BCSC alleges fraud and illegal distribution against two B.C. residents and purported pharmaceutical company

VANCOUVER, Jan. 29, 2016 /CNW/ - The Executive Director of the British Columbia Securities Commission (BCSC) has issued a notice of hearing against Winter Huang (a.k.a. Dong Huang), Vicky Dancho (a.k.a. Ju Huang) and two B.C. incorporated companies alleging that they perpetrated fraud and distributed securities illegally.

The notice states that Huang was a B.C. resident and a director and controlling mind of Pegasus Pharmaceuticals Group Inc. and Careseng Cancer Institute Inc. Dancho is Huang's sister and resides in Richmond, B.C. Dancho was a director, the CEO, and the President of Careseng Cancer. None of the respondents have ever been registered in B.C. under any capacity.

BCSC staff alleges that between April 2008 and August 2012, Pegasus Pharmaceuticals raised approximately USD$65 million by issuing approximately 1,800 Pegasus Pharmaceuticals bonds in 11 series to investors in Taiwan, purportedly for different business projects under its control. Each bond consisted of an investment certificate and a promissory note. Huang signed the investment certificate and promissory note as Chairman and President of Pegasus Pharmaceuticals. Approximately 800 of the 1,800 promissory notes stated that Careseng Cancer guaranteed repayment of principal at maturity. Dancho signed these promissory notes as a director of the guarantor, Careseng Cancer. Staff maintains that approximately USD$56 million of these distributions breached securities laws concerning prospectus and registration requirements.

Huang is further alleged to have committed fraud by signing promissory notes, guaranteed by Careseng Cancer, on behalf of Pegasus Pharmaceuticals. Dancho is alleged to have committed fraud by signing promissory notes totaling approximately $36.4 million on behalf of Careseng Cancer. Staff contends that Huang and Dancho knew, or ought to have known, that these guarantees were false as Careseng Cancer had no operations, no employees, no revenue, and less than USD $50,000 in assets.

Staff also alleges that between January 2011 and August 2012, Pegasus Pharmaceuticals fraudulently raised approximately USD$15.4 million by selling bonds purportedly for projects in the Republic of Georgia, and USD$11.1 million by selling bonds purportedly related to a project in Dalian, China. Staff contends that only approximately USD $1.4 million was put towards the Georgian projects, and only approximately USD $560,000 was put towards the Dalian project. Instead, Pegasus Pharmaceuticals used the remaining investor funds to make payments to earlier investors, pay commissions to Pegasus Pharmaceuticals bonds sales agents, and for Pegasus Pharmaceuticals' operational costs unrelated to the projects. As director and controlling mind of Pegasus Pharmaceuticals, Huang is also alleged to have perpetrated fraud against investors.

The BCSC urges anyone who has invested with Pegasus Pharmaceuticals Group Inc.,  or has information about it or any of its associated companies, to contact the BCSC by email at [email protected].

BCSC staff acknowledges and appreciates the assistance provided by the Securities and Futures Bureau of Taiwan and the Securities and Futures Commission of Hong Kong during this investigation.

These allegations have not been proven. Counsel for the Executive Director will apply to set dates for a hearing into the allegations before a panel of commissioners on February 23, 2016 at 9:00am.

You may view the notice of hearing on our website www.bcsc.bc.ca by typing Pegasus Pharmaceuticals Group Inc., Careseng Cancer Institute Inc., Winter Huang (Dong Huang), Vicky Dancho (Ju Huang) or 2016 BCSECCOM 25 in the search box.  Information regarding disciplinary proceedings can be found in the Enforcement section of the BCSC website.

Please visit the Canadian Securities Administrators' Disciplined Persons List for information relating to persons disciplined by provincial securities regulators, the Investment Industry Regulatory Organization of Canada (IIROC) and the Mutual Fund Dealers Association (MFDA).

About the British Columbia Securities Commission (www.bcsc.bc.ca)

The British Columbia Securities Commission is the independent provincial government agency responsible for regulating capital markets in British Columbia through the administration of the Securities Act. Our mission is to protect and promote the public interest by fostering:

• A securities market that is fair and warrants public confidence
• A dynamic and competitive securities industry that provides investment opportunities and access to capital

SOURCE British Columbia Securities Commission

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