Lawyer Yvonne Hsu, a former member of Liberal MP Joe Peschisolido’s law firm, has been cited by the Law Society of British Columbia for alleged incompetence and engaging “in activities that [she] ought to have known assisted in or encouraged dishonesty or fraud.”

The citation is in relation to a fraud case whereby investor Paul Oei managed to siphon money out of Peschisolido and Co. trust accounts for his personal use.

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Oei, who in 2017 was found by the B.C. Securities Commission (BCSC) to have committed a $5-million fraud against prospective Chinese immigrant investors, has alleged he was provided bad legal and financial advice from the firm for the way in which the investment was structured (although this did not excuse him from committing the fraud by misappropriating the funds).

Exactly how Oei structured shares in Cascade Renewables is difficult to explain, noted the BCSC panel’s decision against Oei, considering the investment documents, purportedly prepared by Hsu and given to investors, are “nearly indecipherable from a legal perspective.”

The society is claiming several matters against Hsu, who did not respond to Glacier Media’s request for comment.

Among the claims is the allegation Hsu failed to “acquire and apply relevant knowledge or skills of securities law and regulatory requirements.”

This includes her apparent failure to obtain information regarding exemptions to regulatory requirements. For instance, Oei, who was not registered to issue securities, claimed many investors were accredited and hence could have been exempt from reporting requirements.

Hsu is said to have failed to make reasonable inquiries from her clients (Oei and his companies) to prepare documents for issuing securities in compliance with the regulatory requirements.

Hsu, it is alleged, “made changes to disclosure documents used to solicit funds from investors (the ‘Disclosure Documents’) requested by your client [Paul Oei], including the removal of information regarding commissions payable to [Paul Oei].”

She also ensured investors would not acquire direct shares of the company they thought they were investing in. Rather they were issued shares in Oei’s numbered companies, noted the society’s citation.

The society claims Hsu allowed trust accounts to be used to receive and disburse investor funds. Furthermore, she didn’t make reasonable inquiries into whether Oei was registered to sell securities.

There was also found to be “significant differences among versions of Disclosure Documents given to investors.”

The citation claims Hsu’s troublesome legal work occurred between May 2009 and February 2014.

Hsu has since moved her practice to Hsu Law Office in Surrey.

She was called to the B.C. Bar in 2004 after graduating from the University of B.C.

Hsu claims to practise in the areas of corporate commercial, family, wills and estates, real estate and immigration.

Allegations against Hsu are unproven by the society, a semi-judicial body. She will face a hearing in the near future.

Meanwhile, Peschisolido has wrapped up Peschisolido and Co. and ceased to be a member of the Law Society of B.C.

The fraud case has led to back and forth allegations, via civil suits, between his firm and investors.