Chinese-Canadian businessman charged in fraud and money-laundering case

A Chinese-Canadian businessman was charged Thursday in connection with an alleged fraud and money-laundering case involving hundreds of millions of dollars and thousands of investors in China.

Edward Gong, who lives in Toronto’s North York neighbourhood and has established himself as a hotel, television, and health supplements mogul was charged Thursday following a months-long investigation into his affairs, led by the Joint Serious Offences Team of the Ontario Securities Commission.

Gong, who also goes by the name Xiao Hua Gong, faces four charges under the Criminal Code of Canada: fraud over $5,000, possession of property obtained by crime, laundering proceeds of crime, and uttering a forged document.

He is accused of using two of his companies, O24 Pharma PLC and Canada National TV Inc., to fraudulently sell securities to Chinese citizens between January of 2012 and Dec. 20 of this year.

A disclosure document issued on otcmarkets.com in May by a company called 024 Pharma Inc., which lists Xiao Hua Gong as president, says its business is vitamin and mineral manufacturing and retail.

OSC staff, RCMP, and Toronto police executed search warrants on premises in North York on Thursday, including Gong’s residence and his “alleged place of business,” according to a statement issued by the OSC. They are now seeking his arrest.

Gong came to Canada in 2002 from China, where he was an opera director, according to a 2016 story in the publication China Daily. He established himself as a prominent businessman in the Toronto area, and was photographed last year alongside Prime Minister Justin Trudeau at a fundraiser.

Gong has donated to the Liberal Party of Canada, party communications adviser Elyse SuretteDiMuzio said Thursday.

“All contributions made to the Liberal Party of Canada are made, processed, and transparently reported in accordance with the Canada Elections Act,” she said in an emailed statement.

Election Canada records show individuals named Xiao Hua Gong and Xaiohua Gong with the same North York postal code have made contributions to both the Liberal party and the Conservative party.

The multi-jurisdictional investigation into Gong’s business affairs was led by the OSC’s JSOT in co-operation with the Royal Canadian Mounted Police, and financial crime authorities in China and New Zealand.

Some of the charges laid Thursday relate to what Gong did with proceeds from the allegedly fraudulent scheme.

The OSC alleges “a significant percentage of the money obtained by this scheme was directed to Gong’s bank accounts in Canada which he then used for his personal benefit,” the regulator said in Thursday’s statement.

None of the allegations have been proven. Officials at the OSC say the case will be prosecuted in court in Ontario even though all the alleged victims, numbering in the tens of thousands, are in China.

In Canada, a criminal fraud conviction carries a penalty of up to 14 years in prison.

Reports out of China last summer named Gong in connection with a financial pyramid scheme being investigated in that country. None of those allegations have been proven.

In 2010, Gong was honoured at a Markham, Ont., business awards ceremony. He was named person of the year in international business at the Chinese Business Chamber of Canada’s fifth Chinese Business Excellence awards.

In an interview with the China Daily last year, he spoke of the need to use his businesses, including a Mandarin-language TV station in Toronto, to support increasing economic and trade co-operation between China and Canada.

In recent years, Gong ’s business activities extended to investments in commercial real estate in the United States, according to an article in Crain’s Chicago Business in June of this year. The properties include a prominent hotel in Dearborn, Mich., and 30 floors in the Pittsfield Building, a faded Chicago landmark, the business journal reported.

Another report in the Northwest Herald says a company owned by Xiao Hua Gong, called Edward Harvard Holdings LLC, paid US$9.3 million in April for a former Motorola campus in Harvard, Ill.

At one time, Gong owned a private school in Hamilton, Ont., called the National Art College of Canada, which catered largely to high school students from China. However, the school’s creditgranting authority was revoked in November of 2011, according to Ontario’s Ministry of Education.

Calls placed to the numbers listed for 024 Pharma Inc., and Canada National TV in Markham were not answered Thursday.