The British Columbia Securities Commission has ordered a hearing into allegations of fraud and illegal distribution of securities against Alfredo Miguel (Michael) Yong in two multimillion-dollar land deals.
The notice, issued Thursday, alleges that between March and May 2008, Yong promoted and sold shares, primarily to BC residents, in Inverlake Property Investment Group Inc., which entitled investors to an ownership interest in the Inverlake land based on one share per acre of land.
Commission staff alleges that Inverlake, a company founded by Yong, purchased the land from the owner for just over $3.2 million, but that Yong told investors that the per acre share price was based on a purchase price of more than $6.2 million, leaving investors paying almost double the actual purchase price of the Inverlake land.
Yong is also accused of failing to tell investors that he had stopped making mortgage payments on the property and that he had consented to a foreclosure application, which took effect in January 2014 and returned the land to the original owner.
Investors lost their entire investments and the commission staff contends that by inflating the share purchase price and not telling the investors about the foreclosure, Yong perpetrated a fraud.
According to the commission, at least 28 individuals and corporate entities purchased shares in the Inverlake land, paying the initial $19,500 per share. Inverlake has never filed a prospectus in British Columbia and for approximately 24 investors who purchased 46 shares for $949,650, there was no exemption from prospectus requirements.
Meanwhile, the commission notice also alleges that in July and August 2008, Yong promoted and sold shares primarily to BC residents that entitled investors to an ownership interest in the Wheatland Business Park Ltd., another company founded by Yong.
Yong allegedly sold shares through WBP, telling investors that the WBP land would be developed and sold at a profit. At least 19 individuals and corporate entities purchased shares in the WBP land at approximately $53,000 per share.
Among the investors, 15 investors who purchased 20 shares for $1,090,470, there was no exemption from prospectus requirements. WBP also never filed a prospectus in BC, the commission said.
Allegations in both cases have not been proven.