Liberal MP involved in second bare trust deal with client named in ‘transnational money laundering’ probe

Embattled Liberal MP Joe Peschisolido continues to claim he has never been involved in a controversial legal service known as a bare trust agreement and that he did not participate in a secretive transaction completed by his law firm in 2011 that might have helped an alleged “drug boss” from China launder money in a Coquitlam, B.C., condo deal.

But Global News has identified another 2011 bare trust land deal in Surrey, B.C., that directly connects Peschisolido’s legal services to another client from China named in a “transnational money laundering” investigation at a Richmond casino, according to legal filings and B.C. Lottery Corp. documents.

Last week, Peschisolido attempted to distance himself from the first B.C. bare trust condo deal identified by Global News, which involved Peschisolido’s law firm and Kwok Chung Tam, a convicted drug trafficker and alleged “brazen loan shark” and “heavyweight” with a powerful Mainland China heroin cartel.

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Peschisolido acknowledged that lawyers in his Richmond law firm — which he says he voluntarily decided to “wind down” in 2016 — have completed bare trust deals.

But these lawyers acted completely independently, he claimed. He reiterated that he had no dealings with Tam or the bare trust that a lawyer in his firm completed for Tam’s numbered development company.

“I’ve never been involved in a bare trust agreement,” Peschisolido said. “If you were to ask me how it works, I wouldn’t know.”

Tweet This Click to share quote on Twitter: "I've never been involved in a bare trust agreement," Peschisolido said. "If you were to ask me how it works, I wouldn't know."

Tam was called an “alleged drug boss” in the headline of a Vancouver Province story in 2006. The report detailed an RCMP drug raid on Tam’s Richmond home, which is the same home that is directly connected to the development company Tam used in the Coquitlam bare trust deal.

From 1991 to 2014, Tam has faced repeated allegations connecting him to China’s Big Circle Boys gang, but his lawyer informed Global News that allegations of Tam’s involvement in organized crime have never been proven in court.

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And despite many allegations against Tam, he has only been convicted three times. He was convicted for theft under $1,000 in 1992 — for which he received a pardon in 1997.

And following the 2006 raid on Tam’s Richmond home, he was convicted in 2010 of possession of marijuana for the purpose of trafficking and possession of narcotics.

“Transnational money laundering”

They are legal, but bare trusts have come under fire in B.C.’s money-laundering scandal. Critics say this secretive type of legal service is a loophole that allows so-called “beneficial” owners to buy and sell land ownership shares anonymously — with their identities only revealed to their lawyers — while straw-buyer “nominee” companies are represented in public documents.

B.C.’s NDP government has charged that bare trusts enable money laundering and tax evasion.

And while Peschisolido has repeatedly claimed to have no involvement in bare trust agreements — or even knowledge of how they work — a 2016 B.C. Supreme Court ruling outlines an extremely “complicated” bare trust land deal in Surrey and says Peschisolido represented a client that was supposed to buy development land in a share transfer from a number of hidden investors involved in a bare trust joint venture.

Global News informed Peschisolido last week that the client — a wealthy industrialist and real estate developer in China, according to court filings — has been identified in B.C. Lottery Corp. investigation documents as a “VIP” gambler that is involved in 21 alleged suspicious cash transactions at a Richmond casino.

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These suspicious transactions by the construction magnate from China were connected by Lottery Corp. investigators to “unsourced cash drops that have confirmed links to criminality” and an organized crime suspect named Paul King Jin, September 2015 Lottery Corp. documents say.

The transactions involved Canadian cash loans paid back offshore, according to the documents, “in suspicious circumstances using suspicious methods with little or no interest … (that) indicate transnational money laundering.”

Tweet This Click to share quote on Twitter: The transactions involved Canadian cash loans paid back offshore, according to the documents, "in suspicious circumstances using suspicious methods with little or no interest … (that) indicate transnational money laundering."

Although the industrialist has purchased a number of development properties in Metro Vancouver since immigrating to Canada in 2009, he resides in China, according to case filings.

The man could not be reached through a number of lawyers that represented him in the Surrey bare trust venture case. The allegations in the Lottery Corp. documents have not been proven, and the man has never been charged with money laundering in Canada.

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Global News has been unable to reach Jin directly or through his lawyer for comment on the allegations against him, which include B.C. Civil Forfeiture filings connecting him to illegal casinos and casino loan sharking in Richmond. No charges have been filed against Jin.

In an interview, Peschisolido said he does not know the Chinese industrialist and B.C. property developer that he is linked to in the 2016 B.C. Supreme Court ruling. And Peschisolido said that he “wasn’t involved at all in the files” for the Surrey bare trust deal outlined in the ruling.

Peschisolido also said he does not know of Jin and several other suspects targeted in B.C. Lottery Corp. money laundering probes.

$1-million transfer “not explained”

According to the B.C. court ruling, there was a numbered company that held the legal title to the Surrey property. And in the bare trust venture agreement, many other companies and investors that were the true landowners held shares in the front company.

The deal was “chaotic” and “confusing,” according to the judge, who wrote that “in what appeared to be an unusual and unexplained situation, the company in which the shareholders held the shares, held the beneficial title to the subject property in trust for those shareholders.”

Tweet This Click to share quote on Twitter: The deal was "chaotic" and "confusing," according to the judge, who wrote that "in what appeared to be an unusual and unexplained situation, the company in which the shareholders held the shares, held the beneficial title to the subject property in trust for those shareholders."

According to filings, Peschisolido’s firm was provided confidential records regarding the transfer of shares held by the true beneficial landowners that controlled the front company in this trust deal.

This would seem to suggest that Peschisolido’s firm was preparing an agreement to finalize the transfer of beneficial ownership shares in the land that was held in a pre-existing bare trust arrangement.

However, the ruling does not make clear whether Peschisolido or someone at his firm specifically reviewed the bare trust agreement documents, which were created before he became involved in the complex deal.

Peschisolido would not answer questions from Global News on the transaction.

Because of a dispute over share transfers and beneficial ownership records, the Surrey land deal collapsed, according to the judge.

And $1 million that was held in trust in Peschisolido’s accounts was returned by Peschisolido to his client in circumstances that were “not explained.”

A lawyer representing the sellers in the collapsed deal questioned why this fund transfer had happened.

“When I received Mr. Peschisolido’s letter, my clients learned for the first time that the $1 million due and owing to them pursuant to the Share Purchase Agreement had been released by Mr. Peschisolido back to (a B.C. land investment company directed by the Chinese construction magnate’s son),” the lawyer said.

Tweet This Click to share quote on Twitter: "When I received Mr. Peschisolido's letter, my clients learned for the first time that the $1 million due and owing to them pursuant to the Share Purchase Agreement had been released by Mr. Peschisolido back to (a B.C. land investment company directed by the Chinese construction magnate's son)," the lawyer said.

In the case, the judge found that both the buyer and seller in this deal were responsible for its collapse.

In a brief phone call last week, Hsu told Global News she could not comment on the Surrey land deal, speak for any clients involved or answer whether she has been involved in bare trust deals for Peschisolido and Co.

Hsu also said she could not comment on the Law Society citation, which contains unproven allegations that have not yet been the subject of a hearing.

In an interview, Global News asked Peschisolido if he can assure citizens that he has not done business with clients who are allegedly involved in suspicious transactions in B.C. Lottery casinos.

Peschisolido did not directly answer the question.

“I can assure the good people of Steveston-Richmond that I’m doing my job as a member of Parliament, and when I acted as a lawyer, I acted with complete professionalism and I made a decision back in 2016 to wind down my firm,” he said.

-With files from Brian Hill