Before moving from China to Canada in 2006, Runkai Chen told immigration officials that he made at most $41,000 a year. His wife, he said, was employed as a clerk.
Despite their modest incomes, a series of money transfers poured $114 million into the Chen family’s Canadian bank accounts a few years later.
Chen is now wanted for arrest by the Chinese government on charges of bribery for his alleged role in a major corruption scandal involving a senior military official.
He’s fighting to stay in Canada, where his family has two mansions in Vancouver overlooking the Pacific.
He is the owner of a Tudor-style home with mountain and ocean views he purchased in 2016 for $15.6 million. It sits a few doors down from another mansion his daughter bought in 2012 for about $14 million when she was 25. She did so without a mortgage and while listing her occupation as “student.”
Until now, Chen has been unknown to the public and referred to only as “Person A” in a case study by a British Columbia commission tasked with examining overseas money laundering in the province and its links to surging property prices.
A joint investigation by the Toronto Star and Organized Crime and Corruption Reporting Project (OCCRP) has identified Chen and his family for the first time as the faces behind suspicious money transfers of unexplained millions through offshore shell companies and Hong Kong money exchanges.
The Chen family’s investments in Canada add to mounting concerns about illicit overseas money flowing into the country’s overheated real estate markets, helping to push already sky-high housing costs out of reach for many Canadians. Amid vigorous public debate about billions of overseas dollars laundered through Vancouver’s real estate market —— including from organized crime groups —— the B.C. government formed the Cullen Commission in 2019, which is expected to deliver its final report shortly.
Chen’s Toronto lawyer, Lorne Waldman, said that while his client was involved in a controversial land deal in China, he paid no bribes and had been caught up in a “political” case against the military general for which he was innocent.
And while Chen declared a low salary upon arrival to Canada in 2006, a “big (land) development occurred after that,” which lifted his income, Waldman said.
He did not offer comment on Chen’s ongoing legal battle with the federal government to get Canadian citizenship.
“It’s obviously very stressful to be in the situation that he’s in,” he said. “But he believes in the legal system in Canada.”
Court documents detailing Chen’s legal battle to stay in Canada have been sealed. A federal court judgment relating to his daughter’s citizenship application shows Chen is fighting allegations of “misrepresentation” to Canadian immigration authorities and “organized criminality” before he became a permanent Canadian resident.
The federal government has been quietly analyzing the source of Chen’s wealth through documents dating back to before he arrived in Canada in 2006, according to documents obtained by the Cullen Commission that include a report from the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) — Canada’s financial intelligence unit.
Before arriving in Canada, Chen and his wife had amassed $1.26 million to bring into Canada despite the modest incomes they reported to Canadian authorities.
“Unless they made considerably more before the majority of funds began to come to Canada in 2010, Person A and his family did not have sufficient resources to account for the funds they transferred,” according to a forensic financial analysis quoted in the case study.
“The discrepancy between the funds they had available and the volume of subsequent transfers to Canada is a significant indicator for money laundering activity,” the analysis said.
Experts who reviewed the documents agree.
“There are … strong indicators of money laundering,” said Mary-Jane Bennett, a former criminal lawyer in Vancouver recently commissioned by Toronto’s Massey College to investigate and write a forthcoming report on money laundering.
From 2009 to 2016, tens of millions of dollars of Chen’s wealth flowed into big Canadian banks through offshore shell companies in tax havens and an alleged underground banking network of Hong Kong currency exchanges, according to the Cullen Commission case study.
When one bank — UBS Bank (Canada) — flagged the conspicuous transfers and asked the Chens about the source of the funds, clear answers never came, according to a report from the bank contained in the FINTRAC report. The bank reported the transactions to federal authorities.
Chen’s wealth appears to have come from land deals involving Gu Junshan, a Chinese lieutenant-general who was handed a suspended death sentence later commuted to life in prison in a high-profile corruption case in 2015.
Chen was named in a 2014 open letter in China addressed to “all military commanders,” which excoriated Gu for corruption. The author of the letter was anonymous, but it circulated widely online and was referenced in state-backed media.
“During the course of the initial investigations into Gu, unidentified senior military officials allegedly tipped off Chen, who fled to Canada,” the letter said. “President Xi Jinping then ordered the issue of an arrest warrant, but to this day he has eluded authorities.”
The letter was cited in an article by the China Police Network, an official mouthpiece. That article called Chen a “real estate developer” who had “paid a huge amount of bribes to Gu.”
Given China’s closely controlled media and internet environment, the letter naming Chen could only have been allowed to circulate online if it had been officially sanctioned, said Eva Pils, a China expert who teaches law at King’s College London.
“There would be zero likelihood that it would survive, I’m kind of tempted to say more than a few hours, but maybe more than a few days,” she said. “If there has been no attempt to stop circulation, that’s almost like official approval.”
