A judge has sentenced convicted fraudster Weizhen Tang to six years in jail, saying his serious frauds require "a significant period of incarceration."
Justice Alfred O'Marra of the Ontario Superior Court said Mr. Tang, who called himself a "Chinese Warren Buffett" while raising more than $50-million from investors, must also pay a fine of $2.8-million within five years of release from jail. He will have to serve five more years if he does not pay within that period.
Judge O'Marra decided not to order specific victim restitution, saying he could not easily determine the losses and believes Mr. Tang has none of the money.
Judge O'Marra said there was "overwhelming evidence" that Mr. Tang committed a fraud. He said Mr. Tang clearly misled investors about keeping their funds safe, and gave them false account statements with numbers he "made up."
"His assertions were patently false. They were dishonest and led to the fraud," Judge O'Marra said.
The Crown asked the judge to sentence Mr. Tang to between eight and 10 years and impose fines and victim restitution totalling more than $8-million, alleging he ran a Ponzi scheme that stripped victims of their life savings.
Mr. Tang, who has steadfastly maintained his innocence and claims he had no intention to commit fraud, had asked the judge for no jail term and a far smaller financial penalty, saying he did not personally profit from investors' money.
Mr. Tang did not react or speak when the verdict was announced. He was immediately handcuffed and led from court by an officer without speaking to his family.
Earlier Friday, Mr. Tang's wife told the court her family has none of the more than $50-million he raised from investors, and she has not hidden any of it away.
In tearful testimony at her husband's sentencing hearing, Hong Xiao described her family's financial difficulties and said she received threats from angry investors who said they would injure her teenaged son.
"They called every day to threaten – they threatened to break my son's legs, to kill my son," she said through an interpreter. "My son was so scared he didn't want to go to school. He was only 14 years old at the time."
Mr. Tang was found guilty in October of operating a Ponzi scheme after his trial heard he raised $52-million from more than 200 investors in his Oversea Chinese Fund LP, many of them members of the Chinese community in Toronto. His trial heard testimony that he told investors in early 2009 that the fund had more than $70-million in assets, when in fact it had just $1,000 in its bank accounts. Mr. Tang was also accused of giving clients false account statements that misrepresented the value of their investments.
The Crown asked the judge to sentence Mr. Tang to between eight and 10 years in prison and to also impose a fine and victim restitution orders totalling more than $8-million.
At his sentencing hearing Friday, however, Mr. Tang argued the proposed penalties were too steep because most of the money he raised from investors was returned to them in payouts, while $20-million was lost in the market downturn of 2008. He said he used only $2.8-million of investors' funds himself, and he said that money was used to pay legitimate office expenses and salaries.
Mr. Tang, who is representing himself at the trial with the assistance of an amicus lawyer appointed by the judge to give him advice, called his wife as a witness to testify about the family's financial distress to help emphasize his inability to pay a large penalty.
Ms. Xiao told the court she has not previously spoken out publicly in defence of her husband of 28 years, and said she has been suffering enormous stress since charges were laid against him.
She said she was admitted to hospital in mid-2010 and was contemplating suicide at the time. Since then, she said she and her husband have been unable to find work because potential employers in the Chinese community do not want to be connected with them. The bank has foreclosed on their home, but she said they are still living in the house for the time being, and don't know where they will go next.
Ms. Xiao broke down in tears as she described how they could not pay their electricity bill, had their power cut off for a period of time in the past and had no hot water at their home in Toronto. She said the family took showers at the YMCA.
"The sufferings and miseries we've been going through the last four years is unimaginable for other people," she said. "Can you imagine in cold weather like that there was no hot water, no electricity at home?"
She said investors must believe they do not have their money, or they would not live in such dire straits. "If we really had defrauded the money, how could we live like this? We can't even survive any more."
Despite their hardships, Ms. Xiao says she continues to believe in her husband's innocence, saying he didn't do anything wrong and didn't intend to defraud anyone.
Also Friday, Mr. Tang asked the judge for the right to cross-examine investors who provided victim impact statements about the troubles they have faced since losing their money in his fund. Some said they pledged their life savings to Mr. Tang, taking out loans and mortgaging their homes to raise money to invest.
In a submission to the judge, Mr. Tang said he did not believe they had suffered because of their losses.
Judge O'Marra denied the request, saying Mr. Tang's arguments did not meet the legal test for cross-examining victims on their impact statements. Judge O'Marra said Mr. Tang's comments about his investors left him "speechless" and were "beyond the pale."
Mr. Tang and Judge O'Marra sparred throughout the sentencing hearing Friday. At one point, the judge told Mr. Tang he did not have a "soap box" to make lengthy statements about his innocence, and denied a request by Mr. Tang to read a 47-page statement decrying his treatment and condemning the justice system.
Mr. Tang argued the judge could not stop him from talking, and threatened to appeal his case. "Fine," Judge O'Marra replied.