$275K in fines for real estate agents who allowed fraudsters to sell B.C. home that wasn't theirs

The logo for Pacific Evergreen Realty Ltd. is seen in this photo from the company's website. (pacificevergreenrealty.com)

Four real estate agents and an associated brokerage have agreed to pay a combined $275,000 in fines to the BC Financial Services Authority for their roles in facilitating a fraudulent transaction.

Five consent agreements involving Pacific Evergreen Realty were posted on the BCFSA website Wednesday. All of them relate to a real estate transaction that took place in November and December 2019 involving a fraudulent power of attorney document and an absentee "owner" who did not actually own the property being sold.

While some of the consent agreements contain more detail than others, all of them are clearly referring to the same transaction.

DETAILS ABOUT THE HOME

The most detailed account of what happened can be found in the consent agreement between the BCFSA and Lok Chi Annie Fong, who was a managing broker for Pacific Evergreen at the time of the transaction. 

All of the agreements have been redacted to remove identifying information about the property, its true owner, the alleged fraudsters and various other parties not subject to BCFSA discipline proceedings.

Fong's is the only consent agreement that identifies the property's location, describing it as having a civic address in Richmond, B.C., and an assessed value of $2,278,000 as of July 1, 2019.

The true owner, referred to as "Owner 1" in the documents, was a woman born in October 1983 in Chengdu, China, who had been registered on the title to the property since April 2004, when she would have been just 20 years old.

"At all material times, Owner 1 had sole legal and beneficial ownership of the property and sole authority to dispose of it in any way," the consent agreement reads.

On Nov. 15, 2019, a man referred to in the documents as "Seller 1" contacted Tracy Xiaomei Li, another real estate agent working as a licensed representative of Pacific Evergreen.

The following day, Li met Seller 1 at the property. The man introduced himself as the executive assistant of the property's purported owner, a man referred to in the documents as "Fake Owner 1."

Seller 1 told Li that Fake Owner 1 was in Toronto, but had given Seller 1 power of attorney to represent him in conducting the sale.

A power of attorney document did exist, though Seller 1 did not share it with Li at that first meeting, according to the consent agreements. The document had been signed and notarized in Vancouver the day before the meeting, and Fake Owner 1 had provided a fake B.C. driver's license to the notary.

Seller 1 gave Li and her assistant – referred to as Assistant 1 – a tour of the property, saying that Fake Owner 1 had never lived there and had rented it out. He claimed the owner had had "very bad experiences" with the last tenant, saying the tenant stopped paying rent and stole appliances.

"The property was vacant and appeared to have been broken into," the Fong consent agreement reads.

"It was missing all removable appliances including the fridge, washer, dryer, and dishwasher. Some copper piping had been taken from the mechanical room in the garage and a bathroom cabinet was missing legs."

THE TRANSACTION

At the meeting, Seller 1 told Li and her assistant that Fake Owner 1 had no intention of fixing the property and was willing to sell it for $1.8 million.

"Seller 1 refused to have the property listed on the MLS system because he wanted to 'keep it quiet' and 'do (a) quick transaction,'" the Fong consent agreement reads.

Shortly after the meeting with Seller 1, Li went to Pacific Evergreen's Richmond office and told other licensees there about the situation. Another real estate agent, David Chian Wei Yang, was present at the time and said he might have a buyer, according to the agreement.

Yang called a representative of his client, who was interested and agreed to send Li an offer.

Over the ensuing two weeks, Li, Yang, Fong and Pacific Evergreen managing broker Lo-Ming Lee each were told at least once that the circumstances of the transaction – on the seller's side – seemed suspicious.

Li made efforts to get identification documents from Seller 1 and Fake Owner 1, but only ever received photos of the latter's ID, according to the consent agreements.

Despite the red flags associated with the sellers and the various conversations within Pacific Evergreen expressing suspicion about them, the sale completed on Nov. 29, 2019, for a price of $1,725,000.

