BRITISH COLUMBIA SECURITIES COMMISSION  
Securities Act, RSBC 1996, c. 418  
Citation: Re DFRF Enterprises and others, 2022 BCSECCOM 405  
Date: October 4, 2022  
DFRF Enterprises LLC (DFRF Massachusetts),  
DFRF Enterprises, LLC (DFRF Florida),  
Daniel Fernandes Rojo Filho, Heriberto C. Perez Valdes,  
Sabrina Ling Huei Wei, Justin Colin Villarin  
and James Bernard Law  
Gordon Johnson  
Audrey T. Ho  
James Kershaw  
Vice Chair  
Commissioner  
Commissioner  
Panel  
April 19, 20, 26, 27, 28, 2021  
May 7, 10, 11 12, 13, 2021  
June 14, 15, 16, 17, 18, 2021  
July 12, 13, 14, 15, 16, 2021  
Hearing Dates  
December 30, 2021  
October 4, 2022  
Submissions Completed  
Findings Date  
For the Executive Director  
Appearing  
Paul Smith  
Sabrina Ling Huei Wei  
Justin Colin Villarin  
James Bernard Law  
For Herself  
For Himself  
For Himself  
Findings  
I.  
Introduction  
[1] This is the liability portion of a proceeding under sections 161(1) and 161(6)(b) of the  
Securities Act, 1996, c. 418 (Act). This proceeding was initiated by a Notice of Hearing  
(NOH) issued on May 25, 2020 (2020 BCSECCOM 167).  
[2] The NOH divides the allegations of misconduct into three main groups. The first group of  
allegations relate to the respondents DFRF Enterprises LLC (DFRF Massachusetts),  
DFRF Enterprises, LLC (DFRF Florida), Daniel Fernandes Rojo Filho (Filho) and  
Heriberto C. Perez Valdes (Valdes), collectively defined as the US Respondents. In  
particular, the NOH alleges that orders under section 161(6)(b) of the Act are warranted  
against the US Respondents, as the US District Court of Massachusetts in the United  
States (US Court) has found that they committed securities fraud in that jurisdiction. The  
second group of allegations are allegations that the respondents Sabrina Ling Huei Wei  
(Wei), Justin Colin Villarin (Villarin) and James Bernard Law (Law), collectively  
defined as the BC Respondents, participated in the fraud of the US Respondents and by  
doing so, breached section 57(b) of the Act. Alternatively, the NOH alleges they made  
misrepresentations contrary to section 50(1)(d) of the Act. The third group consists of a  
fraud allegation against only Wei, contrary to section 57(b).  
[3] The evidence does not suggest that the respondents made any material distinction  
between the two corporate respondents, DFRF Florida and DFRF Massachusetts. To the  
extent that those entities were referenced in exhibits or testimony, it is difficult to tell  
which entity was being referred to. For the purposes of this decision, we have kept in  
mind that there are two distinct DFRF entities. However, there is no issue which turns on  
which one is being referenced at any particular stage. We will only make a distinction  
between DFRF Florida and DFRF Massachusetts if we find that it is material. We  
generally refer to them together, or interchangeably, as DFRF.  
[4] The essence of the fraud allegation against the US Respondents is that they operated a  
Ponzi and pyramid scheme through DFRF, supported by various false claims about the  
nature of DFRF’s business and the investment returns available. It is alleged that these  
allegations are proven by evidence led in this proceeding. It is also alleged that the  
findings by the US Court and the public interest in British Columbia justify our making  
orders under section 161(6)(b) of the Act.  
[5] The misrepresentation allegations against the BC Respondents relate to repeating certain  
specific claims of the US Respondents when the BC Respondents knew, or should have  
known, that those claims were false. These misrepresentation allegations are expressed in  
the alternative to the primary allegations against the BC Respondents.  
[6] The primary allegations against the BC Respondents are that they repeated false claims  
about DFRF made by the US Respondents and took various other steps, such as  
organizing events and encouraging others to solicit investors, thereby participating in the  
fraud of the US Respondents. It is alleged that the BC Respondents repeated these claims  
and took these steps at a time when they knew, or should have known, that the US  
Respondents were committing a fraud.  
[7] The executive director submits that a total of 137 investors who were residents of British  
Columbia or had connections to British Columbia, and who had invested the equivalent  
of C$1,466,615 in DFRF, were defrauded.  
[8] The fraud allegation which is made solely against Wei is that she diverted $90,000 in  
funds paid by investors for DFRF investments to her own benefit.  
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[9] The NOH initially named five BC respondents. By the time of the hearing, two of those  
respondents, Monita Hung Mui Chan (Chan) and Marie Joy Vincent (Vincent), had  
negotiated settlement agreements with the executive director and this proceeding had  
been discontinued against those two respondents. The three remaining BC Respondents,  
Wei, Villarin and Law, fully participated in the hearing, although only Wei testified.  
None of the US Respondents participated in the hearing or in this proceeding.  
[10] A substantial volume of written documentation and video recordings was admitted into  
the record. We heard testimony from a Commission investigator and from four  
individuals who invested in DFRF. We also heard testimony from an accountant called  
by Wei and, as noted above, Wei testified on her own behalf.  
II.  
Procedural Issues Regarding Adjournments and the Admissibility of Certain  
Exhibits  
[11] We heard two applications to adjourn the hearing. The first application, seeking an  
adjournment of several months, was made by Wei on March 29, 2021 and resulted in an  
adjournment of the commencement of the hearing from April 6 to April 19. The second,  
made by Villarin, was made on the first day of the hearing and was dismissed. In each  
case, the panel indicated to the parties that the reasons for dismissing the adjournment  
application, or for allowing the adjournment only in part, would be provided in this  
decision.  
[12] We also heard several objections by the BC Respondents regarding certain evidence  
sought to be introduced on behalf of the executive director. We ruled on those objections  
as they were made and explained our decisions as the hearing unfolded. However, there  
was one type of objection which the BC Respondents made repeatedly. We have further  
explained in this decision how we addressed such objections during the hearing and in the  
course of reaching this decision.  
A.  
First Adjournment Application  
[13] Wei was initially represented by counsel. Wei collaborated with her former counsel in  
reviewing the voluminous disclosure made by the executive director. We infer that the  
collaboration included many hours of work by Wei reviewing documents and writing  
notes which would put the documents into context. Wei’s counsel withdrew from the  
record many weeks before the hearing and provided Wei with access to a file containing  
the relevant documents and Wei’s notes. However, as the hearing date drew closer and  
Wei sought to access the relevant file she found she had permanently lost access to her  
considerable work. Apparently, the difficulty related to a change in the software used by  
Wei’s former counsel. Wei applied for an adjournment of several months so she could  
repeat her work. Her application was supported by the other BC Respondents.  
[14] Counsel for the executive director opposed any lengthy adjournment. The executive  
director argued that since Wei had already reviewed the relevant materials in detail the  
effort needed to review them a second time would be much reduced compared to the  
effort needed the first time. The executive director asserted that a significant proportion  
of the documentation had been sent to or created by Wei in the course of the conduct  
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which was the basis for the allegations against her. The executive director noted that by  
the date of the adjournment application, less than 10 days before the scheduled start of  
the hearing, Wei should have anticipated that her time would be fully occupied by  
preparation for the hearing, so at that point Wei would be in a position to dedicate herself  
full time to repeating her document review. The executive director referred to the public  
interest in having scheduled hearings proceed efficiently and on time.  
[15] We granted a 13 day adjournment of the start of the hearing. We did so on the basis that,  
from our decision date on March 31, 2021, an adjournment to April 19 would be  
sufficient to allow Wei to complete the work which she said was essential. We were also  
influenced by the indication from counsel for the executive director that his first witness,  
a Commission investigator, would be giving direct evidence which would continue  
beyond the first day of the hearing. This would allow Wei more time beyond April 19 to  
prepare her initial cross examination questions.  
B.  
