The results were sent to CRA bosses in the hope of triggering a major investigation of investor migration. “The thought process was that this factual info could shock local senior management and management in Ottawa of the gross misrepresentation of reported income by these very wealthy people,” the retired auditor said.
But few official audits were launched – and those that were resulted in drawn-out court battles with well-financed opponents. Because of the huge manpower required to audit unidentified global income – versus, say, a local Canadian business – tax recovery was minimal compared to the effort.
Auditors were keen to pursue immigrant investors as a matter of law enforcement and principle, but as a revenue raiser, bosses saw the project as a bust.
There was “not enough leadership or recognition of the magnitude of the non-compliance from top management … the screened files got swept under the carpet”.
In hollow vindication, the auditors’ suspicions would eventually be reflected in long-term tax data showing immigrant investors declaring, on average, refugee-level incomes in Canada.
Ten years after admission, a 2014 federal government evaluation showed, average annual income tax being paid by IIP breadwinners was C$1,400 (one-fifth that of the average taxpayer, and one-eighth that of skilled-worker immigrants). Their annual taxable income from all sources peaked at just C$19,500 three years after arrival, then defied the trend of all other immigrant classes by falling sharply, to C$15,800 after 10 years.
The failure for more than 30 years to systematically investigate the suspiciously low incomes endemic to wealth migration remains a source of regret among CRA staff: three current and former auditors helped the Post with its 2016 investigation.
“I spoke recently to a retired CRA real estate appraiser, who said ‘we missed the first wave in the ’90s, then the wave in the 2000s, now we have gone through another wave, and we still have no handle on it’,” said one of them. “You’d think we, or the politicians, would have it figured it by now.”
An associated phenomenon is the chronically low retention rate of IIP and QIIP, another tendency exploited by Wang and Pilzmaker.
Census and immigration data show more than 40 per cent of IIP principal applicants do not live in Canada; the true figure is likely higher, since it excludes people who deceptively claim physical residency. It is, nevertheless, the worst in-Canada retention rate among all immigrant classes.
Even lower are the in-province retention rates for the Quebec IIP. Only 10 per cent of the 58,000 QIIP immigrants still in Canada for the 2016 census were living in Quebec. Most of the rest lived in Vancouver.
A 30-year veteran of the Canadian immigration industry, now retired, said that low retention of millionaire migrants suggested illicit services like those provided by Wang would be commonplace.
“It’s the same pattern that’s been going on for 30 years now,” he said, drawing a direct line between Pilzmaker and Wang, both of whom were “fabricating indicia of presence in Canada when in fact [their clients] were not here”.
“It goes way, way, way back and it’s part of the same phenomenon that we see with Hong Kong and Taiwan and now mainland Chinese – mostly business immigrant – families, where the head of the family has no interest in immigrating to Canada at all. He wants to continue running his business in China, or wherever.”
This was not a specifically Chinese behaviour but was instead typical for the rich, with profitable businesses and high-paying jobs in their country of origin. “They are the ones with the incentive not to actually live in Canada,” the immigration expert said.
One such client of Wang, millionaire businessman Pi Long Sun, had only visited Canada twice since 2012. However, he continued to file his taxes in Canada, listing his entire worldwide income in 2015 as C$720 from Canada’s Universal Child Care Benefit.
“In that year [Wang and wife Ying Wang] paid for their children’s living expenses in Canada, university tuition at the University of British Columbia for [their eldest daughter], private school tuition for their youngest daughter, and C$61,000 cash for a Mercedes-Benz [for their eldest daughter],” said IRB panellist Pemberton, as he denied the couple’s appeal against exclusion last year.
The downside of this general phenomenon was not just the loss of tax revenue, and the compromised integrity of Canadian residency and citizenship, added the retired CRA auditor. “They do not report their income while taking full advantage of our social programmes and boosting the value of real estate,” he said.
Among Wang’s clients, 146 fraudulently claimed Canadian benefits meant for the working poor, investigators say.
These included Xiao Qing Li, who lost an appeal against exclusion in June 2017. She and her husband, a partner in a Beijing law firm, had returned to China to live just 10 days after activating Canadian permanent residency in 2006.
In 2014, Li and the couple’s two sons did indeed move to Canada, where Li claimed benefits based on her status as a low-income worker, in a fake job arranged by Wang.
Her West Vancouver home was valued at more than C$8 million. Other Canadian properties boosted the family’s net equity position to “well over C$10 million”, according the IRB ruling against her.
The legal wreckage left in Wang’s wake
Vancouver immigration lawyer Peter Larlee is busy these days, as he cleans up after Sunny Wang.
He has represented about 50 ex-clients of Wang, about 35 of whom have already lost residency status and been issued five-year exclusion orders. Other cases are pending, while three have been successfully appealed.
“I really feel for my clients because a lot of them were so poorly served by Wang. They were led into a type of behaviour that is not condoned in our society, signing blank forms, leaving it all up to someone else to do,” Larlee said. “But we all tend to fall into that. I mean, if you go into a lawyer’s office you put your trust in someone, and they put their trust in the wrong people.”
