Richmond luxury car detailer ordered to pay back $240,000

The owner of a luxury car detailing business in Richmond has been ordered by a judge to pay back $240,000, plus interest and costs, to an unwitting investor.

Zhi Yuan Li, the owner of Morecan Auto Spa, Morecan Auto Detailing and Morecan Auto Group Corp – which used to operate out of a unit on Minoru Boulevard at Lansdowne Road – was sued by Zi Hao Zhou for “fraudulent misrepresentation and breach of fiduciary duty.”

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In a B.C. Supreme Court judgement released last month, Justice Barbara Norell pointed out that, prior to the $240,000 being handed over for a 35 per cent stake, Li falsely claimed to Zhou that he had invested $700,000 in his firm.

“I find Mr. Zhou would not have invested $240,000 for a 35% interest in Morecan if he had been told the true information, which was that Mr. Li’s investment was either in the range of $250,000 or even up to $430,000, which is what Mr. Li has pleaded in his response to civil claim,” said the judge.

Morecan Autospa, which used to operate out of Minoru Boulevard and Lansdowne Road. Google Maps

Not long after Zhou, 26, bought the 35,000 shares, the company closed.

Court documents detail how Zhou came to Canada in 2008 and, after attending high school and Douglas College, he worked as a realtor’s assistant from 2014 to 2015.

He met Li through a mutual friend during that time and was ultimately offered the 35 per cent stake in Li’s auto detailing business.

Despite having little business acumen, experience or knowledge of the industry, he paid the $240,000 and, according to court files, didn’t even ask for any documents or to review any company financials, saying that he trusted what Li told him.

Court documents indicate that Zhou expected a $5,000 return from his investment at the end of every month, but didn’t receive anything.

He then discovered in early July 2016, when asked to go to the bank to withdraw money for employee payroll, that the company had insufficient funds.

It later became apparent from company bank statements that purchases had been made from the account at high-end department store Holt Renfrew.

An employee of the company testified in court that he was often paid late, if at all, and that Li would post pictures on social media to make the business look busy, when it was not.

The employee added that customers often paid Li in cash, which didn’t make it into the company’s account.

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