The British Columbia Securities Commission (BCSC) has stepped in to put a stop to a suspected online Ponzi scheme, which it alleges was being carried out by a fund dealer rep.
The BCSC said Thursday that its executive director has issued a temporary order and notice of hearing against two Burnaby, B.C. residents, and an unregistered company, alleging that they were running a Ponzi scheme.
The BCSC says it received two anonymous complaints alleging that the company, Bossteam E-Commerce Inc., was operating a Ponzi scheme through a website registered to Yan Zhu (aka Rachel Zhu), who is registered as a fund dealer rep and a life insurance agent, and her husband, Guan Qiang Zhang.
The regulator’s notice alleges that Zhu, Zhang, and Bossteam E-Commerce appear to have illegally distributed securities and perpetrated securities fraud. It claims that, in an interview with investigators, Zhang admitted that the company had no real source of income, and that funds paid to investors came from other investors.
It also charges that they lied to the commission’s investigators. The notice alleges that, among other things, Zhu lied when she denied involvement with another website registered to her and her husband, which is carrying on a similar scheme in Hong Kong; and that she falsely claimed she had told her mutual fund dealer about her outside business activities with Bossteam E-Commerce. None of the allegations have been proven, and the BCSC says its investigation is ongoing.
The temporary order issued today prohibits trading in Bossteam E-Commerce securities and orders Zhu and Zhang to cease all investor relations activities on behalf of Bossteam. The order expires on May 15, and counsel for the executive director will apply to set dates for a hearing into the allegations on May 15.