B.C. residents accused of $60-million fraud involving company with no employees

VANCOUVER – A British Columbia brother and sister committed US$60-million in fraud in a far-reaching scheme stretching to Taiwan, China and the Republic of Georgia, the B.C. Securities Commission alleges.

The commission issued a notice of hearing against Winter Huang and his sister Vicky Dancho and two B.C.-incorporated companies alleging fraud and illegal securities distribution.

Huang was a director and controlling mind of Pegasus Pharmaceuticals Group Inc., and Careseng Cancer Institute Inc., while Dancho was a director, CEO and president of Careseng Cancer, according to the commission.

It alleged that between 2008 and 2012, Pegasus Pharmaceuticals issued $36.4 million in bonds to Taiwanese investors that included guarantees from Careseng Cancer of repayment of principal at maturity.

“Huang and Dancho knew, or ought to have known, that these guarantees were false as Careseng Cancer had no operations, no employees, no revenue, and less than US$50,000 in assets,” the commission said in a news release Friday.

Hearing dates have not been set so the allegations have not yet been tested at a hearing before the commission nor in court.

The commission said that between 2011 and 2012, Pegasus fraudulently raised about US$15.4 million purportedly for projects in the Republic of Georgia and US$11.1 million for a project in China.

Only about US$2 million went toward the projects, the commission alleged.

“Instead, Pegasus Pharmaceuticals used the remaining investor funds to make payments to earlier investors, pay commissions to Pegasus Pharmaceuticals bonds sales agents, and for Pegasus Pharmaceuticals’ operational costs unrelated to the projects.”

Huang and Dancho are also accused of illegal securities distribution. The commission alleged the pair sold $56 million in securities without a prospectus — a document outlining a company’s business plan, audited financial statements and executives’ names.

A prospectus allows investors to make informed decisions and it is illegal to sell securities without one unless special exemptions are sought. Huang and Dancho did not seek any exemptions, according to the commission.

Pegasus declined to comment through its lawyer, Owais Ahmed.

Anyone who has invested with Pegasus or has information is asked to contact the commission.