Chinese court and company registration documents, a construction and planning permit as well as media accounts, appear to show that Chen bought and sold properties at the site of a former military airport in Shanghai that was part of a development project overseen by Gu. But Waldman denied China’s allegations that Chen paid bribes to Gu to acquire the land.
“He didn’t do anything wrong, doesn’t know the general, and was involved in legitimate business activities,” said Waldman.
He said Canadian authorities should understand that information provided by China cannot be trusted due to the country’s notoriously corrupt legal system, which often uses evidence obtained through torture.
“I think it’s likely that the government of Canada’s interest in my client’s case occurred as a result of the Chinese government approaching them,” said Waldman.
Canada Border Services Agency said it was unable to comment on Chen’s case specifically, but said it sometimes receives information from “foreign government enforcement agencies” about individuals seeking citizenship, and would then seek to “confirm its validity.”
Concerns about suspicious foreign money in Canada’s real estate market reach well beyond the Chen case.
Experts have testified to the Cullen Commission that real estate has also become inundated with dirty money derived from the drug trade and other crimes, as well as alleged corruption.
“By laundering illicit funds, serious and other organized criminals are able to profit from some of the most damaging crimes,” including drugs and human trafficking, violent crime and fuelling the devastating opioid crisis, the Government of Canada wrote in its closing arguments to the commission last July.
A 2020 report from the Criminal Intelligence Service of Canada found that as much as $113 billion is laundered annually. In all, 176 organized crime gangs — half with international ties — were fully integrated into the country’s economy, the report says, and nearly half were involved in the cocaine trade.
The real estate sector, in particular, is “vulnerable to exploitation by criminals looking to launder illicit (proceeds of crime),” the federal government submission reads, by providing a secure, legitimate investment and a location to live and conduct “further criminal business.”
James Cohen, executive director of Transparency International Canada, which also made submissions to the Cullen Commission, calls the impacts of international money laundering sweeping.
“It is one of the most infuriating and awful reasons for housing prices to go up — the idea that limited housing supply is just sitting there as a safety deposit box for the funds of drug dealers and crooks and kleptocrats. We could add some housing supply without ever hammering a nail into a board by removing the dirty money that’s just sitting in these vacant condos and houses.”
In 2019, a B.C. government expert panel estimated that more than $7 billion in dirty money was laundered in the province in the previous year alone. As much as $5.3 billion of that was laundered through real estate, causing housing prices to increase about 5 per cent.
Financial and law enforcement experts say the problem extends to other Canadian cities too, notably the Greater Toronto Area (GTA), which in February surpassed Vancouver as the most expensive place in the country to buy a home, according to RBC Economics.
“There’s definitely money laundering going on in GTA real estate,” said Cohen. “We haven’t seen quite the revelations yet as in B.C., but there’s enough red flags.”
Concerns about the Chen family’s financial flows first emerged in 2010, according to an anonymized report from FINTRAC. The document is contained in a “Money Laundering Case Study” by the Cullen Commission. It refers to Chen as Person A.
The commission’s case study is heavily redacted and does not name Chen. But Toronto Star and OCCRP reporters used publicly available documents to piece together his identity, along with his wife and daughter.
The case study includes a redacted FINTRAC chart, which failed to completely obscure one company name. Reporters identified the firm by trying different combinations of letters, and searching leaked corporate data obtained by the International Consortium of Investigative Journalists. One search turned up a company director named Zi Jun Chen —— the same person appearing in Chinese reports about the military corruption scandal.
That name also appears in B.C.’s property registry — though spelled as Zijun Chen — with information matching details available in the case study. And the registry shows that Chen, his wife and daughter all registered name changes on their property titles in 2015, as reported in the Cullen Commission case study.
Between Jan. 26 and 29, 2010, Chen and his family deposited $15.1 million from four different companies in Hong Kong and China, the FINTRAC report details.
In December 2011, the FINTRAC report details another 10 transfers — two of them reported as “suspicious” by UBS Bank (Canada) — worth $6.3 million from the Bank of China Hong Kong Ltd. The money moved into a Canadian bank account held by Chen’s mother — referred to as “Person D” in the anonymized documents — over which he had power of attorney.
“Person A was the ordering client on electronic funds transfers ordered from an account held by Person D,” the report reads. “Person A acts on behalf of Person D based on a legal power of attorney and has been the primary client contact since the relationship was established with UBS Bank (Canada).”
The money was transferred in smaller chunks, the detailed transaction records show.
On Dec. 13, 2011, nearly $400,000 came. The next day, there were four more, ranging from $349,000 to $1 million. The day after that, the documents show two transactions worth $999,963 and $2 million. And on Dec. 16, three more transactions ranging from $290,000 to $1 million.
