Four years after two accused con men duped realtors and other professionals into selling a $1.7-million Richmond home that the fraudsters didn’t own, a provincial regulator has censured realtors, managing brokers and their company, Pacific Evergreen Realty Ltd.
The fines to the company, realtors Tracy Xiaomei Li and David Chian Wei Yang, and managing brokers Lok Chi Annie Fong and Lo-Ming Lee, total $300,000.
The B.C. Financial Services Authority determined the licensees, managing brokers and brokerage were not complicit in fraud but found they failed to take reasonable measures at several points in the transaction.
The accused fraudsters used a fake ID and impersonated the homeowner, who lived in China, to get a power of attorney to sell the house, and then used that documentation to enlist the realtor to sell the house in 2019. They also fooled a notary and a lawyer during the scheme.
Findings by the Financial Services Authority show that during the sale, Fong, one of the managing brokers, emailed Li and Yang, saying she and Lee felt the transaction appeared suspicious and worried it “might be scam.” Fong had advised Li and Yang to consult a lawyer, which they did not do.
“The penalties reflect the severity of the licensees’ failure to meet their core responsibilities, including know-your-client obligations and duties to act honestly and with reasonable care and skill,” Jonathan Vandall, the Financial Services Authority’s vice-president compliance and enforcement, said in a written statement.
The B.C. Financial Services Authority was created in 2019, taking on responsibility for real estate services in 2021 as one of several steps the B.C. government has taken to tighten oversight of financial services and combat money laundering and other financial crimes.
The fraudulent sale of homes by someone who is not the owner is rare in British Columbia, but has happened in other places in Canada, including Ontario, and in the U.S.
The Land Title and Survey Authority of B.C. in 2021 warned of two attempts, one of which was successful, of fraudsters impersonating homeowners to steal the homes’ title. Since then there has been no further documented attempts, said land title officials.
Ron Usher, general counsel for the Notaries Public Society of B.C., said there has not been a wave of these types of crimes but it is does point to the value in real estate in B.C., particularly when the home is owned outright, and the need to guard against forged identification.
“When you have very large numbers of empty and offshore owned homes, those present a very interesting target,” said Usher, who testified at B.C.’s Cullen commission into money laundering.
Usher said the notaries society has been increasing its education and that technology improvements are also helping thwart fraud. This summer a notary used a software program that verifies driver’s licences to spot a fake ID. That along with some other concerns prompted the notary to call the police, who arrested a man.
More insight on how the Richmond sale was carried out is detailed in a civil lawsuit filed by the homeowner, Yuan You, in B.C. Supreme Court. The suit alleges the fraudsters started casing the property in July 2018, which included breaking into the home. The house was leased but the tenant was in China. The suit also alleges the fraudsters were specifically targeting houses that were empty and had no charges against the property, such as a mortgage, which would complicate a transaction. B.C. land title records show You’s house was bought outright in 2004 for cash, which would thus provide the full value of the sale to the fraudsters.
The lawsuit alleges the fraudsters were satisfied by November 2019 the place was unoccupied and used a forged driver’s licence to impersonate You, who is listed as a student in property records. The civil lawsuit also shows that a lien of $525,000 was placed on the property days before the sale, allegedly to help the fraudsters more easily distribute their illegal gains.
The house was sold to Luxor Homes for $1.725 million with no mortgage and then sold again in March 2020 for $2.15 million, show property records.
The civil suit was settled with some of the defendants, including Pacific Evergreen Realty, Li, Yang, Luxor Homes, the notary who signed off on power of attorney and the lawyer who handled the transaction.
The notaries society has not yet conducted an investigation because civil court proceedings continue, said officials. The notary is now retired.
The Law Society of B.C. lists the lawyer as a former member and his practice as being managed or wound down by a custodian. The lawyer has no discipline history, said law society officials.
Two of the alleged con men, Richard Yeltatzie and his brother Kieran Yeltatzie, have been criminally charged in the fraudulent sale of the house.
The civil case continues against other defendants, including the Yeltatzie brothers who have not responded to the lawsuit.
In its findings, the B.C. Financial Services Authority said Li did not carefully verify identification documents, and did not refrain from providing trading services until she received an executed power of attorney or did not verify the validity of the power of attorney when suspicions of fraud arose, such as the rushed nature of the sale of the property. Li also backdated disclosure documents and a fee agreement, which obscured the actual order of events.
The regulator said Yang failed to take steps to investigate the suspicious circumstances surrounding the transaction and advise his buyer client of all the suspicious circumstances known to him and the brokerage. Fong and Lee, as managing brokers, failed to properly supervise Li and Yang and to take sufficient steps to address the situation once it came to their attention.
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