After being accused of professional misconduct by B.C. Law Society earlier this month, Richmond real estate lawyer and mayoral candidate Hong Guo is now being sued by two Chinese investors over $13 million dispute.
Chinese investors claim they are $13 million out of pocket after a $40 million Richmond development deal, involving Guo, turned sour.
Qing Yan and his wife Kaiming Yu are suing fellow investors Zhongping Xu and his wife Xiaohong Liu, real estate lawyer Guo and three other companies, after pulling out of a joint agreement to develop a 4.6-acre high-density, residential area at Minoru Boulevard and Lansdowne Road.
Back in 2013, Yan and Yu, living in Hubei, China, met Guo who assisted them with their Canadian immigration application.
Guo subsequently introduced the couple to Zhongping Xu and his wife, who “advised Mr. Yan that he was looking for an investor to participate in a high-density mixed-use commercial and residential development project in the Richmond Minoru Blvd area,” according to a lawsuit filed at the Supreme Court of B.C.
Soon after that, the plaintiffs and the Xu couple entred into a joint agreement to develop the land, which would require an investment of $40 million, under the name of a company called Vancouver Soho.
According to the agreement, the company would receive $20 million from a financial institution, the Xu couple would invest $12 million for a 60 per cent ownership in Vancouver Soho, and Yan and his wife would invest $8 million for a 40 per cent ownership.
Later, the Xu couple required a $4 million “short-term loan” from Yan and his wife and agreed to pay three per cent monthly interest “through an oral agreement,” according to the lawsuit.
In the process, Guo provided Yan and his wife, neither of whom are fluent in English, with legal advice, and also represented the Xu couple and Vancouver Soho, according to Glen Forrester, of Forrester & Company Barristers, on behalf of Yan and Yu.
“All of these companies had divergent and often conflicting legal interests, and by normal legal standards should have been represented by separate counsel,” he added.
“All of these companies had divergent and often conflicting legal interests, and by normal legal standards should have been represented by separate counsel.”
Things started to hit the fan at the end of 2014, when Yan and his wife claimed that they didn’t receive the repayment Xu had promised, and the project was not moving forward. Being in financial distress, they decided to pull out of the project.
In the summer of 2015, Guo located a company called 1032821 BC Ltd.(1032), which agreed to purchase the plaintiffs’ shares, and the debts the Xu couple owed to Yan and his wife, for $14 million, in exchange for a 60 per cent share in Vancouver Soho, according to the lawsuit.
“1032821 BC Ltd. was incorporated by Ms. Guo, and also appears to have received legal advice from her in respect to an agreement to purchase shares in Vancouver Soho,” said Forrester.
However, Yan claims that he and his wife have only received $1 million from 1032 ever since, and according to a Share Transfer Agreement, they were entitled to reclaim the shares if 1032 failed to pay.
“Ms. Guo then proceeded to transfer and deliver shares to 1032821 BC Ltd., in breach of various agreements,” said Forrester.
“As a result, Mr. Yan and Mrs. Yu presently have lost all of their shares, which are in the name and apparently in the possession of 1032821 BC Ltd.
“Ms. Guo subsequently advised Mr. Yan and Mrs. Yu that they were unable to reclaim their shares in Vancouver Soho, and that their shares in Vancouver Soho now belonged to 1032821 BC Ltd., despite their not having received payment for their shares.”
“Ms. Guo subsequently advised Mr. Yan and Mrs. Yu that they were unable to reclaim their shares...despite their not having received payment for their shares.”
The allegations have not been proven in court.
In 1032’s response to the lawsuit, the company claims it “was made aware of the fact that Ms. Yu was encountering financial distress. As such, Ms. Yu requested that the defendant (1032) immediately pay to her $1 million as payment for Yu’s 40 per cent shares in Vancouver Soho,” which are worth $8 million.
But Forrester said neither Yan nor Yu ever met anyone from 1032, and “in fact Ms. Guo and Mr. Xu acted as their go-betweens in all negotiations with the company.”
1032 didn’t explain the other $5 million that Yan and Yu accused it of failing to pay in its response.
According to the lawsuit, Yan and his wife even “suspected that 1032 was controlled by the Xu couple and Ms. Guo,” but this was denied by 1032.
Guo was required by law to file a defence to the civil claim by July 18 but she has not responded to date. She also hasn’t responded to the Richmond News’ interview request.
Yan said a hearing will take place on Oct. 30.