Fraudster nets $2.29-million fine over ‘extensive campaign of deceit’

In its latest high-profile monetary sanction, the B.C. Securities Commission last week issued $2.29 million in penalties against Vancouver resident Roy Ping Bai for investment fraud.

But there remains a question of whether the penalties will be paid, underscored by a Postmedia News investigation published last November that found more than a half-billion dollars in commission fines have gone uncollected in the past decade. From fiscal 2007-08 to 2016-17, the collection rate has been less than two per cent.

In response to questions from Postmedia, BCSC said Bai has not yet paid his penalty, and the commission wouldn’t provide details on how it might collect.

It also doesn’t appear police intend to investigate Bai, notwithstanding a pledge by the B.C. government to increase its emphasis on court convictions of financial fraudsters. That pledge was made following the Postmedia probe’s finding that criminal prosecution of fraudsters in B.C. was a rarity.

“The BCSC vigorously pursues all cost-effective avenues to collect outstanding fines. We determine a unique collections strategy for every case, and we will revisit and revise strategies throughout the life of a case,” commission spokeswoman Alison Walker said in a written response. “The BCSC does not publicly share specific collections strategies, as doing so has the potential to jeopardize our collections efforts.”

In an interview, RCMP Supt. Henry Tso, B.C.’s top officer in charge of financial crime, said he would look into the case, but cautioned that since it was an older file it may not be one they would take on.

Tso, who commands the financial integrity and Federal Serious and Organized Crime units in B.C. and arrived here from Ontario last summer, said the RCMP is recently working more closely with the B.C. Securities Commission to find cases where they can criminally prosecute fraudsters. He said he expects results from that new relationship.

Vancouver police say they are not investigating the case. In a written statement, VPD spokesman Sgt. Jason Robillard said the incident was reported to the police in 2014, but the VPD financialcrime unit “deferred” to the commission for this investment-fraud investigation.

“The BCSC was already investigating the matter and they had the most appropriate investigative resources/expertise in this particular case,” he said.

A BCSC tribunal found Bai and his firm, RBP Consulting, raised $1.53 million to invest in foreignexchange trading, but only used $129,000 of the funds to do so.

The rest was used to pay “purported” returns to investors and personal living expenses for Bai and his wife.

The tribunal noted Bai and RBP Consulting had carried out an “extensive campaign of deceit.” Bai’s penalties include a $1-million administrative fine and an order to pay to the commission the $1.29 million in illicit gains. Bai and RBP Consulting have also been permanently banned from B.C.’s capital markets.

In general, investment-fraud victims have cited frustration over their belief there is little justice when penalties aren’t paid and there is no prospect of jail time. Experts and investment advocates have also criticized the lack of criminal prosecution of these types of investment fraud, saying it creates an environment of impunity and undermines deterrence, a key tenet of Canada’s justice system.

Following the Postmedia probe, B.C. Finance Minister Carole James ordered the BCSC to improve its penalty collections and said she expected an increased emphasis on court convictions of fraudsters. At the same time, B.C. Attorney General David Eby said he wanted to increase the likelihood of fraud cases being treated with the prosecutions “they deserve.”

In a written statement, James said the government is working to improve the BCSC’s ability to enforce its penalties, noting the work is complex and involves a number of different agencies.

“Our province needs capital markets regulation that works for people, protects investors and helps prevent financial misconduct, and we are working hard to get it right,” said James.

The BCSC has acknowledged its poor collection rate, but said it’s the nature of the fraudulent activity and the perpetrators that makes collection difficult and unlikely. The money has been spent or hidden, sometimes abroad, or the fraudsters have fled.

Sometimes securities regulators can collect through assets held by fraudsters. A search of property records shows an address cited for RBP Consulting, a condo in Coal Harbour, is not listed in Bai’s name. According to B.C.’s Personal Property Registry, which registers loans on items such as vehicles or boats, Bai owns a 2015 BMW 328i xDrive sedan.

The BCSC vigorously pursues all cost-effective avenues to collect outstanding fines.