Behind Canada’s largest breach of security – millions in Ponzi scheme money stolen by a U.S. citizen who remains at large – there is an old maid in the wake.
In 1974, Charley Hui played tae kwon do with Linus and put his boots on Dale Earnhardt. Now, it seems, he may have done the same with millions of dollars that were supposed to finance his poker machine supply company, which produced more than 5,000 machine models before he disappeared.
With his business sunk in the tar pits of the horse racing industry and an underworld criminal network thriving in Canada’s gambling tunnels, Hui retreated to New Jersey with his 39-year-old fourth wife and their seven children – and a collection of mother-in-laws and a pawn shop at least as wealthy as his operation.
Over a period of two decades, Hui, according to federal prosecutors, borrowed $43 million from nearly 200 investors to operate his business, Country Bears Trading Corporation. In return, he paid investors with phony invoices and income statements that hid how rapidly the company was losing money.
Perhaps knowing the cards were stacked against him, the 65-year-old Hui tried to lure victims in the business community by promising lower taxes. A pyramid-type structure allowed him to form new investments through an opaque network of straw investors. In court filings, prosecutors called the operation “a marriage of convenience” but said Hui turned a blind eye to the business’ uneconomic condition.
Fraudulently guaranteeing returns, and signing copies of investor letters without having the right to do so, made it particularly difficult for the victims to detect a fraudulent scheme.
In a desperation bid to stop the hemorrhaging, Hui and his business partner, Derek W. Trexler, 53, even printed and stapled letters that purported to originate from horse racing officials promising customers steeply discounted racing bets. About a quarter of the investors missed the signs that Hui was changing the terms of the arrangement in his latest attempt to secure additional loans.
By October 2018, Country Bears’ losses reached $3.8 million. The company stopped operating and ceased all deposits to its bank accounts. Hui’s wife and six children, with other family members, were ordered by a bankruptcy court to sell off their lavish properties to pay back millions in losses. The eight other shareholders, including some of Hui’s former business partners, were ordered to liquidate their companies. But neither of the siblings of Hui, who continues to be a fugitive, has come forward to fight his fraud case.
Ultimately, New Jersey authorities have managed to collect a few hundred thousand dollars from the company, where about 200 people invested more than $40 million and earned less than $900,000. As of early 2018, about half the original investors had lost their investments. Federal prosecutors said Hui still owes $18 million to roughly 200 people – including more than $5 million owed to the racetrack near his house. Trexler, who was charged with bank fraud last April but has not been apprehended, remains a fugitive as well.
Hui was arrested in New Jersey on Tuesday, where he tried to flee before being taken into custody. Law enforcement officers escorted him back to the United States without any fanfare. Although authorities expected Hui to return to Canada, no arrests were made as of early Wednesday evening.
Hui’s attorney in New Jersey is seeking to block the owners of the eight bankrupt companies from collecting on the $4.5 million in assets they managed to recover, according to a media release from New Jersey Attorney General Gurbir Grewal. The attorney general is considering legal action against Hui and Trexler.
We’re happy to see Hui returned to custody. But, unfortunately, his criminal actions – which directly impacted more than 200 people in Canada – echo that of other financial predators who prey on thousands of innocent investors. Criminal convictions alone may not be enough to deter other irresponsible financiers from the pursuit of immoral fraud. These crimes must be treated with the urgency they deserve, and the criminal justice system must make it harder for such greedsters to flee and avoid the consequences of their actions.