DEVELOPING STORY: [BULLETIN]: Filings Suggest New Strain Of Autosurfing Cancer Discovered In Canada; British Columbia Securities Commission Investigating ‘Bossteam E-Commerce Inc.’ Amid Ponzi Allegations
BULLETIN: A potential new form of online fraud that sells memberships for up to $5,000, purportedly pays participants for clicking on ads and also invites them to exchange “private” shares in the venture through a purported “internal trading platform” has been discovered in Canada, according to the British Columbia Securities Commission (BCSC).
The scheme recorded more than $1.2 million in combined deposits in Canadian and U.S. dollars in less than four months and “has no real source of income other than funds received from investors,” according to a statement taken by BCSC investigators.
In alarming preliminary findings announced yesterday as part of an Executive Director’s Bulletin designed to fast-track a developing Ponzi-scheme case, BCSC said the purported “opportunity” opened two bank accounts in Canada — one for Canadian dollars, and one for U.S. dollars.
“From October 2011 to January 24, 2012, the accounts received numerous deposits in the form of cheques and inter-bank transfers in amounts ranging from $2000 to $5000,” BCSC alleged.
By Jan. 24, the agency said, “$688,746.15 had been deposited into the Canadian dollar account” and “USD$590,527.26 had been deposited into the U.S. dollar account.”
More than $405,000 was withdrawn from the Canadian-dollar account, with as much as $212,954 directed from the account to make Ponzi payments, according to the preliminary report.
Although the report does not specifically reference affinity fraud, it alleges that “[a] website targeted at Hong Kong residents offers an investment in ‘YouAd Credits.’”
The BCSC document references a site known as “youadworld.” When the PP Blog visited the site, a page loaded that read in part:
“Our unique operating mechanism is attracting subscribers from all over the world. Your advertisements will have the most steady increasing, loyal audience.”
Named in the BCSC action are Bossteam E-Commerce Inc. of Burnaby, B.C.; Yan Zhu, also known as Rachel Zhu; and Guan Qiang Zhang. Both Zhu and Zhang are listed as Burnaby residents.
From BCSC (italics added):
6. Bossteam offered two types of securities to residents of British Columbia through its Website (Bossteam Investments). To be eligible to purchase either of these securities, an investor first had to purchase a membership for $2000 or $5000.
(a) The first security was a profit sharing agreement that provided a share of Bossteam’s profits to investors who clicked on a certain number of Internet advertisements.
(b) The second security was a share of Bossteam offered by the Website through an “Initial Private Share Offering.” Bossteam offered 8 million shares, with dividends on these shares paid quarterly. The Website stated that Bossteam had issued 400,200 shares. The Website also provided an internal trading platform where investors could trade their shares.
The BCSC probe began with anonymous tips, the agency said.
As the investigation evolved, Zhu and Zhang denied offering Bossteam “shares.” Meanwhile, a story about a purported website hacking in December 2011 surfaced as an explanation for the offering of the “shares” and “Zhu lied about her involvement with the Hong Kong Website,” BCSC alleged.
And Zhu, who is registered with the Mutual Fund Dealers Association of Canada as a dealing representative and with the Insurance Council of British Columbia as a life-insurance agent, “falsely claimed she had told her mutual fund dealer employer about her outside business activities with Bossteam,” BCSC alleged.
“She is the sole director of Bossteam,” BCSC said.
When investigators interviewed Zhu’s husband, he told them that “Bossteam has no real source of income other than funds received from investors” and that “funds paid to investors came from the investment monies of other investors,” BCSC alleged.
Read the preliminary order.