Investors defrauded by a former Burnaby couple will soon be getting restitution.
The B.C. Supreme Court has approved a plan to distribute US$3.5 million back to 451 investors who fell victim to financial malfeasance involving Bossteam E-Commerce Inc., according to the B.C. Securities Commission (BCSC).
The money will be paid out by the court-appointed receiver in the case, Grant Thornton Ltd., who developed the redistribution plan after analyzing nearly 1,000 claims against Bossteam.
The BCSC determined in 2015 that Bossteam owners Yan (Rachel) Zhu and Guan Qiang (Victor) Zhang had defrauded clients out of more than $14 million through their e-commerce site.
In addition to Grant Thornton’s restitution plan, the court also gave the go-ahead for the BCSC to pay investors interest on money lost to Bossteam.
“The BCSC always looks for opportunities to return money to victims of securities misconduct so it was important for us to apply to have a receiver appointed to run a claims process in this complex matter,” BCSC director of enforcement Doug Muir said in a June 29 statement.
“Having now obtained the court’s approval, the receiver can return a substantial amount of money to many investors who suffered losses because of the misconduct in this case.”
The interest will be paid out at a rate of 5% from April 12, 2012, onwards.
Additionally, the court is allowing the BCSC to review claims filed after deadline.
The BCSC’s investigation found that Zhu and Zhang had developed an e-commerce site that allowed businesses to pay money to post links to their company websites as advertising.
What clients didn’t know was that most of the ads appearing on Bossteam were associated with Bossteam’s own accounts — not accounts associated with actual advertisers.
The BCSC also determined Zhu and Zhang sold shares in Bossteam despite not being licensed to do so.
During its investigation into Bossteam the regulator froze more than US$10 million held in several bank accounts and registered a charge on land Zhu owned, collecting $123,000.
In addition to ordering Zhu and Zhang to repay the $14 million obtained through their misconduct, the BCSC also ordered the pair to pay a $14 million administrative penalty.
