U.S. alleges Metro Vancouver homes were part of scheme to launder money embezzled in China

 

A condo and a house were bought outright in Richmond and White Rock, then mortgaged for $1.1 million

 

BY JEFF LEE, VANCOUVER SUN MARCH 28, 2015

 

 

Qiao Jianjun, former director of the state company that manages China’s grain reserves in Henan province, is being prosecuted for money laundering and immigration fraud in the U.S., the first case of this type. He is on the run.

In early 2012, a few months after she left China for a new life as an immigrant investor in the United States, Shi Lan Zhao flew to Metro Vancouver, bought a numbered B.C. company and began searching for properties in which to invest.

Flush with money that she and her ex-husband, Jianjun Qiao, had moved from China through banks in China, Hong Kong and Canada, Zhao first bought a Richmond condo, paying for it outright. A few months later, on a return trip, she bought a five-bedroom White Rock home, also paying for it outright.

Zhao, 51, moved easily between B.C. and her home outside Bellevue in Washington state, making at least 20 trips since 2011. She became familiar to real estate agents and people at the Vancouver company that managed her properties and the banks where she and Qiao kept accounts.

But U.S. and Chinese investigators now suspect the money for the Metro homes purchases came from an embezzlement scheme that was just one part of a massive corruption and bribery operation that nearly crippled the China Grain Reserves Corporation, also known as Sinograin.

From 1998 until mid-2011, Qiao, also 51, was director of Sinograin’s Zhoukou Municipal Grain Reserve in Henan province. After he disappeared, officials discovered what they allege was a bribery and corruption program that in Henan alone involved more than 110 officials and the misappropriation of $114 million US. Qiao was accused of embezzling $50 million and spiriting much of it through a number of bank accounts with fictitious names. His boss, Li Changxuan, the chairman of Sinograin’s Henan branch, was convicted in China of accepting $2.3 million in bribes and was sentenced to life in prison.

Chinese media reports indicate that a Henan court found that, between June 2009 and July 2011, Qiao had allegedly “colluded with grain businessmen” in the offering of bribes worth 237 million Yuan, or $39 million. The report said the scheme involved the under-measuring of grain at a number of Sinograin’s Henan depots.

Earlier this month, Chinese prosecutors, acting as part of the anti-corruption crackdown launched by Chinese President Xi Jinping, gave the U.S. State Department a “priority list” of list of 150 people it wanted help in finding and in repatriating monies they allegedly embezzled. It is not known if Qiao and Zhao are on that list, but the Sinograin scandal was a major embarrassment to the Chinese government.

U.S. authorities now allege Qiao and Zhao had long planned to enter the U.S. as husband and wife immigrant investors, even though they apparently divorced nearly a decade earlier, a status that would have made them ineligible under American rules.

On March 17, a grand jury indictment in U.S. District Court in Los Angeles was unsealed that charged Qiao and Zhao with three counts of money laundering and immigration fraud, based partly on information from Chinese investigators.

Zhao was arrested at her home in Newcastle, just outside of Bellevue. Qiao has not been found, and investigators believe he has fled to the Caribbean. Zhao remains in jail pending an application to return her to Los Angeles. The U.S. government is considering deporting her to China, but her lawyer, Kirk Davis, opposes the move, saying she fears she will be arrested and tortured to reveal the whereabouts of her ex-husband.

U.S. authorities allege that Zhao and Qiao started their quest for U.S. residency in 2008 under the popular EB-5 immigrant investor program. It required her to invest at least $500,000 in a company that could support 10 employees. In her application, Zhao said the money for her investment came from ownership in two flour companies.

The couple arrived in 2009, but Qiao, at least, appeared to move back and forth between the U.S. and Zhoukou city in Henan, where he was considered such a rising star that he was given a top entrepreneur award for management innovation. They have two sons, one studying at a college in Toronto, the other a teenager in Newcastle.

Authorities allege that in the summer of 2011, shortly after they qualified for U.S. green cards, Qiao and Zhao began surreptitiously using accomplices to transfer millions of dollars into bank accounts in Wenzhou city, Hong Kong and Canada. At least two Canadian banks were used, HSBC Canada and the Royal Bank of Canada.

Zhao recently put the White Rock property up for sale for $689,000. Paulo Leung, a real estate agent with Regent Park Realty, said he had also sold the property to her in 2012 as an investment. He declined to say more. Both properties are being managed by Vancouver-based Chartell Properties. A receptionist there said they knew Zhao.

A search of property and title records conducted by The Vancouver Sun show that Zhao’s numbered company bought the properties outright. However, a few months later, it took out mortgages on both, totalling $1.1 million, that represented almost their entire market value. According to the U.S. indictment, a few weeks later Zhao and Qiao took money from their Canadian RBC account to pay for a Bellevue home.

Officials for the RCMP and Citizenship and Immigration Canada said they did not know if their departments assisted U.S. and Chinese investigators, and could not comment if they did.