BCSC imposes sanctions on Ponzi promoters

Three British Columbians have been ordered to pay almost $1 million and banned from the market for periods ranging from 20 years to life for their involvement in a phantom gold-mining scheme.

Last year a hearing panel of the British Columbia Securities Commission (BCSC) found that Sabrina Ling Huei Wei, Justin Colin Villarin and James Bernard Law violated securities law when they solicited investors in B.C. to participate in a Ponzi scheme orchestrated in the U.S., and purportedly raised over US$15 million from more than 1,400 investors, according to the U.S. Securities and Exchange Commission.

“Investors were promised extraordinarily high no-risk returns on supposedly lucrative gold-mining operations in Mali and Brazil. In reality, none of the investments were used for gold mining,” the BCSC said. The purported mining company’s only source of revenue was money from new investors, it said, and about $6 million was diverted by the scheme’s mastermind for his personal use.

The scheme allegedly resulted in B.C.-based investors losing $1.5 million, the commission reported. “There are significant impacts to people that go beyond just the economic losses, as family and other personal relationships have suffered as a result,” it said.

The regulator ordered that Wei is permanently banned and must pay a $500,000 penalty, along with with $90,000 in disgorgement.

The BCSC also banned Villarin for 25 years and imposed a $200,000 penalty on him, plus $15,718 in disgorgement. It ordered a $150,000 penalty and a 20-year ban against Law.

In its sanctions decision, the panel noted that Wei’s conduct “was more serious” than the other two, as she led the scheme’s distribution efforts in B.C., including appearing in promotional content.

“She did so during a period when she should reasonably have known of the fraud, and she continued after she had actual knowledge of the fraud,” it said.

It also noted that Villarin, who had been registered to sell insurance and mutual fund products, prepared and distributed promotional materials, spoke at investor presentations and directly solicited investors to participate in the scheme.

James Langton

James is a senior reporter for Advisor.ca and its sister publication, Investment Executive. He has been reporting on regulation, securities law, industry news and more since 1994.