The B.C. Securities Commission has issued nearly $1 million in penalties and repayment orders against three local fraudsters involved in an international Ponzi scheme that promised investors large returns on non-existent gold mining operations in Africa and Brazil.
A commission panel ordered Sabrina Ling Huei Wei, last known to reside in Vancouver, to pay a $500,000 administrative penalty, plus the $90,000 she improperly obtained from the scheme. James Bernard Law, also of Vancouver, must pay a $150,000 penalty for his part in the scheme and Justin Colin Villarin, of Surrey, must pay a $200,000 penalty plus a repayment of $15,718 he improperly obtained from the scheme.
Between 2014 and 2015, the trio solicited B.C. investors, organized events and sold membership units to American companies promising high, no-risk returns for what turned out to be sham gold mine operations.
In reality, noted the commission in a statement Oct. 6, 2022, DFRF Enterprises LLC’s only source of money was from investors.
Additionally, the trio has been banned from participating in B.C.’s capital market for varying amounts of time: Wei’s ban is permanent, while Villarin was banned for 25 years and Law for 20 years, according to the panel’s ruling.
The trio worked with American and Brazilian promoters, who have previously been found guilty of fraud in a civil case brought by the U.S. Securities and Exchange Commission (SEC).
On Oct. 22, 2019, the SEC obtained default judgments against four key promoters of the scheme. The promoters raised more than $15 million from at least 1,400 investors by recruiting new members in pyramid-scheme fashion to keep the fraud afloat, noted the SEC.
Three promoters paid a US$160,000 penalty while lead promoter Daniel Fernandes Rojo Filho, a Brazilian living in Florida, was issued a $1-million fine and ordered to repay nearly US$10.2 million.
The BCSC found 137 B.C. residents or people connected to the province lost a total of $1.5 million.
“None of the funds raised by investors were used for gold mining, and bank records show no proof that DFRF had other legitimate business activities. Filho used more than US$6 million of investors’ money for personal expenses and luxury cars,” stated the BCSC.
The commission heard from B.C. victims of the scheme last year.
The BCSC highlighted some of the steps it took to catch the trio: acting on a tip, BCSC investigators went to a promotional event at the Fairmont Pacific Rim Hotel in Vancouver.
Wei wooed the crowd, according to the panel’s findings.
Attendees, the commission noted, were told to expect a monthly return of up to 15 per cent interest on their membership, and that their principal was guaranteed by insurance.
Prior to the ruling against Wei, Law and Villarin, a panel found on April 20, 2021, Monita Hung Mui Chan, of Burnaby, and Marie-Joy Vincent, of Surrey, were also found to have defrauded 52 B.C. investors as part of the scheme.
Collecting fines has proved difficult for the BCSC in the past. The BCSC claims it is improving its collection powers although it maintains some fines are so large they may only act as a deterrence to others and the commission may not see all fines repaid.