The BC Securities Commission has given a notice of hearing to three leaders of a “once fast-growing” B.C.-based insurance group, alleging the group “dishonestly raised over $47 million.”
In a news release issued Nov. 6 – which announces a hearing set for Dec. 4. – the commission alleges that “Aik Guan ‘Frankie’ Lim and Scott Thomas Low, the directors and founders of FS Financial Strategies Inc. and related companies in the group, failed to disclose to investors “that the company wasn’t profitable, its financial situation was deteriorating, and it survived by raising money from investors to cover its expenses.”
The commission alleges almost $33 million of the securities were sold in unsecured loan agreements beginning in 2012, and that Lim, Low and the related companies were not registered to sell the securities. The pair also diverted $770,000 to help fund a movie production featuring Lim’s son, according to the notice of hearing.
The notice adds that Darrell Wayne Wiebe, the company’s general manager, “was aware of the FS insurance group’s true financial condition and contributed to the fraud by routinely advising Lim and Low how much the company needed to raise from investors to stay afloat.”
The BCSC says investors were promised interest payments of 10 to 12 per cent. According to the release, Lim and Low “created an illusion of profitability” by opening new offices rapidly; donating to charities; telling customers that they planned to take the insurance group public; and hosting parties for clients and staff at expensive hotels.
According to information online, FS Financial Strategies locations include offices in South Surrey, Richmond, Burnaby and Vancouver.
The notice of hearing names six additional people allegedly appointed by Lim and Low as directors of related companies in the FS insurance group that also sold the unsecured loans.
Lim and Low are also alleged to have violated the BC Securities Act by “continuing to trade and sell securities after making a legal promise… that they would stop.”