Former PI Financial owner Gary Ng charged with fraud and money laundering

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Gary Ng, the entrepreneur who took Canada’s asset management industry by storm with a highly publicized acquisition spree that came crashing down amid allegations of forgery, has been charged criminally by the RCMP.

Mr. Ng, the former owner of PI Financial Corp. and a former co-owner of Bridging Finance Inc., was charged in late January by the Mounties’ Integrated Market Enforcement Team (IMET), with one count of fraud over $5,000 and one count of laundering the proceeds of crime.

In an e-mailed statement, Mr. Ng’s defence lawyer, Christi Hunter, said Mr. Ng denies the criminal allegations against him “and intends to fully defend himself through the criminal process.”

The RCMP’s charges were not made public at the time they were laid, but in an e-mailed statement, the Mounties confirmed they charged Mr. Ng on Jan. 31 and that he surrendered on Feb. 7. He was released and his first court appearance is set for March 25 in Toronto.

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In the e-mailed statement, the RCMP said the fraud charge stems from its investigation into allegations that Mr. Ng secured loans using falsified collateral, and the money laundering charge stems from the uses of the loans that Mr. Ng obtained.

The RCMP’s charges follow two recent high-profile investigations by Canadian regulators in which Mr. Ng played central roles.

The first of those, launched by the Investment Industry Regulatory Organization of Canada (IIROC), alleged Mr. Ng used fabricated investment account statements to inflate his personal net worth and persuade lenders to provide him with $172-million in loans.

A large portion of that debt was used to finance Mr. Ng’s purchase of several investment advisory firms, the most significant of which was his 2018 acquisition of PI. Mr. Ng paid $100-million in an all-cash deal to acquire the Vancouver-based dealer, which offers investment banking and wealth management services and had $4.5-billion in assets under management at the time.

PI is now under the control of Miami-based HIG Capital and Vancouver-based RCM Capital, two of the lenders that financed Mr. Ng’s purchase based on allegedly forged documents.

IIROC’s enforcement hearing against Mr. Ng is scheduled to be heard in Vancouver from May 9 to May 20. He has not appeared at any of the regulator’s previous hearings, either in person or through a legal representative.

The regulator also alleges Mr. Ng supplied falsified collateral when buying a 50-per-cent stake in private debt manager Bridging Finance in the summer of 2019, and his purchase landed Bridging in hot water with a different regulator, the Ontario Securities Commission.

Around the time of this $50-million purchase – which provided a non-controlling interest in Bridging – Mr. Ng likened himself in media interviews to an “admiral” amassing a “fleet” of financial firms. Although Bridging is alleged to have been a victim of the fabricated account statements at the heart of IIROC’S case, Bridging also lent Mr. Ng’s companies more than $131-million. These loans are now part of a broader investigation into Bridging by the OSC.

Bridging was placed under the control of a court-appointed receiver in April, 2021, and the OSC has cited Bridging’s loans to Mr. Ng as part of an alleged pattern of self-dealing by some Bridging officers and executives.

In court filings, the OSC faulted Bridging for not disclosing to its 26,000 investors that it was lending to Mr. Ng at the same it was “engaged in discussions for Ng to acquire a significant interest” in Bridging itself.

For its part, Bridging has pointed out that, when the allegations of falsified collateral came to light in early 2020, Bridging’s owners – Jenny Coco and Natasha Sharpe – personally started repaying Bridging investors for the bad loans as part of a deal to buy back Mr. Ng’s $50-million stake in Bridging for $5.

In its most recent report to the court, PricewaterhouseCoopers LLP, the receiver that now controls Bridging, also highlighted Bridging’s lack of disclosure to investors with respect to a different aspect of its relationship with Mr. Ng.

PwC alleges in its report that in July, 2020, Bridging entered into a settlement agreement that provided Mr. Ng with a covenant not to sue him. PwC says this covenant could hinder investor recovery efforts and that the “amounts owing under the Ng loans may be rendered uncollectible.”

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