UBS flagged the inflows as suspicious because the volume of transactions in such a short time had the stamps of a money laundering technique called “layering,” in which “complex layers of financial transactions are used to obscure the source of the ownership of funds,” reads a report from UBS Canada referring to the 2011 transactions contained in the records.
So bank officials started asking questions of Chen’s mother, whose name was on the account.
She told a bank official the funds were proceeds from a partial land sale in China but could provide no details, according to the FINTRAC report.
When the bank turned to her son for more information, Chen “was unwilling to provide any satisfactory documentation confirming legal title over the land in (location redacted) or in relation to any land sale transactions.”
UBS closed the account and had the Chens transfer the money to another financial institution.
But the family had little trouble finding other Canadian banks to accept ongoing flows of tens of millions of dollars as late as 2016. The documents show the money arrived in accounts the Chen family held in many of the country’s large banks, including CIBC, Royal Bank of Canada, HSBC and Bank of Montreal.
When asked for comment, all the banks issued written statements saying they could not speak about an individual client but said they have strong commitments to detecting and reporting suspicious financial transactions.
Chen’s first known Vancouver property purchase was in 2007 when he bought a home in the posh Shaughnessy neighbourhood for just under $2.3 million. He and his wife were listed on the title that year as joint tenants under their former names, Zijun Chen and Chenguang Qi. They sold the house last year for $4.9 million.
Their daughter —— at the time named Zhouren Chen —— bought a mansion in 2012 near the beach in Point Grey for $14.7 million, which features a tennis court and swimming pool. The B.C. Assessment Authority lists that property as the 98th most valuable in Vancouver, now worth $19 million.
Two years after Chen’s daughter purchased the Point Grey property, Chinese prosecutors brought a corruption case against Gu for reportedly selling off military land in exchange for bribes.
The general had allegedly amassed properties and possessions that far outstripped his military salary, according to media reports. Chinese police reportedly spent two days at one of Gu’s homes, loading four trucks with luxury items, including a solid gold statue of the revolutionary communist leader Mao Zedong.
China issued an international arrest warrant for Chen for his alleged involvement in the scam, which eventually got Gu a suspended death sentence.
In the meantime, Chen was fighting to stay in Canada. The Border Services Agency found him “inadmissible” for citizenship, but his lawyers convinced a federal judge to examine that decision. Amid this legal battle, with an arrest warrant from China hanging over his head, Chen and his family changed their names.
Titles for their properties show that in 2015, Zijun and his daughter, Zhouren, became Runkai and Hanying Chen. His wife, Chenguang Qi, switched her name to Ruizhen Qi. The following year, Chen purchased a Point Grey mansion a few doors down from the one his daughter bought in 2012.
His daughter’s Canadian citizenship application is also in limbo, hanging on the verdict of her father’s case, according to a federal court judgment.
Documents from the case show she obtained permanent residency as a dependent of her father, who had entered Canada under the federal government’s former Immigrant Investor Program in 2006. She declared having $5,000 in her possession on arrival. She noted in 2015 that she was receiving financial support from her parents, who were retired but had savings from real estate deals in China.
Waldman, who is also representing Chen’s daughter, did not comment on her immigration case.
Although Chen and his family live in luxury, their comfortable lifestyle is diminished by the ongoing court case and threat of deportation, as well as possible harassment from Chinese security agents.
Waldman said he did not know if those agents had contacted Chen in Canada in an attempt to pressure him to return. He has represented other economic fugitives who have been subjected to intimidation tactics, including having their family members arrested back in China.
“I’ve seen officials come to Canada. I’ve seen them arrange for articles to be published in the newspaper to embarrass my clients,” he said. “I’ve seen them show up at my client’s house and threaten them.”
Those tactics, as well as a Chinese legal system that routinely relies on torture to obtain evidence, put the Canadian government in a tricky position, said Pils, the King’s College professor.
“There may be well-founded suspicion against Mr. Chen,” she said on the phone. “And that would mean that, of course, in an ideal world Mr. Chen would be sent back to the country where he is alleged to have committed crimes.”
If the justice system in Chen’s home country were trustworthy, Canada could extradite him to face a fair trial, she said. “But you can’t have that when you’re dealing with China.”
“It doesn’t matter whether someone has perpetrated a completely awful crime, they still have a right not to be tortured,” Pils added.
In a 2021 statement, Canada’s Public Safety Ministry said agents from the People’s Republic of China are known to have come to the country hunting economic fugitives.
The Department of Justice declined to comment. The Chinese embassy in Ottawa did not respond to requests for comment.
While Chen and his daughter await word on their citizenship in this country, the weight of financial evidence collected to date is sufficient for Canadian authorities to take some action now, said former criminal lawyer Mary-Jane Bennett.
“Consideration should be given to seizing the property,” she said. “When you’ve got all of the indicia of money laundering, it seems to me that somebody should take a serious look at seizing their property.”