Vancouver’s runaway housing prices have long been blamed on foreign money. But a recently concluded BC supreme case reveals that the impact of foreign money has been amplified by mortgage fraud.
Meet wealthy businessman Jian Guo Wang who moved to Canada from China with his wife Fei Fei Wu to give their daughter Yi Meng Wang AKA Sharon a good education1. Mr Wang doesn’t work in Canada and makes all his money in China.
 The Claimant, Jian Guo Wang is a wealthy, self-made man. He got his start as a young man studying machinery, and now with a few partners, runs a successful manufacturing company in China. Mr. Wang is also an astute investor.
 In 2002, Mr. Wang and his wife Fei Fei Wu (“Ms. Wu”) immigrated to Canada so that their daughter, Sharon could have a good education.
 Mr. Wang and Ms. Wu initially settled in Richmond. Later, they purchased a home on West 21st Avenue in Vancouver.
 After completing high school, Sharon studied economics at Western University in Ontario, and later transferred to Simon Fraser University to complete her studies. During this time, and for a considerable time thereafter, Sharon was supported by her parents.
 Mr. Wang does not work in Canada. Rather, he has supported his family through his income in China and he divides his time between China and Canada.
Sharon meets and marries Jun Cheng Jiang AKA John, who came to Canada from China with his parents as refugees “because they did not have the financial holdings to justify being investors or entrepreneurs.”
 However, Ms. Jiang acknowledges that she and Mr. Jiang came to Canada as refugees because they did not have the financial holdings to justify being investors or entrepreneurs. She also acknowledged during cross-examination by Sharon’s counsel that, at discovery, she made no mention of having any substantial assets. No contemporaneous loan documents have been produced by Ms. Jiang or John.
According to the version of events accepted by the courts, Mr. Wang wanted to “get into the real estate market in Vancouver” and decided to buy 2772 West 20th Avene Vancouver, because, among other things, “Mr. Wang liked how close West 20th was to his home on West 21st Avenue”.
 After a search that involved viewings of 20 or 30 houses, Mr. Wang, who was looking to get into the real estate market in Vancouver, eventually found West 20th. Among other things, Mr. Wang liked how close West 20th was to his home on West 21st Avenue. Mr. Wang also thought that West 20th was good value. While the home’s exterior was not particularly attractive, the owners had spent over $200,000 on the home’s interior. Mr. Wang decided to purchase West 20th.
The property, which cost $2,123,000, was bought in John and Sharon’s name with $850,000 provided by Mr. Wang, and the rest financed by a mortgage that John and Sharon assumed.
How did John qualify for the mortgage?
 In his application to CIBC to assume the vendor’s mortgage, John provided various financial information about himself. That information included:
(a) He was then working for Westin International Trading Inc., and had been since March 16, 2009, and that he was earning $18,750 per month;
(b) Sharon was then working at Mr. Zhang Enterprises Inc. and had been since January 6, 2010, as office manager and bookkeeper, earning $4,000 per month;
(c) John owned a Mercedes worth $95,000; and
(d) In addition to the value of West 20th, which he listed as $2,123,000, John had $850,000 of his own funds in a bank account.
 According to the Claimant, none of that information was true:
(a) By this time John had already started WIT [Wingsum International Trading Inc., which will be dealt with in more detail in the matrimonial action], and had ceased working for Westin. Also, according to his own evidence at trial, John was not earning anywhere close to $18,750 per month, rather, as he said during his evidence in chief and confirmed during cross-examination, he was earning a little over $3,000 per month.
(b) Sharon never worked at any business called Mr. Zhang Enterprises Inc. In 2012, she was still a student, and was not working at all. At trial, John confirmed that Mr. Zhang was one of his customers.
(c) John did not own any Mercedes. Ms. Wu owned a Mercedes, which Sharon used from time to time.
(d) John did not have $850,000 of his own funds, in addition to the value of West 20th. Rather, John had $850,000 of Mr. Wang’s money which was required in order to complete the purchase of West 20th.
Mr Wang and John both were both interested in real estate, so they decided to buy 7371 Sunnymede Crescent, Richmond, this time in John’s mother Ms. Jiang’s name.
How did Ms. Jiang qualify for the mortgage?
 By this point, Mr. Wang had not agreed to the terms of the agreement. Without Mr. Wang’s money, Ms. Jiang had no way to independently qualify for a mortgage.
 I accept that the evidence of the following transactions shows that John and Ms. Jiang transferred various funds into Ms. Jiang’s own account, for the purpose of fraudulently representing Ms. Jiang’s net worth to Scotiabank.
 On January 17, 2014, John and Ms. Jiang transferred $97,448.10 from their joint account into Ms. Jiang’s account. During her cross-examination, Ms. Jiang, when asked about the source of this deposit at discovery, acknowledged that she did not know where the funds came from.
 That same day, John transferred $450,000 from WIT’s account into Ms. Jiang’s account. At trial, Ms. Jiang claimed that she had asked John to “repay” this money to her and that John told her “this is how much I can repay” but added that John told her she would have to give the money back to him, a factor she had not mentioned at discovery.
 On January 20, 2014, according to bank documents produced by Ms. Jiang, there were three further transactions, a deposit of $10,000, a deposit of $529.20 and a withdrawal of $1,000. After these transactions were carried out, Ms. Jiang’s account had a balance of $573,407.49.
 This is the same sum – $573,407 – that Ms. Jiang set out in the “Asset” section of her Scotiabank mortgage application.
 At trial, John agreed that he gave his mother a temporary loan of the $450,000 so the bank could be fooled, and that he then took it right back again. Otherwise, John denied that he had helped his mother with the mortgage application. However, Ms. Jiang acknowledged on discovery that John was helping her.
This is not an isolated case. A number of BC Supreme Court cases, including Fu v Zhu2, have shown how foreign money has been leveraged to buy speculators using mortgage fraud, often with the connivance of realtors and mortgage brokers.
Warren Buffet famously said that “It’s only when the tide goes out that you learn who has been swimming naked.”
As property prices continue to fall in Metro Vancouver and foreclosure actions pile up in Metro Vancouver, we’re likely to see more and more cases of mortgage fraud in court proceedings.