BC Ponzi scheme, $4.8 million penalty payment

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BC Ponzi scheme, $4.8 million penalty payment
BC Ponzi scheme, $4.8 million penalty payment

The British Columbia Securities Commission (BCSC) says it has collected $4.8 million in administrative penalties from two former Burnaby, B.C., residents who defrauded hundreds of investors in a Ponzi scheme.

A Ponzi scheme is a fraudulent investment operation that pays returns to investors from their own money or money paid by other investors rather than from any actual profit earned from investments.

In 2015, a BCSC panel found that Yan Zhu and Guan Qiang Zhang, co-founders of Bossteam E-Commerce Inc., described as an online advertising business, committed fraud, illegally distributed securities and withheld information from BCSC investigators.

According to a BCSC news release, Bossteam’s business revolved around a website where advertisers could post links to their own websites. But, the panel said, the company created a false impression that well-known businesses were paying to advertise on the site.

Zhu and Zhang also paid about $6.5 million to 464 people who lost money investing with Bossteam.

Every investor with a validated claim was reimbursed for all their losses, plus five per cent interest.

A $14-million administrative penalty was imposed on Zhu and Zhang, with the money being collected from the pair’s bank accounts, which were frozen during the investigation.

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