Second Adjournment Application  
[16] Villarin’s adjournment application was made orally at the opening of the hearing. The  
basis for Villarin’s application was that he wished to retain legal counsel. Villarin  
provided no evidence or submission regarding whether he had searched for legal  
representation prior to the first day of the hearing, how long he expected it would take  
him to find legal representation or why he had not raised the issue at a prior time.  
[17] Villarin’s adjournment application was dismissed. The Commission strives to provide  
respondents with an opportunity to obtain legal representation. However, it is up to a  
respondent to take advantage of that opportunity. No respondent should expect that a  
hearing will be adjourned if the respondent waits approximately 11 months between the  
issuance of a notice of hearing to the commencement of a hearing to assert an intention to  
obtain legal representation.  
C.  
Admissibility And Weight Of Certain Types of Evidence  
[18] The BC Respondents objected repeatedly to the admission of evidence in a form which  
offered no opportunity for them to cross examine a witness or otherwise test the  
evidence. For example, there were objections to evidence from government records in  
Montana regarding reported activities at a mine in that state, there were objections to the  
introduction of transcripts of interviews with investors who did not testify at the hearing  
and there were objections to the introduction of notes made by investigators while  
interviewing investors who did not testify at the hearing. In general, we admitted the  
evidence in question despite the objections and we gave our reasons at the time of our  
rulings. In the course of some of our rulings, we made reference to the need to evaluate  
the weight we would need to attach to certain evidence. We take this opportunity to  
expand on that reference.  
[19] The Commission’s Hearing Policy (Policy 15-601) contains multiple references to  
evidence adduced during a hearing. In particular:  
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s. 3.6(c) [Disclosure, Timing]  
The Commission considers all relevant evidence from a party in an  
enforcement hearing, unless some other reason precludes the evidence from  
being entered as an exhibit. Therefore, if the evidence is relevant, it will permit a  
party to introduce it.  
s. 4.1 [Evidence (a) Admission of evidence] In enforcement hearings, the  
primary test for the admission of evidence is its relevance to the allegations in the  
notice of hearing.  
The Commission will receive all relevant evidence from a party, unless some  
other reason precludes the evidence from being entered as an exhibit, such as  
being privileged. The Commission is not bound by the formal rules of evidence  
that apply in the courts. Generally, evidence should be the best evidence. The  
Commission expects that the party entering any evidence as an exhibit will  
properly describe it in a list of documents, and make submissions on its relevance  
during the hearing. A party may dispute the admission of any evidence before or  
during a hearing. (Emphasis added).  
[20] In the law of evidence, “best evidence” means the original or primary  
evidence. Examples include the original document (like a will or a contract with wet  
signatures), a photograph taken by a known photographer, or the direct oral evidence of a  
witness given at trial. This is in contrast to “secondary” evidence, such as a photocopy of  
a contract, or a scan of a photograph, or a previous statement of a witness read into  
evidence.  
[21] The issue of what is “best evidence” frequently comes before Commission panels in the  
context of witness statements. A useful discussion of this can be found in Re Barker,  
2005 BCSECCOM 146, where the panel ranked the types of testimonial evidence  
available, and how it would treat the different categories:  
98 The best evidence from these sources is that of Scalzo, Harris and Smit. This  
was testimony in the hearing, which provided us with the opportunity to hear  
their stories directly, observe their demeanour, and to ask them questions  
ourselves.  
99 The next best evidence is the transcript of Barker's interview. Although  
unable to observe his demeanour or ask questions, we were able to assess his  
evidence with the confidence that comes from sworn testimony with counsel for  
the witness present.  
100 Third best is evidence consisting of a Commission staff investigator's notes  
of telephone interviews with other shareholders. The statements of the  
shareholders are not sworn, nor is there a transcript of their conversation with  
staff, so we do not have the context of the questions that Commission staff put to  
them, or their verbatim answers. Nor is the evidence, for the most part,  
corroborated by other, more reliable evidence. We therefore gave this evidence  
no weight when considering the allegations of misrepresentation and fraud.  
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101 Finally, the evidence includes questionnaires completed by investors who  
were not interviewed by Commission staff. Investor questionnaires are  
undoubtedly a useful tool to help staff determine which investors may have  
relevant evidence in an investigation. However, on their own these questionnaires  
have little probative value and we gave them no weight when considering the  
allegations of misrepresentation and fraud.  
[22] In Re Hu, 2011 BCSECCOM 355, the panel admitted the relevant evidence of a witness  
(Tian) and a statement discovered in her purse as they were relevant to the central issue  
of whether the respondent knew the password to the witness’ account. The panel  
admitted them, but gave them no weight, as the respondent would be unable to cross-  
examine the witness. The panel further admitted, but gave no weight to translated tapes  
without any evidence relating to the speakers or the accuracy of the translations (see  
paras. 152-159).  
[23] In Re Corporate Express, 2004 BCSECCOM 680, the panel deliberated about the  
admissibility (but not the weight) to be given to transcripts of interviews of potential  
witnesses. The panel found in multiple circumstances that:  
28 For the reasons cited by the Executive Director, we agree that these  
documents are relevant. We therefore admit them as evidence. However, the  
best evidence in this area would include viva voce evidence from [the  
witness]. The Executive Director should call him as a witness. If it turns out that  
[the witness] is unable to testify, the parties can address in argument the weight  
we ought to attach to these documents in those circumstances.  
[24] How much weight should be given to any particular piece of evidence is something this  
panel has carefully considered on a case by case basis. In each instance, we have  
considered factors such as whether the evidence in question is uncontradicted and  
whether the evidence is generally consistent with other, well supported evidence. This  
latter factor sometimes applies, for example, in the case of notes taken by Commission  
investigators of statements made by investors regarding what representations they heard  
before deciding to invest or reinvest in DFRF. Unlike the panel in Barker, we have not  
reached the conclusion that investor questionnaire responses or any other category of  
evidence should, as an entire category, be given “no weight” in all circumstances. We  
have given weight to evidence about investors collected from sources such as  
investigators’ interview notes, emails and investor questionnaire responses, when that  
evidence is consistent with other well supported evidence such as video recordings and  
documents, or when it is uncontradicted by any respondent.  
[25] The bulk of the evidence from investors is largely uncontested and consistent with a  
significant volume of evidence we observed in video recordings, in documents which are  
clearly authentic and in other sources that we might, in isolation, give less weight to. To  
be specific, given the existence of a significant body of highly reliable evidence about the  
nature of the message delivered to investors by the BC Respondents generally, it is  
appropriate to give some weight to similar evidence about the nature of the message  
received by individual investors even where such evidence was collected from investors  
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who did not testify at the hearing and be available for cross examination. This is  
particularly true where the evidence was not contradicted by any respondent.  
III.  
A.  
Factual Background  
US Respondents and Overview of the DFRF Scheme  
[26] In January, 2010, Filho was named as a target in a US federal civil forfeiture proceeding  
in Florida arising from allegations about drug trafficking, money laundering and a Ponzi  
scheme (Earlier Florida Proceeding). In August, 2010, a default judgment was entered  
against Filho in the Earlier Florida Proceeding. In August, 2013, Filho consented to a  
civil forfeiture to the US government of more than $25,000,000 held in bank accounts in  
the names of his minor children and two businesses that he controlled.  
[27] The paragraphs which follow summarize some of the events related to the promotion of  
DFRF. Not every promotional event is mentioned. Including all details would be overly  
repetitive and would not add to the understanding of events in a material way.  
[28] DFRF Florida and DFRF Massachusetts were formed in April, 2014 and July 2014,  
respectively. On October 9, 2014, Filho signed documents on behalf of DFRF to open an  
account at Citibank (Citibank Account).  
