Regulators in British Columbia have ordered $8.6 million in penalties and disgorgement, along with market bans, in connection with a multi-million dollar investment fraud.
A hearing panel of the B.C. Securities Commission (BCSC) has ordered that Paul Se Hui Oei be permanently banned and pay a $4.5 million penalty after finding that Oei raised millions of dollars as part of an investment scheme to finance a pair of start-up companies.
A company controlled by Oei, Canadian Manu Immigration & Financial Services Inc., also was ordered to pay a $1-million penalty, and both were ordered to disgorge $3.1 million.
The penalties follow a BCSC hearing that found that Oei, Canadian Manu, and two numbered companies Oei controlled, defrauded investors after raising funds for two start-ups, Cascade Renewable Carbon Corp. and Cascade Renewable Organic Fertilizer Corp., through an indirect investment structure.
The panel found that Oei and the companies he controlled did not direct all of the investors’ funds to Cascade’s start-up costs as promised, and thereby misappropriated more than $5 million from investors. Approximately $2 million has been returned to investors, the panel found, in ruling that Oei and Canadian Manu disgorge $3.1 million.
“Oei was clearly the mastermind of the fraud perpetrated on the investors,” the panel noted in its reasons. “He made the representations to investors about the investment structure. He made the decisions with respect to the flow of funds that led to the diversion and misappropriation of investor funds. Canadian Manu was a material participant in all of this misconduct and must bear some responsibility for its role, but it clearly was not the driving force behind the fraud.”