He said his clients were “seduced” by the simple solution offered by Wang to their common immigration plight: they failed to spend enough time in Canada to maintain permanent residency (currently, two years within a five-year period).
Like Pilzmaker, Wang’s business model, branded “sinister” by one judge, was to fabricate his clients’ presence in Canada. Travel dates would be changed or added to passports with the help of fake stamps and Chinese forgers. Passports would be reported lost, but instead couriered to Wang for doctoring.
Properties in Calgary and Edmonton as well as Wang’s own Richmond home were used as fake addresses for Wang’s clients, who were given backstories that included official correspondence and jobs with fake businesses. Some were issued payslips that allowed millionaires living in China to claim tax benefits intended for poor Canadians.
“What we can tell you, is that [as of March], over 860 of New Can Consultants Ltd and Wellong International Investments Ltd clients have either lost their status or been reported for inadmissibility under the Immigration and Refugee Act,” said a spokesman for the Canada Border Services Agency. “To date, over 55 of these clients have been removed.”
The CBC has reported that more than 200 others face the potential loss of their Canadian citizenship.
Larlee said he had suspicions about how some immigration consultants were operating in Vancouver before news of the Wang scandal broke.
“I knew that there was at least one consultant who was openly advertising that PR card renewal could be obtained even with long absences. Some [potential clients] asked why I couldn’t do it. I said it wasn’t possible and they should be very cautious.”
A small number of Wang’s customers appear to have had genuine cases to stay in Canada. But the immigration status of many hundreds more has been denied or is in peril.
One Vancouver-based lawyer, who represents several of Wang’s clients and requested anonymity, said: “The notorious astronauts who come over and drop off their families and go back to China … they just don’t stand a chance.”
He was advising such clients to swiftly concede the allegations against them, resulting in a five-year ban from visiting or applying to move to Canada. “You want the penalty period to start as soon as possible,” he explained.
The lawyer said the CBSA was still identifying suspects at Canadian airports, using a “very convenient list” seized from Wang’s home.
“So it was pretty easy to take that list and just create a bunch of red flags for all these individuals … My guy was grabbed just the other day. So they’re still doing it. They’re still catching people as they come in.”
The bid to expand millionaire migration and ‘placate concerns’
Sources such as the Middle East and Taiwan represent large but finite pools of would-be millionaire immigrants. But mainland China’s pool is limitless, practically speaking.
Even as Wang’s clients wend through the legal system, some in Canada’s immigration industry eye that pool hungrily, as they pursue the revival of the federal millionaire migration scheme.
In December 2016, scores of immigration professionals, lawyers, academics and other stakeholders gathered at the Hilton Toronto Airport Hotel. They were there for the Conference Board of Canada’s “Entrepreneur & Investor Immigration Summit”, an event pitched as helping shape the future of business immigration in Canada.
“Launching a new federal immigrant investor programme could draw more foreign capital to Canada to support such key areas as infrastructure, affordable housing, and venture capital,” wrote the board’s Kareem El-Assal, the summit organiser, in a report summarising the event.
Vancouver immigration lawyer Jeffrey Lowe suggested to attendees that a new IIP could require applicants to fund affordable housing with investments of C$1.5 million.
Retention of IIP immigrants had been a pervasive problem, Assal’s report acknowledged, while the board noted in a news release that “a public awareness campaign would also be required to placate concerns regarding the impact of immigrant investors on real estate prices in major cities such as Vancouver”.
Another investor immigration summit is planned by the board in Ottawa this November, by “popular demand”. Guests are slated to include government ministers.
David Lesperance believes the concept of investor migration is not irredeemable, and that the problem of ghost immigrants like those who turned to Wang can be fixed. But his solution is a radical one: abandon physical presence as an immigration requirement entirely, and take a hardline stance on Canadian tax residency instead, bolstering audits and other enforcement.
He agreed that ignoring physical presence was a tough proposal to sell to critics, who would respond “‘well, that’s un-Canadian’, and that’s where the conversation ends”.
“But [instead] you keep doing the same thing, and you expect a different result? That’s madness,” said Lesperance. He derided physical presence rules as a “wish list”. “And people quickly discovered it was not enforceable, so they ignored it.”
Wang and his clients were at least partly enabled by the “incompetence” of border authorities, said one immigration lawyer. “I find it hard to believe that if you use the same address on repeated applications for so long, that no one’s going to notice it,” he said.
But Peter Larlee, his law office inundated by the aftermath of Wang’s activities, described an encounter that highlighted the fundamental mindset problem among many millionaire migrants.
“I met with clients who wanted to renew their permanent resident card and I put it to them like this. I said: ‘Well, I know how you can renew your permanent resident card’,” he recounted.
“And they said, ‘Oh great, please tell me, share with me your wisdom’. I said, ‘Stay in Canada.’
“‘No, that’s preposterous. I can’t do that’. And they jumped out of their chair and they went away. I suspect people like this went to Sunny Wang’s office.”
None of Wang’s clients named in this article, all of whom were approached via their lawyers, would speak on the record.