[29] According to a business model document and various presentations generated by DFRF,  
key elements of the DFRF investment opportunity offered to the public included:  
(a) Investors would subscribe for membership interests in DFRF, with a minimum  
purchase price of US$1000 per membership interest  
(b) The maximum investment cap available for the public to invest was US$3.5  
billion  
(c) Members would:  
(i) receive a monthly return of up to 15% on their membership interest  
(ii) receive a 10% commission on the membership interests purchased by others,  
if they referred those investors to DFRF  
(iii) have their membership interest 100% insured by Accedium, an insurance  
company based in London and Barbados  
(iv) have their earnings deposited in their names in the Platinum Swiss Trust  
Bank in Switzerland  
(v) receive a VISA debit card from the bank in Switzerland to access their  
earnings  
(d) DFRF’s main business was a gold mining operation in Mali, Africa  
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(e) DFRF’s entire business was backed up by a physical gold reserve with certified  
documentation that was audited by a renowned Canadian geologist company  
(f) Global Note: there was a note with a certified value of USD$3.5 billion which  
monetizesin a Swiss bank (meaning that as funds were deposited by investors,  
funds from the note would be released to DFRF).  
[30] By October 12, 2014, a video was uploaded on the internet showing Filho speaking in a  
conference room. In the course of the video, Filho invites people to “participate as  
members” in DFRF. Filho tells his audience that participants receive an offshore bank  
account in Switzerland. He asks “do you know how hard it is for an American citizen to  
open an account in Switzerland?” In the video, Filho describes how DFRF makes money,  
emphasizing that DFRF has an existing gold mine in Mali, Africa, and saying “Our  
production is not small. We get 10 tons of gold, 420 million dollars worth.” Filho says  
that the minimum investment needed to enter the business is $1,000, and he emphasizes  
that “everything is insured, you will receive 15%.”  
[31] During his presentation of October 12, Filho introduces Valdes. Valdes represented  
himself to be the president of Platinum Swiss Trust Bank, purportedly a bank of  
Switzerland where DFRF deposited monthly returns from the investments. Valdes  
explains how investors can access funds in the Swiss bank account through “a PIN to  
withdraw money from the ATM”. Valdes states “you will have no restrictions for its  
personal use”.  
[32] On October 20, 2014, another video was uploaded to the internet showing presentations  
that Filho and others made to potential DFRF investors on a boat in Boston,  
Massachusetts. Filho asserts that the gold produced in Africa is of an inferior grade of  
purity, but after shipment to the US and processing it will have a $20,000 per kilogram  
cost but can be sold at market prices for $40,000. Regarding the return for investors,  
Filho says “we cannot state that we are paying a fixed rate of 15%. We have to say we  
will pay up to 15% ... if the mine is not producing how much money will you get? 15%.  
If the machine breaks, you get 15% because the money is already there …”.  
[33] By late October, 2014, investor funds were being deposited into the Citibank Account.  
[34] As the weeks passed, numerous other video presentations were uploaded to the internet  
promoting investments in DFRF. Most of the materials consisted of presentations by  
Filho, although other individuals were often featured in the promotional materials.  
[35] Around the time the BC Respondents were first hearing about DFRF, someone uploaded  
to the internet a presentation dated December 8, 2014, involving several people  
connected to DFRF, including Filho and Valdes. During that presentation, an individual  
named Jeff Feldman was introduced as “the person responsible for the insurance  
company.” Feldman spoke and told viewers that an entity called Accedium Insurance  
Company Limited was a multi-line insurance company that underwrites risk all over the  
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world. According to Feldman, Accedium provided a guarantee to DFRF members “of the  
principal that’s invested.”  
[36] Filho spoke extensively in a presentation dated January 14, 2015, entitled “DFRF  
Enterprises LLC-Business Presentation in Englishwhich was eventually posted by  
DFRF on its own website. During that presentation, Filho stated that DFRF has 54  
mining operations. Filho said: Our main reserves are located in Brazil, which we utilize  
to obtain a credit line. However, the mining activities are being conducted in the country  
of Mali and in three other countries in the African continent.” Filho also said:  
We use our mineral rights, which we potentialize [sic] with [an] insurance policy,  
in order to issue a global note and obtain a credit line that is already placed in a  
bank account in Europe. It's enough money for us to process the gold and to  
conduct all operations we need, without [the] necessity to go into [the] market to  
raise funds from any third party. However, we extend this opportunity to you as a  
member for one reason only. We cannot leverage the credit line we already have.  
We need to use this particular money to support the operations and the projects.  
But with your money, we can block, we can leverage, and then we can process  
the gold. That's why you can participate.  
We are offering up to 15% a month.  
Basically, in the leverage, the company will benefit because three times the value  
of your dollar or your currency, plus that we have $16,000 per kilogram  
production and we bring here $20,000, which means we are doubling the funds -  
double of the triple, we can make up to 600% ... That's the reality. That's the  
truth.  
We are not taking the risk. We are selling the risk for [sic] an insurance  
company. So 100% of your principal, when you become a member, is insured by  
a third party insurance company, which we do have a relationship [with], but we  
do not own that company. We are actually selling the risk.  
You join and you know that you are not going to lose. In my opinion, when you  
do not lose, when you are 100% safe and secure, it's already a good deal. It's  
already a good opportunity. Whatever you can make on top of that, perfect.  
Your money is 100% secure, and is very flexible, because [by] becoming a  
member, you will have online access and also a debit card that you can manage  
your funds. You can transfer anywhere in the world. You can use this card to  
withdraw or to pay your bills and do whatever you want with your money.  
[37] Filho also spoke in a video presentation dated February 2, 2015, that was posted on the  
internet by DFRF with the title “DFRF Enterprises—Part in Assets Part in Money, How  
it Works”. During the presentation, Filho described DFRFs new policy of accepting  
investments in the form of real estate and tangible assets such as vehicles and yachts  
along with equivalent amounts in cash.  
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[38] According to witnesses, investors in DFRF were able to access a web site which appeared  
to display the investor’s number of units and accumulated dividends, compounding as  
time passed. However, investors found that they could not access their cash and began  
asking questions about that. Filho spoke in a video presentation dated March 11, 2015  
with the title "New Debit Cards- CEO Daniel Filho". That presentation was posted on  
the internet by DFRF. The English subtitles for his presentation include:  
The debit card you presently have only allows a maximum daily withdraw [sic]  
of $400 or an equivalent currency. It allows a maximum purchase amounting to  
$2,500, up to $2,500 or equivalent currency, and it also allows you to transfer  
from your DFRF platform account to your debit card $10,000 daily max.  
We made an agreement with a new reloadable card operator, were approved,  
signed the contract, and we are about to issue the new cards. What are the  
advantages you'll have from now on? With the new debit card, you'll be able to  
withdraw up to a daily amount of $2,000 or equivalent currency at the ATM ...  
The limit on purchases goes from $2,500 up to $10,000, that's four times higher,  
and also a daily limit to transfer from your account with us to your debit card of  
$45,000.  
These measures are already in place ... We'll soon be printing out and shipping all  
the debit cards to you, wherever you are.  
[39] On February 24, 2015, newspaper articles were published providing details of a lawsuit  
filed in Framingham, Massachusetts describing DFRF as an illegal pyramid scheme.  
Within days of the appearance of the article, DFRF published a video on its website  
showing Filho attempting to explain away the Framingham lawsuit in what can fairly be  
described as an emotional presentation. Filho said he did not know the claimants, the  
claim was false, and DFRF had over 36,000 members and was helping over 100,000  
children in Africa. The Framingham law suit was subsequently withdrawn.  
[40] On March 19, 2015, Filho announced that DFRF would go public.  
[41] Filho spoke on a video recorded presentation dated May 1, 2015, entitled "DFRF  
Enterprises - Business Presentation Orlando with CEO Daniel Filho 30/04/15". That  
presentation was posted on the internet by DFRF. The video shows an individual named  
Cunha and Filho addressing an audience in a conference room. Cunha stated that he first  
met Filho in the summer of 2014, when he was a consultant performing due diligence  
about DFRF for a client, and that he was so impressed that he became a member himself  
by investing $20,000. Filho also spoke and his statements include:  
We are ready to launch. We are holding this because we have large investors that  
are begging us to wait a little longer ... That's why we are under pressure to wait  
before we launch, because more people want to bring heavy money, large  
deposits now ...  