Both Li and Yang received commissions from the sale on Dec. 6, 2019.

On April 2, 2020, the actual owner of the property filed a lawsuit in B.C. Supreme Court against Li, Yang, Pacific Evergreen, Seller 1 and several other entities, including the notary, Seller 1's lawyer, and the two companies that bought the property.

The Pacific Evergreen defendants, including Li and Yang, have since been removed from that lawsuit, which remains before the courts, according to the Fong consent agreement.

MISCONDUCT AND FINES

Li, Yang, Fong, Lee and Pacific Evergreen all admitted to misconduct related to the transaction in consent agreements with the BCFSA.

Li and her Personal Real Estate Corporation received the stiffest penalty, agreeing to pay the BCFSA a $100,000 penalty, plus $7,000 in "enforcement expenses."

She also agreed to complete the Real Estate Trading Services Remedial Education Course at UBC's Sauder School of Business and to be subject to "enhanced supervision" by a managing broker for six months.

In her consent agreement, Li admitted to nine instances in which she violated the "duty to act honestly and with reasonable care and skill" set out in the provincial Real Estate Services Act and its associated rules. 

Some of these instances included failing to take "reasonable measures to confirm that Seller 1 was duly authorized to deal with the property in relation to its sale" and failing "to take reasonable measures to alert other persons acting in relation to the sale of the Property of the suspicious circumstances."

Li also falsely stated on a document that she had ascertained Seller 1 and Fake Owner 1's identities by viewing their driver's licences on Nov. 16, 2019, when in fact she saw Seller 1's for the first time three days later and never saw the original of Fake Owner 1's ID.

Similarly, she provided a document to Seller 1 that indicated both she and Yang were "designated agents for the buyer," when, in fact, only Yang was.

For his part, Yang and his PREC agreed to pay a $50,000 penalty and $5,000 in enforcement expenses to the BCFSA. He also agreed to take the UBC remedial education course.

His consent agreement lists two instances of misconduct: First, he failed to properly disclose to the buyer whether he would be representing them or not. And second, he "failed to take reasonable steps to alert other persons acting in relation to the sale of the property of the suspicious circumstances surrounding the sale and Seller 1’s conduct." 

Fong's consent agreement calls for her to pay a $50,000 penalty and $5,000 in enforcement fees. She must also take the UBC course and is banned from being a managing broker for six months. 

According to the document, Fong admitted to failing to provide adequate supervision to both Li and Yang, and failing to take adequate steps to address each of her subordinates' misconduct when she became aware of it.

Lee's consent agreement also includes a $50,000 penalty and a $5,000 enforcement fee. He must take the UBC course and is banned from being the sole managing broker of any brokerage for one year. 

His misconduct was the same as Fong's: Failing to provide adequate supervision and failing to adequately address Li and Yang's misconduct when he became aware of it.

Both managers' agreements specifically mention their failure to ensure that Li and Yang ceased providing real estate services for Seller 1 until they had taken sufficient steps to ensure his power of attorney was valid.

Finally, the brokerage itself admitted to one instance of misconduct in its own consent agreement with the BCFSA. 

According to that agreement, Pacific Evergreen committed misconduct by failing to ensure that "before providing trading services to or on behalf of a party to a trade in real estate, licensees engaged by the brokerage, including T Li and D Yang, disclose(d) to the party accurate copies of the Disclosure of Representation in Trade documentation."

The brokerage agreed to pay a $25,000 penalty, plus $5,000 in enforcement expenses. It also agreed to submit a "compliance plan" to the BCFSA within 30 days of the consent agreement taking effect.

The plan must "address the identification of, reporting of, and both the brokerage’s and individual related licensee’s response to suspicious transactions, including but not limited to possibly fraudulent transactions," according to the agreement. 

In all, the fines imposed on the four individuals and the brokerage add up to $275,000, plus another $27,000 in enforcement expenses. This means the total amount owed to the BCFSA under the agreements is $302,000.