A couple of B.C. residents have settled with regulators over their role in promoting a U.S.-based pyramid scheme to investors.
The British Columbia Securities Commission (BCSC) reached settlements with Monita Hung Mui Chan and Marie-Joy Vincent, who admitted to participating in a scheme that involved selling “membership units” in a pair of U.S. companies that promised high returns with no risk.
The BCSC said the purported source of those returns was the firms’ “supposedly lucrative gold mining operations.”
But that “in reality, the entities did not have any gold reserves, and their only source of money was investors.”
For their part in directing investors to the scheme, Chan must pay $135,000 to the BCSC, including $100,000 in disgorgement. She is also banned for 10 years.
Vincent is banned for eight years and must pay $6,500 to the BCSC.
“She did not profit from the misconduct,” the commission said, noting that all the money she raised was paid directly to the scheme mastermind, Daniel Rojo Fernandes Filho.
Filho was arrested and charged in the U.S. in 2015, but a court later ruled he was not competent to stand trial, and the criminal case against him was dismissed.
In 2019 the U.S. Securities and Exchange Commission (SEC) obtained final judgments against the two purported gold mining companies, Filho and another promoter of the scheme, Heriberto Perez Valdes.
The U.S. District Court in Massachusetts entered final judgments by default against Filho and four others, ordering him to pay US$10.3 million in disgorgement and a US$1-million penalty.
Valdes was ordered to pay US$1.2 million, and the companies were ordered to pay US$17.84 million in disgorgement, and US$1.55 million in penalties.
In total, the scheme allegedly raised US$15 million from more than 1,400 investors around the world.
“The investors lost all of their money without receiving any monthly returns,” the commission said.
Last May the BCSC alleged that five people, including Chan and Vincent, participated in the scheme, helping to raise over US$1.15 million from 137 investors.
Of that total, the BCSC said Chan and Vincent raised a total of US$331,400 from 52 investors.
“Chan also recruited other people to promote the investments in British Columbia, while Vincent encouraged the people she raised money from to promote the investments to their friends,” the commission noted.
The regulator alleged that the five people in B.C. who were allegedly part of the scheme “either committed fraud themselves” or made misrepresentations to prospective investors.
The allegations against the remaining respondents in the case have not been proven. A hearing against them began on April 19.
The BCSC is also seeking reciprocal orders against Filho, Valdes and the companies based on the U.S court rulings that they committed securities fraud.