The Hongcouver
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Broker behind Vancouver real estate ‘crowdfunding’ website says it was a mistake

Jason Liu says he wants to help rich Chinese investor migrants, but site that listed multimillion-dollar properties should have been deleted when rules banned large-scale crowdfunding

PUBLISHED : Friday, 12 February, 2016, 8:55am
UPDATED : Thursday, 25 February, 2016, 2:53pm

Vancouver-area realtor Jason Liu says he just wanted to help the city’s wealthy Chinese investor migrants, and to help Canadians understand that “most of them are good guys”.

Instead, he has found himself answering questions from the British Columbia Securities Commission about one of his firms, Canada Luxmore Crowdfunding, and its website that listed multimillion-dollar investment properties across Vancouver and BC – golf courses, a winery, a retirement home, and more.

Liu, a mechanical engineer by training who immigrated to Canada from his native Shandong province in 2005, is exasperated by the attention. “I have lots of trouble now,” Liu said in an interview in his office in the Vancouver satellite city of Richmond.

Luxmore’s “canadazhongchou” (“Canada crowdfunding”) website has now been deleted, but it remained online at least eight months after the securities commission last May banned crowdfunding of more than C$250,000 per project.

Liu said it stayed online by mistake, and that it never recruited any funds.

The site was only pulled down last month after the South China Morning Post emailed Liu questions about whether it complied with BC’s crowdfunding rules. A subsequent January 21 report on the Post ’s Hongcouver blog that named Luxmore Crowdfunding, as well as an unrelated firm, drew the attention of the BCSC, which announced it was reviewing their activities.

Liu said he founded Canada Luxmore Crowdfunding and its website in 2014, but he never promoted it because he and his partners were waiting to find out how BC would eventually govern the online recruitment of investors. “At that time there [were] no BC crowdfunding rules. So we did nothing,” he said.

The website carried a small-print disclaimer that it was for “promotional purpose” - yet the real estate investment projects described on its pages were actual properties that Liu had for sale via his main firm, Luxmore Realty, of which he is CEO. The thriving brokerage employs 50 agents.

‘I cannot leave the website empty’

Although the investment properties were mostly anonymised, some were clearly recognisable. For instance, the canadazhongchou site’s description of the “S golf club”, listed with a price of C$24.5 million, was an obvious match for the Surrey Golf Club (the club and its two courses were sold by a different brokerage last year for a reported C$15 million).

But Liu said the site’s listings were not intended to recruit investors, but were used simply because he didn’t want to leave the website blank. “I cannot leave the website empty. So we put up my listings,” he said. In the case of the Surrey Golf Club, Liu said “We [were] looking for a buyer. But it is no business about crowdfunding.”

When the BCSC rules were introduced in May 2015, limiting individual investors to C$1,500 per project and each project to a total of C$250,000, Liu said he knew that crowdfunding real estate would be futile in a market like greater Vancouver, where the average price of a single detached house is C$1.8 million.

So why was the website left online? “That website was never updated. I think I forgot something… I know, needed to remove, to close. But I think something [went] wrong,” Liu said.

Liu, who was keen to differentiate between Luxmore Realty and Luxmore Crowdfunding, said he voluntarily went to the BCSC office after reading that the regulator was conducting its review. He said he gave investigators a statement so that “I can tell the public, I am not guilty. I am a nice guy, you know. I just want to do the right thing.”

The attention from the BCSC comes amid growing controversy over the role of mainland Chinese money in Vancouver’s red-hot property market, which is one of the most unaffordable in the world.

Liu said part of the problem was that the concept of “crowdfunding” meant different things in China and North America. “[In North America] people think crowdfunding is just one person who wants to do something, a small project,” that recruits many low-level investors who did not know each other.

But in China, the concept was co-operative and more akin to a partnership among investors. Chinese people did not want to get involved in projects in which they did not know their fellow investors: “They need to know each other, as friends,” he said.

Liu said the main target of Luxmore Crowdfunding was never real estate; he says that in fact he wanted to give wealthy Chinese immigrants other investment options. In addition to real estate, the canadazhongchou site listed projects ranging from energy and farming schemes to a coffee shop.

“I really want to help the Chinese investor immigrant group…I also want Canada to know, most of them are good guys,” he said.

“When the immigrant investors came here, the money they bring here, they cannot find another way to invest. They just buy and sell property…But Canada doesn’t like it. You know, lots of media, all the news, they think ‘you make the market crazy’.”

Whatever the investment, Liu says he is now out of the “crowdfunding” business. Luxmore Crowdfunding has been renamed CAUS Capital; it still exists as an investment vehicle, but only for accredited investors and family and friends, meeting the prospectus-exemption requirements of the BCSC.

The company has three projects underway, including “a flying car” and other high-tech endeavours, Liu said.

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The Hongcouver blog is devoted to the hybrid culture of its namesake cities: Hong Kong and Vancouver. All story ideas and comments are welcome. Connect with me by email ian.young@scmp.com or on Twitter, @ianjamesyoung70 .