As the federal election gets underway Richmond Liberal MP Joe Peschisolido is attempting to remove himself from a B.C. Supreme Court case featuring allegations that his former law firm was involved in an “illegal international money-laundering scheme.”
The case concerns a $15-million immigration-investment deal in which some investors allegedly tried to “improperly influence” Canadian politicians to circumvent the “lawful” immigration process.
Thursday in B.C. Supreme Court Madame Justice Sharon Matthews heard Peschisolido’s application to dismiss the claims against him, as well as opposing arguments from plaintiff Yicheng Jiang’s counsel. Justice Matthews has reserved her decision and its not clear when the decision will be issued.
According to legal filings, seven Chinese investors forwarded funds to Peschisolido’s firm through an “underground bank” in China. And one of these investors “brought the funds into Canada in his own name to conceal involvement of the other six investors.”
Yicheng Jiang says he was “induced” to make the banking transactions as part of the immigration-investment opportunity that used Peschisolido’s firm.
It’s alleged that Peschisolido and one of his firm’s “junior” lawyers, Yvonne Hsu, allowed the investor funds transferred from China to be diverted from the firm’s accounts to Paul Oei, a prominent immigration entrepreneur and Liberal party fundraiser in B.C..
The civil case involving Oei and Peschisolido has already resulted in a 2018 B.C. Securities Commission ruling that found Oei defrauded a number of investors. As a result the Securities Commission banned him from selling investments in B.C. and ordered him to pay over $8 million in repayments and fines.
In the Securities Commission hearing, Jiang testified his group had to use “black market” underground banking methods because Chinese citizens are barred from sending more than $50,000 in U.S. dollars abroad, per year.
Hsu was suspended by the B.C. Law Society in August for three months for her conduct in the Oei case, according to the civil claim against her and Peschisolido.
“Hsu allowed her trust account to be used to receive and disburse investor funds without making any or reasonable inquiries, including about the companies in which investors were purportedly receiving shares,” a statement from the Law Society says.
In determining the suitable disciplinary action, the panel considered that Hsu had no previous discipline history, and accepted that she was not aware of and did not intend to facilitate the fraud.
Peschisolido distances himself from deal
In his August filing, Peschisolido argues he did nothing wrong and the ongoing case is unfairly damaging his chances of re-election this October. A trial is set for January 2021.
“Joseph Peschisolido is not just a lawyer, but also a sitting Member of Canada’s Parliament,” his August 13 application states. “The serious and non-compensable prejudice to (Peschisolido) is obvious should he be deprived of the opportunity to exonerate himself in respect of the plaintiffs serious and unfounded allegations against Mr. Peschisolido personally.”
But the plaintiff Jiang maintains Peschisolido is directly involved, and “this is a close to USD $4 million fraud case against a group of alleged fraudsters and their former lawyers.”
According to the filings, Jiang’s group from China thought they were investing in Paul Oei’s fertilizer company.
Jiang says he and his co-investors were told that Oei was influential with high-level B.C. government officials and investors were promised an easy path to immigration in Canada and big profits.
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But instead of receiving shares in Oei’s fertilizer business, the investors received shares with no value in several related “shell companies,” Jiang’s claim alleges.
“Moreover, at the direction of the alleged fraudsters, a large portion of the funds in the law firm’s trust account were transferred out to the alleged fraudsters who then misappropriated them,” the claim states.
Jiang alleges Peschisolido and Hsu were “knowing (in) assistance of fraud.”
Illegal international-money laundering scheme
In her response to Jiang’s claim, Hsu denies any wrongdoing and says to her, “any fraud by the defendant Oei or others never was apparent.”
Hsu makes the legal argument that Jiang cannot claim damages against her, because he would be benefiting from an alleged money laundering transaction that was an “illegal or wrongful act.”
In the case, Jiang conspired with six hidden co-investors in China to perpetrate “an illegal international-money laundering scheme,” Hsu’s response alleges.
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But in a response, Jiang said he was unaware of impropriety, and “the alleged impropriety was part and parcel of the fraudulent scheme perpetrated by the defendants Oei and Lai … and Hsu, Peschisolido and Peschisolido Law Corporation … knew or ought to have known of the alleged impropriety, but failed to disclose these facts or warn Mr. Jiang.”
