$2.1M being returned to investors who lost 15 times that much in real estate fraud, BCSC says

Canadian cash is shown. (Shutterstock.com)

Investors who collectively lost millions in a real estate scheme will soon be getting a small portion of their money back, according to the B.C. Securities Commission.

The provincial financial markets regulator said in a news release Thursday that $2.1 million recovered from Siu Mui "Debbie" Wong and Siu Kon "Bonnie" Soo would be distributed to 92 investors who lost money in the sisters' fraud.

According to court-appointed receiver MNP Ltd., victims of the fraud claim to have lost a combined total of roughly $33 million. Wong and Soo were permanently banned from the financial markets and ordered to pay a total of $22 million in penalties after a BCSC panel ruled on their case in 2016. 

The dispersal of the recovered funds was approved in B.C. Supreme Court Wednesday, the BCSC said.

The penalties against the sisters stem from the acquisition of various tracts of land for development in Alberta, and the sale of shares in those development projects to investors.

The BCSC panel found that Wong and Soo committed fraud by misappropriating $1.2 million of investors' funds, transferring shares to their husbands and adult children without receiving payment in return, "inflating the purchase price of a property and lying about it to investors" and "using mortgage proceeds for purposes other than developing the property."

The sisters also withheld information from one investor about potential delays to the development, and illegally sold shares without a prospectus, according to the BCSC.

The BCSC obtained a freeze order for some of Wong and Soo's assets during its investigation, and it was the sale of those assets by MNP that generated the bulk of the $2.1 million that will now be returned to investors, the regulator said.

"The receiver went to great lengths to gather assets for the benefit of victims of this devastating fraud," said Doug Muir, the BCSC’s director of enforcement, in the news release.

"This case highlights the importance of using our powers under the Securities Act to enforce our financial orders and get money back to victims of investment fraud." 

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