Recent Sale of BC’s Grouse Mountain Resort Tangled Up in Claims of Fraud

Jacqui Davis | | Industry NewsIndustry News
Grouse Mountain Resort Overlooks Greater Vancouver, BC IMAGE CREDIT: Facebook

A lawsuit was lodged with the British Columbia Supreme court on Feb. 4, 2020 regarding the 2017 sale of the iconic Grouse Mountain resort to by CM (Canada) Asset Management, a private conglomerate backed by dozens of Chinese business tycoons. Among other claims, the lawsuit says that two executives from China Minsheng Investment Group (CMIG) flew from Shanghai to Vancouver on a private jet chartered for $381,000 USD to inspect the resort, in which CMIG took a 40 percent stake. The lawsuit depicts a complex web of transactions, supposedly involving a $2 million dollar deposit in Canadian dollars (approx. $1.5 million USD) paid on CMIG’s behalf but routed via the wife of a Vancouver-based investor.

The lawsuit is seeking 30 percent of the proceeds from the recent resale of the resort for an undisclosed amount. The claims are unproven. The main target of the lawsuit is Kenny Zou, who fronted the 2017 purchase of the resort my CM Assent Management, and is a director of the firm. Zou is accused of “fraudulent misrepresentation,” his wife and various other companies of which Zou was a director are named as co-defendants, although CMIG is not.

Businessman Jia Bin Li, the principal of plaintiff firm 1110079 BC Ltd., says he paid about $3.8 million Canadian dollars (approx. $2.8 million USD) towards the deal, but was cut out of a 30 percent ownership stake by Zou. The lawsuit states that at “all material times, Kenny Zou held out and represented to Mr. Li that, acting together, he and Mr. Li would beneficially own 60 percent of the resort on the acquisition, with the remaining 40 percent to be owned by CM International Capital Limited (CMIG).” For his investment in the acquisition of the resort, Mr. Li’s company was to receive a 30 percent interest.

The lawsuit states that on December 4, 2016, Li paid $381,000 USD to charter a private jet from Shanghai to Vancouver, carrying two representatives of CMIG. On the basis of his promised share in the resort, the lawsuit says, Li and his company then paid about $1.3 million Canadian dollars (approx. $981,000 USD) in legal fees and other expenses, as well as covering a $2 million Canadian dollar (approx. $1.5 million USD) deposit to the sellers of the resort, Vancouver’s McLaughlin family. Although the deposit was signed in the name of CMIG, in the lawsuit Li says that he paid the $2 million dollars to Kenny Zou’s wife, Wei Dong, to reimburse her. The sale price is not described in the lawsuit, but it says that Li and his company acted as guarantors on loans worth $129 million Canadian dollars (approx. $97 million USD) as part of the deal.

Grouse Mountain trail map

Li claims that he was cut out of his ownership stake by Zou, who allegedly directed a series of transactions with the express purpose and intent of defeating Li’s 30 percent interest in the resort. The lawsuit wants a declaration that the plaintiff has a 30 percent stake in the resale proceeds, and it is being held in trust by the defendants. It also seeks damages, an accounting of the resale, and costs.

Zou had told Canadian media in 2017 that CM (Canada) Assent Management was a “completely Canadian company through and through,” and that CMIG, although a 40 percent shareholder, would be a silent investor in the running of Grouse Mountain. But the president of CM Canada was Lawrence Liao Feng, who was also the CEO of CMIG International, the foreign investment arm of CMIG. Zou was CM Canada’s secretary, and both Zou and Liao were directors of the firm.

Canadian investment firm Northland Properties Corporation, which is owned by the Gaglardi family, purchased Grouse from CM Canada in a deal announced on Jan. 2. While the price tag on the sale was not disclosed, the resort had previously been valued at about $200 million Canadian dollars. The acquisition adds Grouse to Northland’s existing B.C. ski assets, the Revelstoke Mountain Resort, and Selkirk Tangiers Heli Skiing, and a business portfolio which includes the Dallas Stars NHL team, the Kamlooops Blazers, the Sandman and Sutton Place hotels, and the Denny’s, Moxie’s, and Shark Club restaurant chains.

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