Two Charlottetown hoteliers have been charged with helping set up fake addresses for Chinese immigrants who entered Prince Edward Island under a business program that has been criticized for lax oversight.

Siblings Ping Zhong and Yi Zhong allegedly counselled business immigrants seeking permanent residency to provide residential addresses in P.E.I. though they didn't really live there, as required under the province's immigration system.

The Canada Border Services Agency says 566 immigrants used the same addresses between 2008 and 2015 — the siblings' Sherwood Motel and Ping Zhong's Charlottetown home. Nearly all were granted permanent residency.

Seven cases were chosen for prosecution, said Colin Murchison, a CBSA director of investigations in an interview Tuesday.

The CBSA charged Ping Zhong, 60, with three counts of aiding and abetting misrepresentation under the Immigration and Refugee Protection Act, and five counts against her 58-year-old brother.

"That doesn't mean that we wouldn't ever lay other charges depending on what new evidence presents itself," Murchison said in a telephone interview.

Choosing more luxurious accommodations

Nine thick files of search warrants contain investigators' descriptions of how they monitored the immigrants being picked up at the Charlottetown airport.

One officer said she observed the would-be business immigrants from China spending about 10 minutes at the motel during a three-day visit to the Island capital.

The visit to the Sherwood Motel was to make arrangements for the forwarding of correspondence. - CBSA agent

In some cases, they quickly were shuttled to the five-star Delta hotel to spend their nights on the Island, she wrote.

She states: "I have reasonable grounds to believe that ... the visit to the Sherwood Motel was to make arrangements for the forwarding of correspondence and cards that will be sent by Citizenship and Immigration Canada to the motel while they [the immigrants] return to China."

Ping Zhong, reached on her cellular telephone, declined comment, saying she had hired a defence lawyer. A receptionist at the hotel said Yi Zhong was travelling and unavailable for comment.

Approval under PNP program

The search warrant says that Ping Zhong came to the Island and became a permanent resident in 1991, and a citizen in 1995, while her brother Yi Zhong entered Canada in 2007 under the P.E.I. provincial nominee program, and has not obtained citizenship yet.

Despite the alleged irregularities being noted by federal agents, the search warrants says 99 per cent of the people listing the hotel as their residency "were approved permanent residents under the P.E.I. provincial nominee (PNP) program."

The provincial nominee program has already come under public scrutiny for a poor record of retaining immigrants on the Island, while the province has been reaping millions of dollars in forfeited deposits from the immigrants for failing to comply with conditions of the program.

Under the program, applicants provide the Island government with a $200,000 deposit, and commit to invest $150,000 and manage a firm that incurs at least $75,000 in operating costs.

They also commit to live on the Island while running the business, though they're permitted to be out of the country for as much as half of the year while they operate the business.

After the deal is signed, the province nominates the investor to the federal Immigration Department as a permanent resident.

Promised businesses not opening

The province recently confirmed that two thirds of the PNP businesses in 2016-17, a total of 177 people, didn't receive a refund for the business portion of their deposit, with the majority simply never opening a business.

A spokesman for the province's Office of Immigration wasn't immediately available for comment.

However, Chris Palmer, the minister of economic development, said in the legislature that only 17 of the people claiming to stay at the hotel were planning to reside in the province.

Few of those claiming the Sherwood Inn and Motel as a residence intended to stay on P.E.I., says Economic Development Minister Chris Palmer. (Province of P.E.I.)

"Those 583 were not applications to P.E.I. and we would have no knowledge of those coming to P.E.I. It was an address they used for an application going to a different province," he said in the legislature.

Murchison said there is the possibility of administrative actions, like the revocation of permanent residency status, being taken if CBSA's regulatory branch determines there were breaches of the rules by the immigrants involved.

'A little lax in drilling down for the truth'

Richard Kurland, an immigration lawyer who frequently comments on immigration policy, said the criminal case is being watched nationally and is raising alarm bells.

Similar prosecutions in other provinces resulted in hundreds of administrative cases being opened, he said.

"Even though seven criminal charges may be laid, administratively hundreds of cases can be opened to see about revoking [immigration] status," he said in a telephone interview.

The charges could lead to hundreds of cases being opened administratively, says Richard Kurland. (The Canadian Press/Darryl Dyck )

"It's very unpleasant for the families, very unpleasant for the province. It's something that shouldn't have happened ... It seems the province may have been a little lax in drilling down for the truth regarding the content of provincial nominee program applications."

Kurland has argued that the federal immigration minister should have acted to reduce the quotas being permitted under the provincial nominee program until there was evidence the province had more vigorous enforcement of its own rules.

The case will be prosecuted by a federal lawyer in Charlottetown provincial court; the maximum sentence is a fine of $100,000 and imprisonment of five years. There is no minimum sentence.

Arraignment of the Zhongs is set for June 11.

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