When I say we are ready to launch the public company, it's because we have  
every single step taken care of already ... We are ready right now to launch. We  
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have May 5th as the official date. It might change. I hope not, because I am so  
excited and anxious to go ahead, to open all the books.  
The results from the IPO of the company came out pretty good, so the value of  
the stock on the first day in the market will be $15.06. We are starting big. The  
company has close to $30 billion in cash out already ... The specialists, they are  
predicting that before the end of the first month, based on the performance and  
the reserves, based on the structure we have, we are predicting that after 30 days  
the value of the stock might go up to $50.  
As a member you have preferred stock. We will secure the same way ·you have  
your principal guaranteed today, without the risk, by an insurance company.  
We will pay 15% dividends, not interest, but dividends, so you'll make 15%.  
Close to 200,000 children we are helping already. 75,000 families we are feeding  
... Remember, we dedicate at least 25% of our earnings for social and  
humanitarian purposes. So if you don't join or you leave, who else will be hurt?  
Thousands and thousands and thousands of people that depend on us today to eat,  
to learn. So we are taking care of hundreds of thousands of people.  
[42] By early May, 2015, there were growing signs of trouble about the substance of DFRF’s  
claims. The lawsuit commenced in Massachusetts, in February, 2015, claimed DFRF was  
a pyramid scheme. This Commission had issued an Investor Alert about DFRF in May,  
2015. Investors continued to be unable to access their promised 15% monthly return.  
With that background, Filho spoke during a video presentation dated May 10, 2015.  
entitled "DFRF Enterprises - Stock Market Registration and Card with CEO Daniel  
Filho." That presentation was posted on the internet by DFRF. The video shows Filho  
answering questions about DFRF's purported conversion to a publicly-traded company.  
His statements include:  
Yesterday was the day where we officially launched the company. We already  
start[ed] the process today of conversion for the members.  
Starting today we are sending ... an authorization form where we are liquidating  
the balance on the account with DFRF in the membership program and  
converting into option [sic]. And during the process we are estimating to finish  
this month, and that's why we already choose [sic] the date on June 3rd, is the  
time frame for us to finalize the entire conversion.  
The preferred shares will have the same benefits, [it] doesn't change anything.  
You'll be insured only for members, because members are the only ones that will  
access the preferred shares ... You will get dividends as a member, and the  
dividends won't be different of what they're getting today.  
The price that we fix is $15.06. That is the ideal valuation that we got in the first  
place. The current value of the stock is already over $18. However, we fix it at  
$15. So all the members that already join expecting the results that might go up  
to $50 during the first month, they can take this advantage and join today,  
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tomorrow, or next week, before June the third. They will have the same benefit  
of the value of $15 per share.  
We search in the market for over 100 credit card processors [but] we couldn't  
find one that is designed [sic] to our program. So finally we choose to purchase  
one. So now we have our own processing card company so we can establish the  
limits.  
As a member, you get the preferred shares, you get the insurance to guarantee to  
secure your principal and all the money that you earn and you leave in the  
platform converted into stock, and you have the debit card also to access  
unlimited your funds that you have available in your account.  
Yesterday we submit [sic] the first request for thousands of cards as [sic] already  
being printed as we speak now.  
We are holding this information [trading symbol and exchange] until June the  
third in order to protect the value and also the entire project ... We cannot reveal  
the institution for security reasons, but eventually we will share that information.  
Everything is run and operating here in U.S. territory so regulated by the U.S.  
Securities [sic], so we have nothing to be concerned about, but for internal  
decisions we prefer not to share what financial institution is behind the credit  
cards ...  
[43] Filho also spoke during a video presentation dated June 3, 2015, entitled "Stock Market,  
Operational System and Debit Card." That presentation was posted on the internet by  
DFRF. Filho’s statements during the presentation include:  
We are being attacked for hundreds of thousands of times, basically every single  
day, people trying to slow us down, to compromise our operation, to make sure  
that we won't be able technically speaking to launch or to release anything.  
I'm feeling very happy. I know we are causing a lot of noise in the market. I  
know that we are not making everybody happy. The only people that are happy  
are the good people, the right people, the decent ones, the ones that want to help  
others, the ones that want to be part of this family with intention to earn it, to  
make money, in order to help others. If you are like this, you belong to our  
family.  
What we are doing is, is extending the date until this coming Friday [June 5]. If  
you already join, if you already increase your contribution, if you are in process  
to become [a] member, you have until this coming Friday utilizing the same price  
... We are holding the price of $15.06, but only until this coming Friday. So you  
have two more days.  
For the next week and the following week, we are increasing this amount; we are  
increasing the value for [to] $35.  
After that, after two weeks, then will be [sic] the price of the share for the day in  
the market.  
12  
Probably you already saw that we have a new system. It's been very difficult for  
us to manipulate it, to manage from one side to another one, because of the  
attacks. And the process of registration, especially for the conversion, has been  
slowing down. That's why we made the decision to postpone a few more days. I  
repeat, $15.06 until Friday, $35 for the next two weeks, then daily market.  
We predicted, we estimated, that today June the 3rd we could get close to $50 per  
option. But here is the news. We are not close to 50, but we already passed the  
50, passed 51, 52, 53. We already passed.  
Since we start this deal until today, people are raising false testimonials attacking  
us, creating biogs, going in official channels, provoke the authorities worldwide.  
They are trying to do everything they can to stop and even to knock us down. But  
what is happening is incredible, is phenomenal, is quite the opposite. The more  
they attack, the more strong [sic] we become. This is because of you. This is  
because of our family.  
So you can now see the new tool we have, where you can upload credit in your  
debit card, you can request outgoing wire transfer, you can transfer between  
members, you can buy and sell your options - very simple tool, very easy to use,  
very efficient, and very safe. It's already available ... So you can use your tool to  
benefit and to better manage your contribution and your future assets.  
We have a large number of cards that we are shipping today, and for the next  
week, until the end of the next week, we should have all international cards, the  
one that comes with the microchip you can use in Europe and anywhere in the  
world. It goes directly to you. You're gonna have full support, directly from the  
processing company. Much more flexible, more than what we announced before.  
Right now, we are already supporting over 75,000 families worldwide and close  
to 200,000 children already, and we are increasing this number.  
[44] Filho also spoke during a video presentation dated June 17, 2015, entitled "Stock Market,  
Operational System and Debit Card." That presentation was posted on the internet by  
DFRF. Filho’s statements during the presentation include:  
We announce[d] a few weeks ago that, according to the evaluation, according to  
the performance, everybody was expecting $50 on June 22 as the value of one  
share. So today, the value of one option is not $50, but $64.17 and we [are] still  
growing. So the company's performance is doing so well, we are increasing  
assets, we are increasing production, we are increasing more deals inside of our  
program in the company ... So I repeat, we hold the price at $15.06, and today we  
already hit $64.17 and we are not yet on June 22. So more things can happen in a  
few more days.  
It's mandatory. So you click, you release the amount you have working right now  
in the platform, so the amount will become available. You will see as [sic]  
available balance and with the available balance you can convert into options  
right away. You already sign the letter authorizing the conversion, but this is the  
13  
step, this is the logistics. You go to the page right now. Actually you have 72  
hours, you have three days to perform this. Go to your page. Release the  
contributions you have blocked working right now, and this amount will show as  
available balance so you can convert in options. 72 hours, three days. I'll repeat  
the number. Remember, we had lock [sic] of $15.06, and today the value is  
already $64.17.  
