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Legislative Office:

Room 201, Parliament Buildings


Victoria, BC V8V 1X4
Phone: 250 387-3655
Fax: 250 387-4680
Community Office:
2909 West Broadway
Vancou er, BC V6K 2G6
Phone: 604 660-1297
Fax: 604 660-0862

Province of

British Columbia
Legislative Assembly

e-mail: David.Eby.IVlLA leg.bc.ca


www.davidebymla.ca

I
David Eby, MLA
(Vancouver-Point Grey)

Chief Adam Palmer


Vancouver Police Department

2120 Cambie St.


Vancouver, B.C.

V5Z4N6
VIA FAX: (604) 665 3417
12 April 2016

Dear Chief Palmer:


Re: Request for investigation - New Coast Realty alleged organized fraud
My name is David Eby and I write to you in my role as MLA for Vancouver Point Grey. I have received a
number of complaints from constituency members concerning the activities of a residential real estate
firm that is active in Vancouver called New Coast Realty.
This past weekend, those allegations escalated to include allegations that the owner of New Coast
Realty trains real estate agents at the firm to engage in a cooperative, coordinated, organized fraud of
New Coast Realty clients on a large scale. The allegations come from an audio recording of a training
session of New Coast real estate agents allegedly held by the owner of the company named Ze Yu Wu.

The details of the allegations were published in the Globe and Mail on 8 April 2016.1
The online version of the article includes the full, raw audio recording of the alleged training session
which appears to have been confirmed as real by the lawyer for Mr. Wu and New Coast in the relevant
article. The raw audio recording is available online here. I note that it is conducted in Mandarin:
http://beta.ima es.theglobeandmail.com/static/interactive/audio/20151014 2.mp3
I am writing to you in part because there is no other agency or remedy available to investigate or
prosecute this alleged fraud. Mr. Wu is not a realtor, so the provincial law that applies to realtors in
British Columbia does not apply to him. As a result, the provincial watchdog Real Estate Council has no
jurisdiction over Mr. Wu s conduct.

11 http://www.theglobeandmail.com/news/investigations/inside-a-fast-growing-bc-firm-that-has-home-sellers-

cryin -foul/article29578417/

Unfortunately, civil litigation is not available for any defrauded parties. Due to the nature of the frauds
alleged, if New Coast clients were fraudulently deceived by their realtors under the direction of Mr. Wu,
those clients are unlikely to know that they have been the victims of fraud. A person who does not know
that he or she has been victimized will not be reporting the matter to police or filing a Statement of
Claim in BC Supreme Court in order to be made whole.

False information to clients about the worth of their home to facilitate additional commissions

The audio recording released by the Globe and Mail allegedly consists of the owner of New Coast Realty
instructing a group of realtors attending a training session at the agency s offices. Among the directions
he allegedly gives to his realtors, are directions to advise clients that their home is worth less than it
actually is in order to induce the client to sell for a lower than market price. He allegedly provides
specifics, including instructing his realtors to print out the lowest value sales in the neighbourhood, to
emphasize deficiencies in the home, and to tell a client to accept the first offer for a home, in order to
achieve this alleged goal of a low selling price for a given client.
The Globe and Mail reports that several agents who have left New Coast alleged that the motive for
deceiving clients about the price of the home is to sell client properties quickly to investors or
speculators, who are also New Coast clients, giving the firm a second commission. The firm then solicits

those investor buyers to hire New Coast again to flip the properties for higher prices and a third
commission. By coercing the first client to sell at a low price through fraud, a single sale and a single
commission could become three separate commissions. In addition, allegations in the article include
that New Coast has its own investment arm that acts as buyer in some instances so that New Coast

directly profits from the lift in price from the original sale to the final sale.
Real Estate agent John Zhu, who used to work for New Coast Realty but no longer does, made the
following allegation in the article: Sometimes the owner wanted us to do something illegal to make
more money.

In particular, the following translated quotes are attributed to Mr. Wu by the Globe and Mail as
strategies to depress an original seller s price. These instructions were allegedly given during the training
session and captured on the audio recording:
It is only a saying to the homeowner, but actually, it's not true. The first offer will never be the
best offer, I am sure about this. But you have to say the first offer is the best offer.
You must print out the lowest prices in the neighbourhood to show to the homeowner. It is
very critical to print out low sale prices in the neighbourhood.
If it's a house by the road, say don't buy a house by the road next time; if there is a ditch in
front of the house, say don't buy a house behind a ditch or electricity pole next time; if the
house is quite narrow, say don't buy a narrow house next time, it doesn't look grand.

False information to selling clients about the realtor s interest in a bonus for the buyer's agent
Mr. Wu also allegedly told the realtors in the training session that they could make more money on a

real estate sale by deceitfully telling the client to offer a bonus to the buying agent to get increased
interest from buying agents. The deceit is alleged because half of the bonus does not go to the buying
agent, but instead passes to the client's realtor without the knowledge of the client.

In particular, Mr. Wu allegedly instructed the attending realtors that they should tell their clients to

incent buying agents with a bonus of $10,000 to $50,000, which would then be divided without the
client s knowledge between the buying agent and the selling agent.
He allegedly encourages agents to consider restricting this kind of fraud on New Coast clients to sales
where a New Coast realtor is representing both the buyer and the seller, because otherwise it might not
be easy to arrange this kind of secret payment.
The quotes attributed to Mr. Wu are:
After adding the bonus for the buying agent, he allegedly advises New Coast realtors acting for

the seller to say to the buying agent: Sorry, you can have half [of the bonus] and I ll have the
other half.
At this time, if you are dealing with other companies, be careful with issues that could violate
the rules. If the other agent is from our team, it can be easily arranged, right? Bonus is so
awesome.

