In a settlement agreement with the British Columbia Securities Commission (BCSC), Virginia Tan has admitted she fraudulently raised at least $30 million from investors.
Before 2011, Tan, a B.C. resident, raised funds from investors through her business, Letan Investments Management, and issued the investors promissory notes. Tan used the funds for short-term, high-interest loans to individuals and small businesses.
After 2011, Tan continued to raise funds from investors and to issue promissory notes but no longer used investors’ funds for loans. The cover letters she gave to investors with their promissory notes still stated that the investments were for “short-term financing” and “to finance short-term investments.”
Tan didn’t earn income from any other business. She made interest and principal payments to investors with funds she raised from other investors and with a small amount of her own funds.
Tan eventually was unable to raise enough new funds to pay investors, and she ceased paying them by late 2015. The total amount she raised from investors after 2011 was approximately the same amount she paid investors in principal and interest payments. However, many investors suffered substantial losses as a result of their investments with Tan.
Several investors started lawsuits against Tan, and one investor petitioned her into bankruptcy. Tan is currently an undischarged bankrupt. The court appointed a trustee to liquidate Tan’s assets and distribute proceeds to Tan’s creditors, including her investors.
Tan agreed to pay $3 million to the BCSC in settlement of this matter. The BCSC says it will take steps to collect this sum after Tan has paid the amounts owing to investors.
Tan has been ordered to cease trading in, and is permanently prohibited from purchasing, any securities or exchange contracts, and she must resign any positions she holds as, and is permanently prohibited from becoming or acting as, a director or officer of any issuer or registrant.
She is also permanently banned from becoming or acting as a registrant or promoter, acting in a management or consultative capacity in connection with activities in the securities market and engaging in investor relations activities.
Read the settlement agreement here.