May 7, 2025
They were the flashy new entry in the Vancouver real estate world, amassing big chunks of pricey land, sponsoring exhibits by famous artists and recruiting a former longtime city councillor to head up operations.
But despite the hype, the Coromandel Properties’ planned developments were slow to come together, and by February 2023, the shiny facade had fallen. Local news reported that 82 Coromandel-connected companies had filed for creditor protection, citing an insurmountable $700 million in debt.
At the time, experts saw the company’s failure as just another example of B.C. developers struggling because of high interest rates, falling land prices and regulatory hurdles.
Today, the IJF can report that something a bit more unusual may have been happening beneath the surface at Coromandel. The developer’s majority owner has accused Coromandel’s CEO of fraud and embezzlement in a lawsuit now making its way through the court system. It’s an allegation the CEO fervently denies.
A claim filed on behalf of Macau-based businessman Junchao Mo alleges that Zhen Yu (Jerry) Zhong and associates misappropriated more than $150 million Mo had invested into Coromandel companies. It claims a large portion of the proceeds from that alleged misappropriation was funnelled into personal real estate purchases and high-end art.
“As a result of the personal defendants’ misappropriation of the investment funds, Coromandel was unable to pay its debts as they fell due,” reads a December 2023 notice of claim filed in B.C. Supreme Court by Mo’s sons and associated family trusts and companies.
It goes on to state that because of this “fraudulent scheme,” led by Zhong, “the plaintiffs have lost their investment funds, which amount to at least $151,640,000 which was advanced by or on behalf of Mr. Mo.”
The Mo family isn’t the only party accusing Zhong of misappropriation. Another two lawsuits allege that millions of dollars in proceeds from sales of Coromandel land were wrongfully diverted to Zhong after the company’s collapse.
Tsur Somerville, a professor at the University of B.C.’s Sauder School of Business, told the IJF that Coromandel’s insolvency was unsurprising when the news first came out.
“Essentially, they got into a cash flow squeeze. They had all this land that was highly leveraged, they’ve got all these land loans, they’re having to make payments on them. The regulation process is taking longer than they think. They can’t do the presales, they can’t refinance this stuff because land prices have fallen, interest rates have risen,” he said in an interview.
But the allegation that Coromandel failed because of misconduct came as a shock.
“I think it’s a Warren Buffett line: When the tide goes out, you see who’s not wearing a swimsuit,” Somerville said, paraphrasing the billionaire investor. “Well, with embezzlement you sold your swimsuit a while ago and pocketed the money.”
None of the allegations in the Mo lawsuit have been proven in court, and Zhong has denied all wrongdoing. His lawyer did not respond to requests for comment.
In a May 2024 response to the claim, Zhong said he did not misappropriate investment funds or fraudulently divert the proceeds from sales of Coromandel assets to himself, and that all investment decisions were made with the express informed consent of the Mo family. Zhong wrote that Mo and his sons “were not in a vulnerable position with respect to the defendant, nor were they unsophisticated in business and real estate matters” and he “did not take unfair advantage” of them.
“The defendant did not engage in a conspiracy designed to embezzle, misappropriate or conceal investment funds, as alleged or at all,” Zhong wrote in his response.
Zhong’s response says the Mo family has had full control over Coromandel bank accounts and offices since the summer of 2023.
The numerous co-defendants named in the Mo claim include Zhong’s parents, his estranged wife and two other current or former girlfriends. Also named are several senior executives at Coromandel.
In their responses to the claim, they have all denied any wrongdoing, including knowledge of or knowing participation in a fraudulent scheme and misappropriation of investment funds.
Basquiats and multi-million-dollar homes
At the time of Coromandel’s collapse, the group of companies had been around for a decade and had active development projects underway on 16 valuable parcels of land.
“They bought a lot of property, but didn’t get a lot of stuff developed,” Somerville recalled.
Nonetheless, the company made its mark. With art lover Zhong at its helm, Coromandel helped bring exhibits by artists like Takashi Murakami, Cindy Sherman and Claude Monet to the Vancouver Art Gallery, and sponsored the city’s annual Cherry Blossom Festival for five years.
The company also hired former Vancouver city councillor Raymond Louie as its chief operating officer. Louie has not been named as a party in any of the lawsuits reviewed by the IJF and he did not respond to requests for comment.
Mo was brought in as an investor in 2013, just as the first Coromandel entity was incorporated, according to his family’s claim. The claim said Mo had been friends with Zhong’s father for years and he agreed to invest in the development company as a silent partner. Though the structure of the agreement evolved slightly over the years, Mo, his sons and their associated companies say they had a 70-per-cent ownership stake in Coromandel.