Law - Regulation of fraudulent activity of the type alleged here

The Canadian Criminal Code has several provisions that criminalize the type of fraud alleged in this
situation. The most applicable is the general anti-fraud provision found in section 380 of the Criminal
Code. The relevant subsections of section 380 read as follows:

380(1) Every one who by deceit, falsehood or other fraudulent means, whether or not it is a false
pretence within the meaning of this Act, defrauds the ublic or any person whether ascertained or not, of
any property, money, or valuable security or any service...
Fraud in excess of $5,000 under this section is punishable as an indictable offence. Property is defined in
section 2 of the Criminal Code as including real and personal property of every description .
Fraud must be accomplished by deceit, falsehood or other fraudulent means, and the individual charged
must have the intent to defraud. The section's description of "other fraudulent means includes,
according to Martin's and the Quebec Court of Appeal, remaining silent or omitting information where
that omission hides from the other person fundamental and essential omission that, in being hidden,
would mislead a reasonable person.2

Martin's Criminal Code lists the classic [judicial] definition of fraud as follows, from 1903: "To defraud
is to deprive by deceit: it is by deceit to induce a man to act to his injury. More tersely it may be put,
that to deceive is by falsehood to induce a state of mind; to defraud is by deceit to induce a course of
action. 3

Martin's also includes a moderately more recent decision from the Ontario Court of Appeal in R. v.
Kribbs in 1967 which expands the offence to include a situation where an accused is procuring a third

2 Rv. Emond (1997), 117 C.C.C. (3d) 275 (Que. C.A.), leave to appeal to S.C.C. refused 117 C.C.c. (3d) vi.

3 London & Globe Finance Carp. Ltd. (Re), [1903] 1 Ch. 728 at pp. 732-3.

person to put him [the third person] in a position to take money to which the complainant would be
otherwise entitled... 4

If an individual encourages or incites another person to commit fraud, and that person does commit
fraud, the counsellor has committed the office of counselling an offence under section 22 of the
Criminal Code, making the counsellor a party to the offence that was committed.
In this situation, it is important to note an attempted" fraud in Canadian law is punished as the actual
offence itself. Section 24(1) of the Criminal Code creates an offence where:
Every one who, having an intent to commit an offence, does or omits to do

anything for the purpose of carrying out his intention is guilty of an attempt to
commit the offence...

Application of the law to the facts


The elements of the offence of Fraud are as follows:
1. By deceit, falsehood or other fraudulent means;
2. Defrauds any person whether ascertained or not;
3. Of any money.
Mr. Wu, in his training, allegedly tells his realtors to deceive their clients about the value of the client s

home (element 1), defrauding the clients through a sale for an artificially low price (element 2), costing
them money to which they are entitled (element 3).
His alleged instructions to the assembled realtors satisfy the classic common law definition of fraud if
they are carried out, and the fraud would be the same if the realtors stay silent about their knowledge
that the home is worth more than they say it is, or if the realtors say the first offer is the best offer when
they know it never is.
According to the decision in Kribbs, Mr. Wu s alleged activity is not any less fraudulent if Mr. Wu does

not benefit personally - by allegedly putting other New Coast Realty clients in the position of receiving
the benefit of the additional, actual value of a client s home, he would be allegedly procuring a third
person to put that person in the position to take money to which the original client was entitled had the
home been sold for its actual value.
Further, even if neither Mr. Wu, nor an intended third party beneficiary actually benefited, if a real
estate agent at New Coast commits a fraud as they were allegedly counselled to do by Mr. Wu, Mr. Wu
would have completed all of the elements of counselling an offence.

This may all be academic, because it is alleged that Mr. Wu benefits directly through 50% of each
commission, and in some cases by allegedly participating in the first purchase as the buyer through a
corporate vehicle, so reliance on Kribbs or the counselling offence may not necessary.

R v. Kribbs, [1968] 1 C.C.C. 345.

Although his alleged instructions satisfy the classic definition of fraud if they were carried out, Mr. Wu s
alleged instructions to his realtors need not be carried out in order for him to have allegedly committed
the offence of Attempted Fraud.
if he has, in fact, instructed his realtors to carry out this activity, Mr. Wu satisfies the elements of

Attempted Fraud by fulfilling a step to carry out his intention to fraud the clients of New Coast Realty in
this manner. Attempted Fraud is punished in the same way as actual fraud in Canada under section
24(2). Flowever, it is important to note that section 24(2) may not be necessary, as two clients are

personally named in the Globe and Mail article alleging they were victims of this type of fraud by New
Coast.

All of the law that applies to deceiving a client about the value of his or her home applies with equal or
greater force to deceiving a client about a $10,000 to $50,000 bonus described as a bonus for a buying
agent which in fact is paid in large part to the client s realtor. If he in fact instructed his realtors to
deceive a client about the necessity of such a bonus, and about the fact that half of the money of the
bonus would actually go to the client s real estate agent, Mr. Wu would be attempting to commit fraud
on New Coast clients for at least the amount of money that passes without the client's knowledge to the
client's realtor.

Request for investigation

I respectfully request that you obtain the audio recording collected by the Globe and Mail, interview the
individuals named in the story as complainants, and investigate this very serious matter. If these
allegations are accurate, the significance of Mr. Wu's conduct would be profound - New Coast Realty
has 445 realtors associated with his firm, and it is reasonable to assume he was involved in some way in
training all of them.
Thank you in advance for your consideration.
Yours truly,

David Eby
MLA, Vancouver Point Grey