The B.C. Securities Commission (BCSC) is accusing the founders of a B.C.-based insurance firm, FS Financial Strategies Inc., of engaging in a $47-million fraud scheme to finance their business.

The BCSC issued a notice of hearing alleging that the firm’s founders and directors — Aik Guan “Frankie” Lim and Scott Thomas Low — fraudulently raised more than $47 million to finance the firm between 2012 and 2017 through unsecured loan agreements.

The BCSC alleges that investors were deceived about the company’s financial condition. Specifically, the notice states that Lim and Low failed to disclose to investors that “the company wasn’t profitable, its financial situation was deteriorating, and it survived by raising money from investors to cover its expenses.”

The BCSC’s notice states that investors were promised monthly interest payments of 10%-12% and that “Lim and Low ‘created an illusion of profitability’ by opening new offices in rapid succession; donating money to charities; telling customers that they planned to take the insurance group public; and hosting parties for clients and staff at expensive hotels.”

According to the allegations , Lim and Low also diverted $770,000 of the $47 million raised from investors to help finance a movie featuring Lim’s son in 2015.

In doing so, the BCSC alleges that Lim and Low committed fraud, sold securities without a prospectus and without being registered. FS Financial Strategies and its related companies also are accused on selling securities without a prospectus or registration. Lim and Low also are accused of violating securities rules by continuing to trade and sell securities in breach of an undertaking, promising the BCSC’s executive director that they would stop selling securities in 2014.

The allegations have not been proven against Lim and Low and various others named in the notice, including Darrell Wayne Wiebe, the company’s general manager; as well as Chun Ying “Jim” Pan, Chung-Sheng “Johnson” Kao, George Lay, Gagan Deep Bachra, Chi Kay “Dixon” Wong and Meng Cher “Philip” Tsai, all of whom were directors of FS Financial Strategies’ related companies. A hearing has been scheduled for Dec. 4.

The Insurance Council of B.C. suspended the firm’s insurance registration in 2016, pending the outcome of the BCSC’s investigation.