A B.C. Securities Commission tribunal found prominent BC Liberal donor Paul Se Hui Oei committed securities fraud.
In a 45-page ruling dated Dec. 12, but released Dec. 13, Nigel Cave, Audrey Ho and Suzanne Wiltshire agreed with the executive director’s case that Oei perpetuated a fraudulent scheme on investors between July 2009 and August 2013.
The tribunal heard investors gave $13.3 million to Oei-controlled companies that he said were planning to build a plant to recycle organic waste into topsoil and fertilizer. Oei spent millions of dollars elsewhere, such as for his Bentley luxury car, legal fees, donations to the BC Liberal Party, advertising and funding beauty pageants.
The tribunal found, on a balance of probabilities, that “the prohibited act of deceit or other fraudulent conduct was carried out with respect to 63 investments in Cascade. Investors were told one thing about the use of funds and the respondents did something very different with $5,003,088 of those funds. The respondents misappropriated these funds and used them for their own purposes and not as the investors were told they would be used.”
The ruling also said “the evidence is clear” that Oei and another of his companies, Canadian Manu, were involved in prohibited conduct with respect to all 63 investments.
“Oei met with all of the investors and made representations (orally or in writing) to those investors with respect to the intended use of their invested funds,” said the ruling. “Oei was also the person who controlled all of the flow of the investors’ funds.”
Before the tribunal on April 10, BCSC lawyer Mila Pivnenko described Oei as a socialite in Vancouver’s Chinese community who impressed by driving expensive cars, rubbing elbows with politicians (like Christy Clark and Justin Trudeau) and donating to charities.
Pivnenko said Oei kept his investors, many of them from China, in the dark and exploited their lack of understanding of English and the Canadian investment process.
The tribunal heard that Oei tailored his persuasive sales pitches to each investor, claiming Cascade was approved by the B.C. government and that the investments would allow them to immigrate to Canada.
Elections BC’s database shows that Oei donated $55,787.85 between 2011-2015 to the BC Liberals, plus $680 through his Canadian Manu Immigration and Financial Services Inc. His wife, Loretta Lai, gave the party $13,565 between 2012 and 2016.
Oei boasted in interviews with Chinese media outlets that he wanted to build 100 composting plants.
The ruling did not mention the names of the nine investors who testified, but instead referred to them by one of the first nine letters of the alphabet. Investor D, as one was known, and her mother invested in CROF. The mother died before the hearings.
“Oei told Investor D’s mother about [Cascade Renewable Organic Fertilizer Corp.]. Oei told Investor D’s mother that if they invested $500,000 in CROF, Investor D would be able to use the investment in Cascade as the basis for her to qualify to immigrate to Canada. Oei did not tell Investor D that any fees related to this immigration process would come from the $500,000 that they invested.
“Oei did not tell Investor D’s mother that he would keep any of the money invested for himself, or that any of the money was going to be paid as a commission to anyone. Investor D testified that her mother did not receive any interest payments on her investment in CROF nor was their investment repaid.”
During the first week of the case, Jiang Yicheng testified that he was part of a group that invested $4 million in Cascade. The losses, however, led his wife to attempt suicide. “At times I wanted to kill myself,” Jiang told the tribunal.
‘[Oei and Lai] told us that Cascade was an environment and immigration project strongly supported by the B.C. government, and there will be no problem absolutely in getting our immigration status,” Jiang testified.
Oei claimed his companies did not receive $13.3 million from investors, but instead $12.2 million, and denied misappropriating any investor funds.
“The respondents submitted that they were reselling their own Cascade securities to the investors and were entitled to keep the difference between what they paid to Cascade and what investors paid the respondents for those securities.”
Oei did not testify in his defence during the 12-day hearing.
The 12-day hearing ran between April 10 and July 6. The ruling was expected Oct. 13. No reason was given for the delay.
The executive director has until Jan. 19 to file submissions about penalties against Oei. Oei has until Feb. 2 to respond.
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Securities fraudster Oei’s 2015 video interview with ChinaLive America, talking about his investments and philanthropy.