The British Columbia Securities Commission has come to a settlement agreement with Virginia Tan, a B.C. resident, who has admitted to fraudulently raising $30 million from investors, announced the regulator April 19.
The BCSC explains that before 2011, Tan would raise money from investors, issue them promissory notes, and use the funds for short-term, high interest loans to individuals and small businesses. After 2011, she stopped using investors’ funds for loans, however, the cover letters she gave to investors with their promissory notes still stated that the investments were for “short-term financing” and “to finance short-term investments.”
Stopped paying investors in 2015
Tan would make interest and principal payments to investors using the funds she raised from others, as well as a small amount of her own funds. She eventually could not raise enough new funds to pay investors with, and stopped paying them in late 2015.
“The total amount she raised from investors after 2011 was approximately the same amount she paid investors in principal and interest payments. However, many investors suffered substantial losses as a result of their investments with Tan,” said the BCSC.
Petitioned into bankruptcy
Several investors started lawsuits against Tan, and one investor petitioned her into bankruptcy. Tan is currently an undischarged bankrupt. The court appointed a trustee to liquidate Tan's assets and distribute proceeds to Tan's creditors, including her investors.
Tan has agreed to pay $3 million to the BCSC in settlement of this matter. The BCSC will take steps to collect this sum after Tan has paid back what she owes to investors. She has been ordered to cease trading in, and is permanently prohibited from purchasing any securities or exchange contracts. Tan will also have to resign any positions she holds as, and is permanently prohibited from becoming or acting as a director or officer of any issuer or registrant. She is banned from becoming or acting as a registrant or promoter, acting in a management or consultative capacity in connection with activities in the securities market, and engaging in investor relations activities.