The notice of claim details a timeline of Mo’s investments into Coromandel, beginning with infusions totalling more than $73 million in 2016. The lawsuit says he steadily contributed additional funds over the next seven years, even agreeing to invest approximately $5 million in a company controlled by Zhong and an associate in March 2023, after Coromandel had filed for creditor protection.
Throughout this time, the Mo lawsuit alleges Zhong and his associates “wrongfully and maliciously conspired and combined among themselves to defraud and injure the plaintiffs.”
The claim lays out an alleged scheme to divert the investment funds away from the development projects and use the money to buy homes and paintings or pay off debt. This arrangement was allegedly concealed from Mo through deceptive accounting, including fake contractor invoices and falsified entries in business ledgers.
As an example, the lawsuit alleges that Zhong transferred a total of $20 million from one Coromandel company to his personal accounts through more than 60 transactions between April 2019 and July 2023. Millions more were allegedly transferred to his associates in the same time period.
The claim lists 12 homes that were allegedly bought using embezzled funds, with purchase prices adding up to more than $43.7 million. Ownership for seven of those properties was registered to Zhong’s mother or father, two to an ex-girlfriend who is also mother to two of his children, one to his alleged girlfriend at the time, one to her father and one to a shell company she controlled, according to the lawsuit.
About $6.9 million was used to purchase 12 paintings and two sculptures, including a collection of four paintings by Jean-Michel Basquiat, the claim states. Zhong then allegedly used that art as security to obtain lines of credit for his personal use.
On top of all that, the Mo family alleges Zhong took out two life insurance policies for himself and caused two Coromandel companies “to pay extravagant premiums on these life insurance policies using investment funds” — totalling nearly $300,000 a month — “then borrowed against the value of these policies to further dissipate the investment funds.”
Proceeds of land sales allegedly diverted
Mo claims he began unravelling the alleged scheme after February 2023, when local media reported that Coromandel had filed for creditor protection.
At first, Mo believed Zhong’s assurances that journalists had “grossly exaggerated” the severity of the company’s financial problems and he agreed to invest more money, according to the notice of claim.
Zhong allegedly assured Mo that he’d be able to sort out Coromandel’s financial woes by selling its land holdings.
But another two recent lawsuits allege money from some of those land sales was wrongfully diverted to Zhong or people related to him. The claims were filed this year in B.C. Supreme Court by partners in two land development projects planned for Coromandel-owned properties in a valuable real estate corridor along Vancouver’s SkyTrain rapid transit system.
The notices of claim state that lawyer Jason Chieh-Sheng Wang and his Vanguard Law Group were retained to disburse the proceeds from selling those land parcels in February 2023. They allege that instead of returning roughly $19.4 million from the sales to the development partners, Wang breached his contract and fiduciary duty by sending the money directly to Zhong.
Zhong is not named as a defendant in either claim. Wang has filed responses which both say he and Vanguard “deny each and every allegation” of wrongdoing, and did not owe any duty to the plaintiffs.
Wang wrote in his responses that “Mr. Zhong was given blanket authority to operate the Coromandel organization and all of its constituent companies, general partners and limited partners as he saw fit for the overall benefit of the investors in those enterprises.” In that light, Wang continued, “the defendants had no reason to question the direction as to payments of the purchase funds.”
Wang is also named as a defendant in the Mo claim, which makes the same allegations about proceeds being wrongfully diverted in the two 2023 land sales, along with a third sale worth $7.9 million.
The claim alleges further wrongdoing by Wang for his role in securing a US$3.3 million line of credit agreement for two Coromandel companies, with five of the aforementioned paintings as security. Zhong allegedly withdrew from those lines of credit for personal use.
East West Bank, the U.S. financial institution that granted the line of credit, filed suit against Wang as well, alleging fraudulent misrepresentation and negligence.
Wang has admitted in his responses to those claims that he falsely notarized the signatures of Mo, his sons and his wife, on documents necessary to secure the agreement. Wang acknowledged he’d sworn that each of the family members had appeared before him by video-conference, when none of them had, but said he’d done so “for the benefit and convenience of” the Mos.
Wang’s responses say that Zhong and other Coromandel representatives had assured him the Mos’ signatures were legitimate.
None of the allegations have been proven in court, and Wang did not respond to requests for comment.
In the meantime, insolvency proceedings related to Coromandel are ongoing. Claims from creditors continue to be filed in B.C. Supreme Court against Coromandel companies, Zhong and Mo, with new files initiated as recently as April.
As Coromandel’s majority owner, the Mo claim states that, as of December 2023, he is on the hook for more than $358.8 million in court judgments and claims on guarantees related to the company’s collapse.
A trial date has yet to be set for the Mo claim. The matter is currently in the case planning stage, according to the B.C. Supreme Court registry.
Courtesy of MSN News – May 7, 2025
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