And the last news is for you that are [an] American citizen, resident, or have a  
link with the United States of America ... You already signed a letter authorizing  
us to do the conversion. However, the conversion process for those that have any  
direct link with the United States, we need to follow rules, regulations, and  
protocols. So we are terminating the membership agreement Everybody will have  
a dissolution agreement. So we will terminate it. We will cut the check with the  
full amount you have, including the contribution that is still working, the amount  
you have as available balance. You will receive one check, the satisfaction  
dissolution agreement. You will get the check in your address. And after you  
receive the check, then you can cash it and you can rejoin as a member, investing  
on the stocks of the company ... And you have the same benefit - $15.06.  
You have thirty days starting today for the entire process. So, no rush. Don't be  
desperate trying to collect it in two, three days, immediately. So, as soon as you  
can do it, better, but we have to follow protocols, rules, and regulations ... The  
conversion process means terminate the contract, get the check, pay off any  
member in the U.S. or directly connected with United States.  
So, [it] will be a huge step for us, executing this last and final procedure for the  
membership. The termination, the payoff, and then you can rejoin under rules  
and regulation by the Security [sic] Exchange Commission.  
We already receive a substantial number of cards and we already ship the cards.  
Many people are right now using the cards. There are more cards coming now for  
the U.S. members, and starting on Friday, we will print the cards for everybody  
else, all the members around the world, international card that comes with the  
microchip. It's all listed, all approved, and we have the first wave of cards being  
printed on Friday. So again, congratulations. You have patience to wait, and now  
you get the best.  
We already identify [sic] over 100 members inside of this family, people that  
came and join us with a different purpose. They came to cause, intentionally,  
problems. How? People that belongs [sic] to other mentality, they don't have the  
same vision, they don't have the same heart. Maybe because they don't feel, they  
don't understand, they don't see how big it is our vision.  
But we have several professionals, hackers that penetrated our company to create  
the problem so they can deliver to the authorities, complaining to the authorities,  
showing that we have this problem and that problem. So the federal agencies  
have no other choice than [sic] check it out, investigate it, to see if [it] is right or  
wrong. So we already identify all those people, all those problems. We are taking  
very serious matters to protect your interest, my interest, the company's interest.  
We are here to cooperate with the authorities.  
14  
We don't have [the] intention to defraud anybody, but if there is any technical  
violation, we should fix it, we must fix it. We show our face, we bring  
professionals, and we make it happen, so we can help millions and millions of  
people every single day.  
[45] The promotional efforts of the US Respondents resulted in significant funds being  
transferred by investors from various jurisdictions, including British Columbia, mostly  
into the Citibank Account.  
[46] DFRF investors were promised access to their accumulated investment returns using a  
DFRF branded VISA debit card. There is no evidence that any investors connected to  
British Columbia were able to access their invested capital, accumulated promised  
investment returns or referral commissions through the use of any such card, and except  
in limited circumstances, no return of funds invested or return on invested capital was  
received. Subject only to a very limited exception, the evidence before us establishes that,  
for all intents and purposes, investors connected to British Columbia were deprived of all  
money or other property delivered to DFRF at the moment of delivery.  
[47] The United States Securities and Exchange Commission (SEC) commenced an  
enforcement action against nine defendants related to DFRF, including Filho, Valdes and  
both DFRF entities. The evidence adduced in those proceedings was also introduced as  
evidence in this proceeding.  
[48] The evidence from the proceedings in the United States was tendered in these  
proceedings. That evidence demonstrates that:  
(a) DFRF received more than US$15 million from many investors in various  
jurisdictions including British Columbia;  
(b) none of the funds transferred to DFRF were used by DFRF to conduct gold  
mining in Brazil and Mali, and DFRF received no proceeds from gold mining  
operations;  
(c) DFRF’s bank records are inconsistent with any suggestion that DFRF had  
legitimate business activities, whether related to gold or otherwise;  
(d) DFRF had no independent source of revenue except the money received from  
investors;  
(e) DFRF did not spend any money on charitable activities;  
(f) Filho took more than US$6 million of investors’ money, in cash withdrawals or in  
payment for personal expenses and luxury cars;  
(g) Valdes made materially false and misleading statements about DFRF in public  
meetings and videos posted on the internet; and  
15  
(h) DFRF paid Valdes approximately US$521,000.  
[49] Subsequently, in a series of judgments, the US Court entered default and final judgments  
against Filho, Valdes and DFRF. The US Court held that the facts in the complaint must  
be taken as true and, as such, Filho, Valdes and both DFRF entities violated Section 10(b)  
of the Exchange Act and Rule 10b-5 thereunder, and Section 17(a) of the United States  
Securities Act of 1933.  
[50] In the final judgments, the US Court permanently enjoined Filho, Valdes and both DFRF  
entities from violating the registration and antifraud provisions of Sections 5 and 17(a) of  
the Securities Act and Section 10(b) of the Exchange Act and Rule 10b-5 thereunder. It  
further ordered the following payments in US dollars:  
(a) Filho to pay disgorgement and prejudgment interest of $10,269,827 and a $1  
million civil penalty.  
(b) Valdes to pay $657,840 in disgorgement and prejudgment interest and a $551,403  
civil penalty.  
(c) The DFRF entities to pay, on a joint and several basis, $17,840,352 in  
disgorgement and prejudgment interest, and for each to pay a $775,000 civil  
penalty.  
B.  
DFRF Scheme in BC and the role of BC Respondents  
[51] One of the first British Columbia residents to come into contact with DFRF was Chan.  
Chan owned a beauty salon in Burnaby and also belonged to various networks of people  
who promoted and participated in a number of direct sales, multi-level marketing and  
other small scale business opportunities. Wei, Law, Villarin and Chan all knew each  
other through their various levels of participation in some of the same small scale  
business opportunities.  
[52] Wei is an accountant by training who articled with a major accounting firm and worked  
as an auditor. At the time of the DFRF promotions in British Columbia, Wei lived in  
British Columbia, was involved in a number of smaller business ventures and was  
working as a consultant for a business which was seeking to develop a mine in Montana  
called Pony Mountain.  
[53] Law is a businessman who, at the time of the DFRF promotion, lived in British Columbia  
and was involved in a number of smaller ventures, including at least one multi-level  
marketing business. Law claimed to have experience regarding gold production in Africa.  
Law attended DFRF meetings and events with Wei.  
[54] Villarin is a businessman who, at the time of the DFRF promotion in British Columbia,  
lived in British Columbia and had previously been registered to sell insurance and mutual  
16  
fund products. Villarin had a close relationship with Chan and participated in some of the  
same ventures that Chan was involved in.  
[55] On December 5, 2014, Chan sent an email regarding DFRF to a distribution list. The  
identity of everyone included on the distribution list is not known, but Villarin was  
specifically a recipient of the email. Chan’s email forwarded a copy of a prior email  
inviting her and her “people” to meet Filho, who was identified as the chair of DFRF.  
Chan’s email went on to report that:  
Marie said this project is real, I talk with the CEO who said their company just  
like the regular investment projects for people to investment WE are just the  
members company share their dividend with their members is legal their project  
meet all the legal rules we won't have any problems. Join Mon 8am Vancouver  
time live conference meetwithmarie.info.  
[56] On December 11, 2014, a representative of DFRF sent Chan an email attaching what was  
described as DFRF’s English and Spanish presentation. The attachment to that email was  
a 14 page presentation deck drafted in English. The content of the presentation deck  
included the following:  
(a) a general overview page which included the question “why buy Membership from  
DFRF” (Italics in original);  
(b) a quote from Filho indicating that DFRF’s core business is gold mining and  
purchasing reserves and mines, and that “we currently bring into the US market  
nearly 10 tons of gold on a monthly basis, extracted from the mines in Mali,  
Africa”;  
(c) a page indicating that what could be purchased was a membership interest in  
DFRF and that:  
It is important to highlight that the principal initial contribution made by  
the Member will result in steadily monthly earnings (Return) that may  
reach as high as 15%. Such earnings will then be deposited, under the  
Member’s name, in the Platinum Swiss Trust bank (PST), in  
Switzerland. All DFRF Members should then receive a Company-  
branded debit card to access their earnings and use the money as they  
choose to, anywhere in the world.  
