Richmond insurance firm facing $47 million investment fraud probe

Richmond insurance firm facing $47 million investment fraud probe
B.C. insurance group allegedly defrauded investors of $47 million
The British Columbia Securities Commission is alleging that three top officers of a once growing insurance group fraudulently raised over $47 million from hundreds of investors.

The BCSC alleges that between 2012 and 2017, Aik Guan "Frankie" Lim and Scott Thomas Low, the directors and founders of FS Financial Strategies Inc. and related companies in the FS insurance group, failed to disclose the company's deteriorating financial situation and used investor money to cover its expenses.

BCSCs notice of hearing names six additional people – Chun Ying Jim Pan, Chung-Sheng Johnson Kao, George Lay, Gagan Deep Bachra, Chi Kay Dixon Wong and Meng Cher Philip Tsai – who were appointed by Lim and Low as directors of related companies in the FS insurance group that also sold the unsecured loans.

Darrell Wayne Wiebe, the company's general manager, was allegedly aware of the insurance group's finances and advised Lim and Low on how much investor money was needed to stay afloat.

BCSC alleges that Lim and Low, in addition to committing fraud, selling securities without a prospectus and selling securities without being registered, also violated the B.C. Securities Act by continuing to trade and sell securities after making a legal promise to the BCSCs executive director, in 2014, that they would stop.

According to the commission, investors were promised interest payments of 10 to 12 percent, payable monthly.

The British Columbia Securities Commission (BCSC) has accused the three leaders of FS Financial Strategies Inc., and related companies in the FS insurance group, dishonestly raised over $47 million between 2012 and 2017 by failing to disclose to investors that the company wasnt profitable.

Lim and Low "created an illusion of profitability" by paying investors monthly returns, opening new offices, donating to charities, hosting expensive parties and telling customers they planned to take the company public.

Lim and Low, according to the BCSC, created an illusion of profitability by opening new offices in rapid succession; donating money to charities; telling customers that they planned to take the insurance group public; and hosting parties for clients and staff at expensive hotels.

The BCSC also alleges that Lim and Low violated the B.C. Securites Act by continuing to trade and sell securities after making a legal promise to stop in 2014.

The notice also says that Darrell Wayne Wiebe, the companys general manager, was aware of the FS insurance groups true financial condition and contributed to the fraud by routinely advising Lim and Low how much the company needed to raise from investors to stay afloat.

Six additional people appointed as directors of related companies — Chun Ying "Jim" Pan, Chung-Sheng "Johnson" Kao, George Lay, Gagan Deep Bachra, Chi Kay "Dixon" Wong and Meng Cher "Philip" Tsai — are alleged to have sold unsecured loans.

The BCSC statement further alleged that the activities continued while the companys financial situation deteriorated and that it survived by raising money from investors to cover its expenses by getting hundreds of people to purchase unsecured loan agreements.

All nine individuals named in the notice are set to appear before the commission at a hearing on Dec. 4.

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FS Financial Services founders Aik Guan (Frankie) Lim and Scott Thomas Low face BCSC hearing Dec. 4 for failing to disclose company wasnt profitable while raising millions from investors

According to the BCSC, Aik Guan Frankie Lim and Scott Thomas Low, the directors and founders of the group, were partly responsible.

A Lower Mainland insurance group’s top officers fraudulently raised $47 million in unsecured loan agreements from nearly 400 investors, the B.C. Securities Commission has alleged in a notice of hearing released Tuesday.

The related companies are alleged to have sold securities without a prospectus and without being registered to do so.

The BCSC alleges that Aik Guan (Frankie) Lim and Scott Thomas Low, directors and founders of FS Financial Strategies Inc. and related companies in the FS Insurance Group, “dishonestly” raised millions between 2012 and 2017 by failing to disclose to investors the company wasn’t profitable, its financial situation was deteriorating and it survived by raising money from investors to cover its expenses.

The BCSC added that investors were promised interest payments of 10 per cent to 12 per cent, payable monthly.

Under B.C.’s Securities Act, Lim and Low face charges of fraud, selling securities without a prospectus (a legal document that details a business and its risks) and without being licensed to sell securities.

There was no response Tuesday to calls to FS Financial Strategies Inc. where after two rings the phone went to dead air.

The allegations by the BCSC also involve Darrell Wayne Wiebe, the company’s general manager, who the securities regulator says was aware of the FS Insurance Group’s true financial condition and contributed to the fraud by routinely advising Lim and Low how much the company needed to raise from investors to stay afloat.

The BCSC says investors were promised interest payments of 10 per cent to 12 per cent, payable monthly. Lim and Low “created an illusion of profitability” by opening new offices in rapid succession; donating money to charities; telling customers that they planned to take the insurance group public; and hosting parties for clients and staff at expensive hotels, says the BCSC.

The six-page notice of hearing also alleges that in 2015, Lim and Low diverted $770,000 of the $47 million to help fund a movie production featuring Lim’s son. They did so, said the BCSC, after telling investors the FS Group would use the money for its insurance business.

The notice of hearing names six additional people — Chun Ying (Jim) Pan, Chung-Sheng (Johnson) Kao, George Lay, Gagan Deep Bachra, Chi Kay (Dixon) Wong and Meng Cher (Phillip) Tsai — who were appointed by Lim and Low as directors of related companies in the FS insurance group that also sold the unsecured loans. The related companies are alleged to have sold securities without a prospectus.

The FS Group of companies first came to the BCSC’s attention in 2014 when Lim and Low promised the regulator to cease trading and distributing securities, according to the notice of hearing.

However, the pair continued their fund raising activities for the FS Group until 2017, raising an additional $29.34 million using unsecured loan agreements, says the BCSC.

At least three investors have filed civil suits in B.C. Supreme Court against Lim and Low and FS Financial Services, seeking to recover hundreds of thousands of dollars in lost investments.

One investor’s claim includes certificates of pending litigation — under which an owner cannot get a mortgage or sell a property — on two homes co-owed by Lim valued at $2.58 million according to B.C. Assessment figures.