The issue raised in case filings is that only Jiang’s name appeared on wire transfer records visible to Canadian authorities. However, a secret ledger providing the names of the six hidden investors was provided to Oei. The ledger and amounts provided by the hidden investors is shown in Jiang’s case filings.
In Canada’s anti-money laundering system, secretive transactions raise concerns that Canadian officials would have no way to know the true source of funds flowing into Peschisolido’s firm in the immigration-investment scheme.
This underground transaction was illegal in China, Hsu’s filings say, and contravened Canada Revenue Agency and Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) laws.
According to Hsu’s filing, the ultimate objective of the “illegal international money laundering scheme” was to use Oei’s connections to “influence government officials” and secure permanent residency for the Chinese investors.
Peschisolido recalls no meeting with plaintiff
In his August 13 application, Peschisolido says there is “no dispute” that Yvonne Hsu “acted as counsel for Oei.”
But Peschisolido claims he “did not draft” any documents for Oei in the deal and he “has no recollection of ever meeting the plaintiff (Jiang.)”
And he was unaware of the details or advice that Hsu was providing, Peschisolido claimed.
Jiang’s claim says that records disclosed in the case by Peschisolido’s former firm indicate that in May 2010 Peschisolido signed a document authorizing a $1-million payout from his trust fund into Oei’s bank account, and that this payout came from about $4-million in funds transferred from Jiang.
Peschisolido acknowledges he signed for a payout to Oei in the case, but claims that he doesn’t remember doing so.
“In one instance that Mr. Peschisolido does not specifically recall, he signed a single trust requisition for payment out of trust of certain monies the plaintiff may have deposited,” Peschisolido’s filings say.
“Although he does not specifically recall approving the requisition, Mr. Peschisolido’s practice was to review the documents on file supporting such a disbursement.”
According to Peschisolido, Jiang has never been able to provide proof that Peschisolido knowingly acted in Oei’s allegedly fraudulent scheme.
“Mr. Peschisolido denies any wrongdoing whatsoever,” his application states.
However last week Jiang responded, claiming he and other investors from China travelled to B.C. and met Peschisolido at a Chinese seafood restaurant in Richmond.
At the alleged meeting, Oei introduced Peschisolido as “the lawyer … whom they were told would be the one handling the investment money for all the investors.”
And Oei informed investors that “Mr. Peschisolido is a very well-known and well-respected lawyer … also a former member of Parliament and a socialite,” according to Jiang’s claim.
Peschisolido has not yet filed a response regarding this alleged meeting.
According to documents filed in the court case, Peschisolido signed off on two transactions from his trust account, including the one for $1-million, Jiang’s claim alleges.
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According to Jiang, the authorization allowing Peschisolido to disburse his funds to Oei, were never seen or signed by Jiang, and “appear on their surface to be uncertain and/or backdated.”
And regarding what Peschisolido’s former associate lawyer Hsu alleges were “illegal” transfers from China into Peschisolido’s trust accounts, Jiang’s claim alleges that Paul Oei used the “professional credentials and credibility of Mr. Peschisolido to lend credibility,” to the scheme.
“Mr. Jiang says he relied on what he was told about Mr. Peschisolido in transferring the investment funds into the trust account,” and that the scheme was discussed in the presence of Peschisolido during a dinner meeting at a Chinese restaurant,” Jiang’s claim alleges. “(But) Mr. Peschisolido says he doesn’t remember.”
In response to questions from Global News, Oei said he did not participate in any scheme to influence Canadian officials. Oei said that he can no longer afford to pay a lawyer to represent himself in the case, and is now acting as his own counsel in the court proceedings.
“As to Jiang’s illegal activities involving illegal transfer of money, we do not have any idea at all since his funds are being transferred from a normal bank account to Peschisolido’s trust account,” an email from Oei said. “I have stressed this point to the B.C. Securities Commissions at the review.”
Global News has reached out multiple times to Peschisolido for comment, but he has not responded.