(d) a page describing the operational structure for DFRF which referenced 10 tons of  
gold produced monthly by DFRF “in Mali,” other reserves, particularly in Brazil  
and a well-known geological consulting company GEOSOL issued the evaluation  
report on DFRF’s reserves;  
(e) some data about a particular gold resource in Brazil called Camarinhas;  
17  
(f) a chart showing the growth of an initial $10,000 investment compounding at 15%  
monthly to $53,502.50 in one year;  
(g) a page describing the risks associated with the investment which states that the  
total initial investment is insured and that reinvested returns could also be insured.  
The investment was described as a “100% HASSLE-FREE and SAFE Haven for  
YOU and your CAPITAL” with “an almost zero risk assessment”; and  
(h) various other content which might appear to make an investment appear  
attractive.  
[57] Wei’s introduction to DFRF by Chan occurred in or about December, 2014. In her direct  
evidence, Wei described her introduction to DFRF, and the context for that introduction,  
as follows:  
“Regarding DFRF, Monita Chan contacted me beginning of December. It was  
the first week of December 2014. And that's when she shared with me that she  
knew of a company that was actively looking for gold producing, gold-producing  
properties and, and projects and proven reserves.  
So she was actually on her way to the company, to DFRF, down in Florida. She  
was supposed to be there, and I believe she was there, like, December 7th, 8th,  
somewhere in that range. And so prior to her leaving Vancouver, that is when she  
contacted me to say, "I'm going down to check out this company. When I come  
back, I'll share with you what I found out," and that was the first time that I had  
heard about DFRF. My role with the Pony Mountain project was that of CFO,  
and my role was to move the whole project forward.”  
[58] Wei was working, at the time, with an owner of the Pony Mountain project (Pony  
Mountain Owner). Pony Mountain was a mining project in Montana that was looking for  
funding. Wei testified that the Pony Mountain Owner:  
was interested to see if I could be able to assist him to locate some private  
financing or put together a joint venture where we could have a long-term joint  
venture partner.”  
[59] And, Wei testified:  
“So once Monita Chan came back after her trip to Florida, she shared with me a  
video, and I believe everybody here has seen the video during the presentation  
...”  
[60] Wei asked various questions of DFRF representatives and, as is discussed below, made  
some inquiries on her own. She then became involved in two processes in relation to  
DFRF. One process was directed towards obtaining financing from DFRF for the Pony  
Mountain project. The other process was directed towards presenting the “opportunity” to  
invest in DFRF to British Columbia residents.  
18  
[61] By the time Wei became involved in presentations to current and potential new investors  
in British Columbia, Villarin had already been involved in that effort for a period of at  
least several days. Villarin had what he characterized as a close relationship with Chan.  
Villarin was deferential to Chan, a conclusion which is supported by the following  
extracts from the transcript of Villarin’s interview with Commission investigators:  
A
A
I see. Okay.  
Okay.  
Moving on to DFRF –  
Q
A
-- how did you first hear about it?  
I first heard about it from Monita. Monita worked with me for a while.  
She helped me build a big team at Seacret. That's how I met her, from Seacret.  
And then she -- we just became good friends. She's kind of like an aunty now or  
so. And she ended up signing with me as well when I started selling SOZO  
coffee.  
And then she got introduced to some investment company from Asia or  
something and then shared it with one of her friends in France, and her friend in  
France goes, hey, there's this new company. And then they decided to learn a  
little bit more about it.  
Monita shared it with me. I just thought it was a scam. I kept thinking it was a  
scam and all that stuff. And then she actually went down to Florida -- to fly and  
meet the owners like Daniel. And apparently there was FBI agents there, and the  
mayor of the city was there, and they were all, you know, investing in the  
company, so she came back.  
I still didn’t believe in it, so I always asked friends. I asked my friend [name  
redacted] who is still in the industry as well to go around and ask other people in  
the industry about Daniel. And a lot of like well-established people vouched and  
said he’s a good person and this is a real company.  
So then I gave Monita the benefit of the doubt I always liked to help her because  
she doesn’t really speak English too well, so she always wants me to help present  
things that she’s trying to present to other people. So that’s how I got started and  
learning about DFRF.  
[62] Villarin admitted that his instincts alerted him early on as to the likelihood that DFRF  
was, in his own words, a scam. Despite this, one of the first steps taken by Villarin was to  
assist a DFRF representative to attract investor interest in a presentation regarding DFRF,  
including by preparing a promotional document to be circulated to potential attendees.  
Villarin helped prepare and circulate a one page flyer in advance of a December 19, 2014  
meeting with potential DFRF investors. The flyer included the words “learn how to  
receive 15% monthly returns with a 100% guarantee on capital, covered by insurance,”  
and Limited seating, please book in advance.” The meeting was scheduled to take place  
in an office at 383 West Hastings Street in Vancouver in a building commonly known as  
Jameson House. That office belonged to the Pony Mountain Owner.  
19  
[63] Through her relationship with the Pony Mountain Owner, Wei had access to the Jameson  
House office, a location which she in turn made available for a number of DFRF  
presentations to potential investors, including the December 19, 2014 meeting promoted  
by the flyer which Villarin prepared and circulated. Some investor witnesses would later  
comment that the building and office space was impressive and contributed to their  
comfort with the underlying credibility of the investment and the parties involved.  
[64] Before December, 2014 ended, some British Columbia residents had made investments in  
DFRF and more were considering making such investments.  
[65] On January 3, 2015, two emails were sent to a number of people setting out the schedule  
for a number of presentations to be made the following week, including presentations to  
be made by Wei, Law and Villarin.  
[66] A further email regarding the scheduling of presentations was sent by Wei to Chan, Filho,  
Villarin and others on January 16, 2015. The body of that email is reproduced in full  
below:  
Dear Monita,  
Let's finalize a schedule for Vancouver meetings both English and Chinese for this  
upcoming week starting tomorrow. We can also schedule video conference  
meetings for your prospects in Asia and other places.  
I believe it is very important now to target and close the large prospects who were  
waiting to see DFRF commitment to Montana Pony project. I will personally assist  
you in confirming this as I am told the contract will be signed today and funds  
forwarded.  
We will schedule meetings at your office, then for the big money people bring  
them to Downtown office. I will also make [the Pony Mountain Owner] available  
to come in to say hello.  
We need to build the foundation so that when Heriberto is back before the end of  
the month that we can put key people in front of him.  
Both James and myself are dedicated to work with you on building the DFRF  
membership worldwide!  
Thank you!  
Sabrina  
[67] Later in January, 2015, Villarin was emailing to existing and potential investors links to  
presentations regarding the benefits of investing in DFRF. During that time period, Wei  
and Law attended a dinner which had been promoted as an event at which information  
about DFRF would be shared. Villarin circulated emails promoting the dinner. Wei sent  
20  
an email confirming that she and Law would be attending and speaking at the dinner and  
she clarified how she and Law should be identified when introduced to potential  
investors. Wei asked to be described as “an investment banker and consultant to  
companies in the fields of real estate and mining.” She referenced her accounting career  
as a senior auditor with a major firm and a portfolio manager of a real estate fund, and  
how she was “instrumental in assisting DFRF in acquiring its first producing gold mine in  
the USA.” She asked that Law be described as a “Gold Exporter and DFRF VIP  
Member.”  
[68] Late in January, 2015, a new form of promotional slide deck regarding DFRF began  
circulating (Canadian Presentation). The Canadian Presentation was virtually identical to  
the version delivered to Chan on December 11, 2014, but also had some notable new  
content, including:  
(a) photos under the heading “Corporate Offices” of two large, impressive buildings,  
one described as “US Headquarters” and the other described as “Canadian  
Headquarters.” The building shown as the Canadian headquarters was the  
Jameson House building in which Wei had arranged to borrow space from the  
Pony Mountain Owner;  
(b) added emphasis on DFRF’s charitable work, indicating that DFRF donates 25%  
of its profits to such work;  
(c) listed DFRF gold mines and reserves in several jurisdictions, including the Pony  
Mountain project in the United States;  
(d) a simplified pro-forma of the compounded value of $10,000 over one year at a  
rate of return of 15% per month;  
(e) in relation to what was described as DFRF’s gold mines and reserves in Mali, a  
photo of Law crouched beside a basket of gold; and  
(f) the concluding statement “DFRF Enterprises, we put your money to work for  
you.”  
