In 2018, little-known industry executive Gary Ng acquired Vancouver-based PI Financial Corp. for an eye-popping $100 million in cash. Now, regulators are alleging that Ng obtained the financing for the purchase with phony collateral.

The Investment Industry Regulatory Organization of Canada (IIROC) alleges that Ng duped a U.S. investment firm, a Canadian asset manager and a third company into lending him $172 million, which was secured with falsified collateral.

The allegations have not been proven.

IIROC has scheduled an appearance to set a date for a hearing into the allegations that Ng violated IIROC rules by engaging in “fraudulent conduct” in connection with the loans, and by refusing to cooperate with its investigation.

The self-regulatory organization brought similar allegations against Donald Metcalfe, former executive vice-chairman and director at PI, and the former president and COO at Ng’s Winnipeg-based Chippingham Financial Group Ltd.

The appearance to schedule a hearing will take place electronically on Jan. 6.

According to IIROC’s allegations, Ng’s purchase of PI Financial in November 2018 was partially financed by $100 million in loans from two separate lenders, secured by trading accounts held first at Chippingham and later at PI Financial.

“However, despite his representations, Ng did not actually own, control or have trading authority over the securities accounts pledged as collateral. Instead, the ownership and control of the collateral was falsified by Ng and Metcalfe,” IIROC alleged.

The alleged fraud included providing the lenders with account statements, summaries and screenshots that vastly inflated the value of the assets in the accounts, and falsely attributed other clients’ accounts to Ng, IIROC stated in the hearing notice. There were also fictitious accounts created “to make it appear that [Ng] held millions of dollars in financial assets with Chippingham and PI Financial when in reality those accounts and the claimed assets did not exist.”

IIROC alleged that Ng later borrowed another $40 million from the Canadian asset manager in July 2019 and in January 2020, again based on falsified collateral. In June 2019, Ng borrowed approximately $32 million from a third lender, also using fake collateral, the hearing notice said.

The allegations indicate that “PI Financial became aware of the issues concerning Ng’s purported ownership of securities accounts at the end of January 2020, and immediately reported these matters to IIROC.”

In a written statement on Tuesday, a spokesperson for PI said the firm “identified unusual correspondence during an unrelated document request.”

“None of the alleged misconduct was related to the firm’s capital or client accounts, and throughout this entire period we have been serving our clients as usual — there has been no impact on our operations whatsoever,” the firm stated.

IIROC began an investigation, and Ng and Metcalfe resigned from the firm on Feb. 11.

IIROC noted that it has not uncovered any client losses as a result of the alleged scheme.

It also said that Ng and Metcalfe failed to cooperate with its investigation.

In July, PI Financial was acquired by a Miami-based private equity firm H.I.G. Capital and a Vancouver-based asset manager RCM Capital Management for an undisclosed sum.

Ng’s other firm, Chippingham, resigned from IIROC in September.