Embattled Richmond real estate lawyer Hong Guo faces second Law Society probe

Guo faces a second hearing to determine alleged conflict of interest and questionable statements to the regulator

Former Richmond mayoral candidate and real estate lawyer Hong Guo is facing a second probe by the Law Society of British Columbia into alleged professional misconduct.

Guo is now facing two hearings for two separate citations issued in 2018 by the society, which is now claiming Guo acted in a conflict of interest while representing several clients in connection to the purchase of two forestry-related companies.

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As part of Guo’s rising slough of legal trouble, she also stands accused of providing false and misleading information to the society.

“The law society believes it has sufficient evidence of misconduct to proceed with a hearing. Details of that misconduct will be explored at the hearing,” said society spokesperson David Jordan.

The most recent citation is connected to allegations laid out in a civil claim by Jun Yuan against Guo, Guo Law Corp., and M & K Sawmills Ltd.

In September 2012, Yuan, a Chinese businessman and recent immigrant, had approached Guo’s office to invest about $100,000 in a small company, according to his court claim dated May 22, 2015.

Yuan claimed Guo sought to co-purchase M & K Sawmills Ltd., including equipment and land, for $900,000, with $200,000 cash and $700,000 in financing. Yuan said Guo drove him to the mill, then located in Quesnel, and translated meetings with the sellers, Nirmal Lidder and Harmanjeet Lidder. In November 2012, the sale occurred, but Guo later misrepresented financial documents, such as a shareholder agreement, or simply did not provide them to him, Yuan claimed.

Following the purchase – which was later alleged by Yuan to be for only $730,000 – corporate records show Guo became the sole director of M & K, whose mailing address became one of Guo’s Richmond homes. The following November, an employee of Guo’s, Yong Rui Wu, became M & K’s director, with Guo remaining president.

At the centre of Yuan’s claim was how Guo allegedly kept him in the dark as to where his money was. For some time Yuan, as a shareholder, claimed he did not know basic details of M & K and hence Guo failed in her fiduciary duties.

Following the purchase, Guo, claimed Yuan, said the business was doing well, but shortly after she “refused to provide financial records and advised the plaintiff that the tenant had fallen through and there was no income.”

Guo eventually formally denied Yuan’s claim on Feb. 2, 2016, after being late to respond to it.

In her response, Guo revealed that a third party was involved in the purchase.

It is said that investor Zisheng Zhu agreed to become involved in the venture, after Guo canvassed for someone who could financially assist Yuan.

Guo stated that Zhu “was another recent business immigrant from China, and Guo had assisted him earlier in 2012 when he had purchased, from Guo’s sister, Min Guo, the shares in, and thus wholly owned and controlled, Friesen Lumber Corp.”

Friesen was incorporated by Guo and Weijin Sun on July 2, 2010, and it was headquartered at one of Guo’s Richmond homes, according to corporate records. Min Guo became the sole director on Sept. 1, 2012, while Guo remained president and secretary, according to Friesen’s corporate history. The company has no online presence. At some time prior to November 2012, Guo claims, Min Guo sold Friesen to Zisheng Zhu.

In an apparent separate proposal, Zhu and Friesen, a purported wood pallet business, were to buy wood chips from M & K. But Friesen ended up buying M & K.

Guo claims she told Yuan she could no longer act for him as his solicitor given Zhu’s involvement.

Yuan is said to have eventually agreed with Zhu to have Friesen purchase M & K. Yuan would then own 10 % of Friesen and Zhu would own 90 %, according to Guo’s response.

“Guo acted only for Friesen in the completion of the purchase and conveyance of the Lands,” claimed Guo, who noted she agreed to advance about $613,000 in Canada to Friesen/Zhu to complete the purchase on Nov. 23, 2012. Those funds were repaid to Guo by Zhu in Hong Kong the next day.

Guo claimed Friesen attempted to keep the sawmill running by hiring a new manager, but “eventually ceased operations and lost significant money.”

Guo blamed Yuan for being absent from participating in M & K’s new operations.

Yuan’s claim alludes to Law Society investigators being involved as Yuan was trying to determine where his money had gone.

In the society’s Dec. 12, 2018, citation, it is also alleged that Guo also acted for three other prospective Chinese immigrants in connection with their applications to the BC Provincial Nominee Program involving the proposed purchase and operation of M & K.

Aside from investigating alleged conflicts of interest, the society also claims that between June 2014 and October 2018 Guo “failed to respond substantially and fully to the Law Society, or [she] made representations to the Law Society that [she] knew or ought to have known were false or misleading, or both.”

For instance, the society claims, Guo told it that she “absolutely never” conducted business for M & K, despite being the company’s sole signing authority.

As well, the society claims Guo told investigators on June 8, 2015, that she had no knowledge of receiving funds from Zhu in connection with M & K, despite the $613,000 transaction she admitted to in her Feb. 2, 2016, court response.

In another instance, according to the citation, Guo told the society she did not know Yong Rui Wu “when you knew or ought to have known” that he received wages from her law firm.

The society further claims Guo failed to adequately advise Yuan, including the need for a shareholders agreement.

Guo did not respond to an inquiry from Glacier Media.

Guo is facing another hearing in connection with the loss of $7.5 million from one of her firm’s trust accounts. She accused her bookkeeper Zixin Li (now arrested in China) of stealing the money, while the society claims, among other things, that she failed to properly supervise Li. Guo now claims she repaid the trust account with her own money. She is also suing CIBC over the money’s disappearance.

If either of Guo’s citations are proven valid by the society’s yet-to-be-scheduled hearing panel, Guo will face disciplinary action ranging between a reprimand, a fine, a suspension or disbarment, according to Jordan.

It is extremely rare for the society to hold a hearing and not issue some form of discipline.

Guo is also being sued by two immigrant investors who claim she acted in a conflict of interest in a real estate transaction in Richmond.

Guo, who has a law degree from University of Windsor, ran for mayor of Richmond last year, claiming the city needed to reduce crime rates and improve traffic while also promoting more cultural ties and trade with China. She received 5% of the vote. During her campaign she reportedly denied China has a record of human-rights violations. Recently she spoke out against the Canadian government’s detention of Huawei CFO Meng Wanzhou.

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