to reveal the true nature of the Bossteam company and to tell investigators from the commission “that Bossteam was only selling advertising, and to refer to Bossteam shares as consumer credits.”
Both Zhu and Zhang were found to have committed fraud, illegal distribution and obstruction of justice. Zhu was also found to have provided false and misleading statements.
Sanctions are expected at a later date.
