A B.C. Supreme Court justice has certified a class-action lawsuit on behalf of former investors trying to get back some of the $30 million they were allegedly swindled out of by a West Vancouver Ponzi schemer.
Justice Joyce DeWitt-Van Oosten certified the class-action lawsuit launched by Jastram Properties Ltd. against Virginia Mary Tan – along with her husband Patrick Tan, her son Marcus Tan and a number of related companies – on April 2.
Tan admitted as part of a settlement agreement with the B.C. Securities Commission two years ago to fraudulently raising at least $30 million from investors.
According to securities commission documents, for several years prior to 2011, Tan raised money from investors for short-term high-interest loans and paid interest to the investors under the name Letan Investments Management. After 2011, Tan stopped using the money raised for loans, but still issued promissory notes to investors saying the money would be used for “short-term financing.” Instead, Tan paid interest with money given to her from new investors – a classic Ponzi arrangement.
By late 2015, Tan was unable to raise enough new money to pay the investors and stopped making interest payments. She and her husband declared bankruptcy in April 2016.
In lawsuits filed since, former investors alleged money received by the couple was “fraudulently diverted to Marcus Tan, their adult son, and used to purchase assets and properties” for his benefit.
Those claims have not been proven in court.
But as DeWitt-Van Oosten noted in her April 2 ruling, Marcus Tan is acknowledged to be the registered owner of six properties acquired in connection with a condominium development in Surrey, and is an officer and director of two companies that own 24 properties in Fort St. John.
Jastram Properties Ltd, the North Vancouver-based company that launched a lawsuit against the Tans and applied to have it certified as a class action suit, was “one of the largest investors in the scheme,” according to court documents.
Between May 2012 and March 2015, the company claims it invested over $6.6 million with Virginia Tan through a series of instalments.
When the true nature of Tan’s scheme was exposed in 2016, the company had received just under $1.8 million in “return on its investments” leaving over $4.8 million of the principal outstanding, according to the lawsuit filed by the company.
DeWitt-Van Oosten noted one affidavit sworn by Lale Doetsch, director of Jastram Properties, as part of the lawsuit, described meeting Virginia Tan at Hollyburn Country Club for dinner where Tan told her “‘she only lent money to people she knew who mainly operated businesses that were waiting to get paid for government jobs. . . . She said she had virtually no clients who defaulted and because of that the investments were very safe.’”
In agreeing to certify the class action, DeWitt-Van Oosten noted as many as 165 of the original 240 investors had been identified by the bankruptcy trustee as being owed money by the Tans.
A significant number of those investors have not filed individual lawsuits, the judge noted – possibly because the Tans declared bankruptcy.
“For these investors, a class action may provide them with access to recourse for recovery that they are otherwise not able to seek,” the judge wrote.