[69] On January 29, 2015, Wei sent an email to an assistant working for Chan which included  
the following language:  
“DFRF is giving a special bonus to our members who contribute USO (sic)  
$10,00+ before January 31, 2015.  
“All contributions above USO (sic) 1OK will receive an immediate BONUS of  
10% of their own contribution credited to their Platinum Swiss Trust (PST)  
account immediately on deposit!  
“This is an incredible gift from DFRF!  
21  
“Please pass on the news…”  
[70] On February 3, 2015 and again on February 8, 2015, emails were sent from the DFRF  
Enterprises Canada email address to a distribution list attaching schedules of conference  
calls which investors could dial into to receive information from presenters for DFRF. On  
February 10, 2015, Wei followed up with an investor with an email that reads:  
This email was sent out on Sunday with the new conference call schedule. You  
said you did not receive it.  
Can you please check again to make sure you did not get it. I want to make sure  
all the other Members received it.  
[71] On February 12, 2015, Vincent circulated an email attaching a 2010 newspaper article  
regarding Ponzi schemes in Florida at the time of the article. The text of Vincent’s email  
was “for your eyes only, Jen found it. Please see hereto attached article. Any comment.”  
The article mentions Filho in connection with the Earlier Florida Proceeding and says  
Filho participated in a Ponzi scheme which victimized thousands of people across the  
globe.  
[72] One of the addresses to which the February 12 email was sent was the DFRF Enterprises  
Canada address. Later the same day, Wei replied to the group from the same email  
address, stating, in part “hi all, will discuss with you in person.”  
[73] Shortly after February 24, 2015, the date when the Framingham litigation mentioned  
above was publicized and around the time (March 3, 2015) when Filho made an  
emotional response which was posted to the internet, Wei says that she made some  
inquiries regarding the Framingham litigation, including by searching the court file on  
line and speaking to one of Filho’s lawyers.  
[74] On March 19, 2015, Villarin sent emails to a circulation list with a link to Filho’s audio  
announcement that DFRF would go public. Filho stated in that recording:  
DFRF Enterprises is now incorporate our public company here in United States  
… And also we already report, and it’s already audit, over $30 billion liquid and  
we can trade because we are registered with the New York Stock Exchange and  
we have a licence with the Securities Exchange Commission.  
[75] In late March and early April, 2015, on Wei’s direction, several investors wired funds  
aggregating more than $480,000 to an account in Vancouver belonging to a company  
connected to the Pony Mountain Owner and over which Wei had signing authority. These  
funds represented the senders’ purchases of DFRF memberships and were credited by  
DFRF as such. Eventually, some of these funds were used to pay accounts for the benefit  
of Wei. Wei’s explanations for these transactions are discussed below in further detail.  
[76] In late April, 2015, Filho had a conversation with several British Columbia residents,  
including Villarin. The conversation was recorded. Some of Filho’s claims made during  
22  
the conversation were that DFRF was receiving $4 billion in investments that week, that  
he was releasing $400 million to himself and his family, that DFRF stocks would launch  
at $15 per share and go up to $50 per share within a month and that he was personally  
taking control of two African countries and writing their laws.  
[77] On April 24, 2015, an email was sent from the DFRF Canada Enterprises email address  
attaching a link to a presentation from Filho and telling investors how to convert their  
DFRF memberships into shares as part of the process of going public.  
[78] On May 1, 2015, DFRF hosted a promotional event at the Fairmont Pacific Rim Hotel in  
Vancouver. Wei made many of the arrangements to have the room available. Villarin  
helped with technical arrangements for audio and visual systems at the venue. Law  
spoke, along with Wei. Unknown to the BC Respondents, investigators from the  
Commission were present at the presentation.  
[79] The May 1 presentation was attended by current and potential DFRF investors and was  
video recorded. The recording was put into evidence at the hearing. Some of the notable  
events at the presentation were the following:  
(a) Wei spoke and explained that she was an accountant with a background in  
financial services, in real estate development and in mining development. She  
described DFRF as an opportunity for the average person to amass great wealth.  
She showed photographs of what she described as DFRFs US headquarters in  
Florida (an impressive office tower) and DFRF’s Canadian headquarters (the  
Jameson House building, which Wei noted is in the financial district of  
Vancouver);  
(b) Wei explained to the audience who Filho was, describing him in glowing terms  
regarding his financial successes and his humanitarian commitment;  
(c) Wei described a resource project DFRF had in Brazil, then Wei turned to what  
she described as DFRF’s producing gold mines. Wei referenced these mines as  
the source from which DFRF was able to pay such significant returns and,  
referencing a particular slide, she said “this particular slide talks about our largest  
producing gold mine, which is based out of Mali.Immediately after referencing  
Mali, Wei noted, in a reference that she later made clear was discussing Law, that  
“we have another special guest that has actually had a foot in Mali, sharing with  
you live experiences;”  
(d) Wei added that “it’s very important for each and every one of you to understand  
the business of DFRF and how it makes its money.” Wei went on to describe how  
DFRF brought gold from Mali to the United States with a tremendous profit  
margin;  
(e) Wei noted how the operating gold mine of Pony Mountain was now a part of a  
joint venture with DFRF;  
23  
(f) Wei added other comments which are important enough to quote rather than  
summarize:  
Now the benefits of being a member is this is an exclusive membership.  
And once you become a member, you can be able to share it with others  
around the world. The minimum contribution to get involved with DFRF  
is 1,000 dollars. However, that's only until next week. Because Daniel is  
going to make a very special announcement today and so after next  
week, the minimum will no longer be 1,000 dollars. And he'll explain  
that to you. The member benefits that the company offers is up to 15%  
per month. So what that means is, for example, let's say you contributed  
10,000 dollars. Well, 15% of 10,000 dollars is 1,500 dollars. So that  
means that the company would then pay you up to 1,500 dollars on a  
monthly basis. What would that do to your lifestyle, an extra 1,500  
dollars per month? Pretty nice, huh. So since my participation with the  
company, I actually joined as a member, because as I got to know Daniel  
and got to know DFRF, I thought 'wow this is an incredible program' so I  
decided to get involved. And each and every month when it's my  
anniversary date of my contribution, I'm always very excited to go to my  
computer, check my account balance, and sure enough, on the day  
exactly, my 15% contribution benefit appears in my account. And so  
historically since the company started, it has been 15% each and every  
month. Now the timing was going to be until the end of this year, but  
again, there's going to be a special announcement so you'll find out more  
about that. We spoke about the deposits of your monthly deposits will be  
placed in Platinum Swiss Trust. And you may say "well, it's way out in  
Switzerland how am I going to access those funds?". Each and every  
member will receive a Visa debit card. It's an incredible card because  
you can be able to use it for purchases around the world. You can also be  
able to withdraw monies at an ATM or go to your bank and receive a  
cash advance. Again, all contributions are fully insured.  
This is just to share with you that, for your monthly benefits, if you wish  
to recontribute them, what that could do. What a compounding effect can  
do. So let's say you started off with that 10,000 dollars that we talked  
about. If you recontributed the monthly benefits of up to 15% each and  
every month, at the end of one full year, that will amount to over 50,000  
dollars. In fact, that's 53,500 dollars.  
(Emphasis added).  
(g) Wei then explained some of the logistics related to investing and she introduced  
Law, describing him as someone who had experience in Mali.  
