Immigration scams, tax evasion and mortgage fraud: Court case reveals Vancouver foreign buyers’ dirty tricks

By ThinkPol Staff

A legal wrangle between two families from China over multi-million dollar homes in Vancouver Westside and the funds transferred to buy them offer a rare glimpse into the questionable strategies used by foreign buyers in the lower mainland’s real estate market.

In Fu v. Zhu[1]Fu v Zhu, 2018 BCSC 9 (CanLII), , retrieved on 2018-01-08, the Honourable Madam Justice Griffin of the B.C. Supreme Court has rendered a 552-page judgement after unravelling reams of “inconsistent” testimonies from parties with “serious credibility problems”.

Here are just seven dishonest tactics used by foreign buyers involved in the case, verbatim from the court document.

The plaintiffs: P1: Mr. Guoqing Fu (Husband), P2: Ms. Chunqin Zhou (P1’s Wife), P3: Mr. Xiao Feng Fu (The son of P1 and P2)
The defendants: D1: Ms. Cui Yun Zhu (Wife), D2: Mr. Hai Ling Xia (Husband)

1. Scheming to deceive Canadian immigration authorities

[146] Indeed, P3 was sophisticated in lying, including scheming to deceive Canadian immigration authorities in 2012 so that he could maintain permanent residency status without spending the necessary days residing in Canada. This scheme involved him pretending to rent accommodation in Vancouver by writing cheques for rent to D1; pretending to be employed by Jie Chen, the wife of the family’s realtor, Mr. Gu, who pretended to pay him employment income (all of which was paid back behind the scenes by payment from P2 to Mr. Gu); having someone use his credit card in Canada in his absence; and then in 2013 falsely reporting to police in China that he had lost his permanent residency card which would have noted when he truly was in Canada, so that he could falsely claim he was in Canada during the period he pretended to pay rent and to receive employment income.

2. Parents knowing about the scheme to deceive Canadian immigration and colluding in it

[151] Both P1 and P2 knew of this false immigration scheme and approved of it and colluded in it, and indeed it appears most likely to me that it was masterminded by P2. They too claimed they had lost their permanent resident cards, filing a report with police in China. P1 claims P2 lied to him about this but I do not believe him and find that the whole family knew that they were making up a story about losing their Canadian permanent resident cards.

3. Declaring questionable worldwide income in tax returns

[181] P1 had his own credibility problems, including asserting to Canadian authorities on his Canadian income tax return a miniscule worldwide income of $97.11. This was an incredible assertion given the fact he owns one of the top ten textile manufacturing and distribution companies based in one of the biggest textile manufacturing centres of China.

4. Falsifying income on a mortgage application

[403] It was around the same time as the purchase of Elm in P3’s name that the Fu Family was making efforts to create a false scenario of P3 living and working in Vancouver, so that it would appear he was in Canada for more days than he actually was, all with the aim of fraudulently maintaining immigration status as a permanent resident. As well, P2 made efforts to falsely document P3’s income in China, falsely inflating his annual income to $500,000 to support mortgage financing from HSBC in P3’s name in Canada for Elm.

5. Using company employees to get around China’s capital controls

[394] There were 21 transfers from Chinese bank accounts of the employees of P1’s company to D1 and D2 into new bank accounts with BMO in Canada from September 26, 2012 to Oct. 22, 2012. The amounts of these transfers were all designed to be under the Chinese currency restriction prohibiting a person from removing more than approximately $50,000 from China. These transfers totalled $917,595 as received by the defendants (accounting for bank fees and exchange rates). The parties agree that these transfers did relate to the purchase of Elm.

[395] P2 also arranged for the transfer of $387,090 to P3’s HSBC account in October 2012, by way of eight transfers. The amount of each of these transfers was around $48,000 which again was obviously designed to evade Chinese currency controls. The plaintiffs’ claims and evidence varied on whether these funds were intended for the purchase of Elm.

6. Hiding the true beneficial owner

[37] The parties also admit that some transactions were structured using the name of a person who was not the true beneficiary of the transaction, in order to gain some perceived advantage, whether it be to evade Chinese currency controls, minimize taxes, obtain a favourable mortgage, evade Chinese restrictions on the number of properties a person could own, or otherwise.

7. Putting property in another person’s name for tax advantages

[252] In cross-examination, D1 added the explanation that she was concerned that if she was not successful in immigrating, then Mayfair would have to be sold and she had heard that there would be a lot of taxes that would have to be paid i.e. as opposed to the taxes that would have to be paid if it was owned by someone who had residency status. This was another reason for D1 wanting to have Mayfair in the plaintiffs’ names.

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References   [ + ]

1. Fu v Zhu, 2018 BCSC 9 (CanLII), , retrieved on 2018-01-08

11 Responses to Immigration scams, tax evasion and mortgage fraud: Court case reveals Vancouver foreign buyers’ dirty tricks

  1. Anonymous says:

    So is CRA and Immigration Service going get these people?

    • nonconfidencevote says:

      They’re too rich.
      Legal appeal after legal appeal after legal appeal and maybe….. 10 – 15 years from now…..after gaming the “Justice” System ….. a slap on the wrist.
      This country surrendered its fiduciary duty to protect it’s citizens 20- 30 years ago under the guise of “multiculturalism”
      Thank Trudeau #1 for starting it….Trudeau #2 is just continuing it…….
      Cant wait to see what the next 30 years brings.

    • anon says:

      That would be racist

  2. Binf Artin says:

    Yes, of course, let’s blame Trudeau for everything and forget about the closet hero Harper( hid in the closet when he heard gunshots)
    after all, he was the one to loosen the mortgage and immigration regulations

    • nonconfidencevote says:

      I couldnt stand Harper but after seeing how “selfie” Trudeau is spending taxpayer money like an addicted asian gambler in Macao….
      And then promising to be everything to everyone….
      ” Transgendered washrooms on every streetcorner! Hurray!”
      Who the Hell is gonna pay for that? Us? Temporary Foriegn Workers? Temporary Foreign investors with Landed immigrant status?
      Well gee whiz.
      If these fine examples of new Canadians are any example …..Citizenship revoked …..send them back.

      How hard would it be to pass an immigration Law that if you break ANY criminal Law in Canada for the first 10 years of your Landed status……GONE. No appeals.
      Canada doesnt need more scammers, criminals and deadbeats looking for free medical for their aging parents, or prime real estate to launder money…..we need young, healthy enegretic people with SKILLS.
      Tradesmen, doctors, scientists, engineers…………
      No more money launderers from the PRC looking for a quick buck in the gigantic Cow called Canada thats waiting complacently to be milked dry.

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