(h) Law then gave a presentation which, again, is important enough to quote in detail:  
Okay that is ... that was the very first tranche of gold that I ever took out  
of Mali. 75 kilos of gold. Now, if you can imagine that, that is 23.64  
carat purity okay, that's ... ah, that was from a single village and the story  
24  
I really want to be able to tell you is about how, the, how much gold  
there is in Africa and why, because there's that much gold are we actually  
able to do what we do.  
Now these are what are called kola nuts. Ok. Kola nuts are something  
that people in Africa eat amongst each other and grow trust and so what I  
actually had to do was I went out to a village and while I was at that  
village, I brought a 50 pound bag of sugar and I put it down on the table  
and I started talking to the various different elders that were there. And  
as I was talking to them if they thought that I was an honest person what  
they would do was reach into a bowl of kola nuts and they would eat  
these things. Now, they are bitter, horrible, they are they taste like .. it'd  
be like chewing on a stick, but essentially what happens is once the  
elders all eat the kola nut with you, they are saying that they are willing  
to do business with you and they trust you.  
Now, for that very first time that I went out there, I also brought with  
myself, a bag of candy. Have you ever, anyone here ever had a mango  
gummy, put up your hand if you've had a mango gummy? Okay well, I  
brought out a bag of mango gummies and just to give you an idea of how  
much gold is out there and how little the people there actually do value  
it. Okay, we value it a lot, but to them it's not worth a lot. That single,  
what I would do is ... I was told take out of your mango gummies and  
little kids would come up to you and they would buy the mango  
gummies off of you, and I said "With what?" and they said, "With gold."  
So what I did was put out my hand and little kids would come up to me  
and they would put gold in my hand. Gold dust. That one bag of gold,  
that one bag of mango gummies returned this. Can everyone see this?  
This is 28 grams of gold. At today's value that's worth over one thousand  
US dollars just this one little thing. I had it smelted down. This is a bag  
of Mango Gummies. Okay, possibly the most valuable bag of gummies I  
ever didn't eat and afterwards, I said to myself "If only I hadn't had those  
two in the beginning I'd have a little bit more". But that, I share with you  
that story because I want you to know that there's a lot of gold in Africa.”  
(i) Filho then joined the presentation at the Fairmont by video link. Filho spoke about  
many subjects, including DFRF’s charitable work (educational programs for  
almost 200,000 children, feeding 75,000 families, and using at least 35% of  
earnings for social and humanitarian programs), that DFRF did not need more  
money but was sharing an opportunity for members and that DFRF was going  
public within a few days at $15.06 and would within 30 days be worth $50.  
[80] All of the investor presentations made in British Columbia, which we saw or which we  
heard described by witnesses, generally followed the Canadian Presentation. In addition,  
Wei testified that “in my presentations I simply relayed the information that was provided  
by DFRF” and that “when giving the presentation I gave the same PowerPoint  
presentation that you saw in the recorded video of the meeting at the Fairmont Pacific  
25  
Rim. I would say that the slide presentation portion of it would be representative of the  
presentation that I had given.”  
[81] On May 6, 2015, Wei joined Filho in Florida in a video presentation posted by DFRF to  
its website. Wei hosted the video, asking Filho a series of questions that drew out the  
usual promotional claims about DFRF and the expected financial returns investors could  
achieve by sending money to DFRF, if they acted quickly. In the course of the interview,  
Wei asked Filho to explain the going public share structure opportunity that was  
exclusively being made available to DFRF members. Filho announced that DFRF had  
gone public, and the share price had already started increasing. He explained that the  
membership interests in DFRF would be converted into preferred shares in the new  
public company rather than common shares. He asserted this as an advantage for DFRF  
members as they would then be entitled to a fixed return paid in preference to common  
shares.  
[82] On May 6, 2015, the Commission issued an Investor Alert referencing some of Filho’s  
claims and stating that several of those claims were “characteristic of investment fraud”.  
[83] On May 8, 2015, Wei sent an email from the DFRF Canada Enterprises email address to  
a group who were involved in recruiting investors in British Columbia, a group she  
addressed with the salutation “Dear Leaders.Wei minimized the alert and said, among  
other things “Here is some insight regarding the investor alert” and “this is an investor  
alert and stating that the claims are characteristic of investor fraud, however it does not  
say that it is fraud or that there has been any complaints.”  
[84] Also on May 8, 2015, in the same manner and approach as had been done by Wei,  
Villarin sent an email to people on his circulation list first referencing “unreliable  
sources” and then referencing credible sources, after which he linked to articles praising  
DFRF as an investment. It is a fair inference that Villarin was referring to the  
Commission’s staff as the unreliable sources and the much less specific news articles as  
reliable sources. When faced with a choice, Villarin, consistent with the acts of Wei,  
chose to downplay and limit the impact of the alert to his contacts.  
[85] In the weeks following May 8, 2015, there were a series of announcements from DFRF  
of postponements to the date on which DFRF would announce it had gone public,  
postponements to the date on which the trading symbol for DFRF would be shared, and  
encouragements for investors to add investment funds before it was too late. These  
efforts by DFRF and others to collect funds from investors continued after June 30, 2015,  
when the SEC filed a claim against Filho, the other US Respondents and others alleging  
that DFRF was a fraudulent Ponzi scheme.  
C.  
(a)  
Evidence of the Investor Witnesses  
Investor M  
[86] Investor M is an insurance agent who lives in Vancouver. She testified at the hearing that  
she had known Chan for at least a decade through her insurance business, and that over  
26  
the years Chan had introduced clients to her. She met Villarin at a meeting involving  
skin care products that M described as “networking” similar to Amway.  
[87] M was introduced to DFRF through an email sent to her from Chan in December  
2014. The email invited her to attend a meeting at a lawyer’s office, which she attended  
with her husband. At the meeting, she was greeted by Villarin at the door, and he took  
her and her husband to the room where the presentation was taking place. M described  
the meeting as having five or six guests and involving a very professional presentation;  
she said Valdes was the main presenter. M was impressed that the meeting was at a  
lawyer’s office. She was told that her investment would be “100 percent insured” and  
provide a 15% return. M and her husband rushed to invest $5,000 US in DFRF because  
they were told that the insurance premium otherwise payable would be waived if they  
invest by December 31.  
[88] Subsequent to her investment in DFRF, M testified that she attended two or three “Happy  
Express” meetings. These meetings initially encouraged those in attendance to pool  
money through “gifts” of $5,000 to one individual, who would receive a larger  
sum. Some time in the future, it would be the gift-giver’s turn to receive the larger  
sum. M testified that, over time, the Happy Express meetings merged with DFRF  
meetings, and the person who was gifted the pooled amount would then be encouraged to  
invest it into DFRF. M testified that these meetings were organized by Chan and  
Vincent, with Villarin and Law usually in attendance, while Wei made the presentations.  
[89] After the Happy Express meetings, M attended a specific DFRF meeting where Law  
presented to the group. Law said he used to live in Africa and was in the gold mining  
business. M testified that she was told that DFRF had a gold mine in Africa and this was  
why it could provide a 15% return, because they were supported by “lots of gold reserves  
in Africa.”  
[90] M testified that she was asked by Chan to invest more into DFRF, but she did  
not. Further, she was unable to get her investment back.  
(b)  
Investor T  
[91] Investor T was a 41 year old landscaper and father of two. He has been in Canada for  
twenty-eight years, and served in the Canadian Armed Forces.  
[92] T was introduced to DFRF through Chan, who he knew through a Vietnamese magazine  
business. Chan had purchased ad space in a magazine, and T had monthly  
communications with her. Chan had previously approached T about a multi-level  
marketing skin care product business.  
[93] Prior to investing in DFRF, T also knew Villarin, Wei and Law, but he testified that he  
really got to know them after he attended a meeting about DFRF at Chan’s salon. T  
stated that he was invited to attend the meeting by Chan, and at the meeting Wei was  
presenting, along with Law. Villarin attended the meeting, but T did not recall him  
saying much.  
27  
[94] A week after the meeting at Chan’s salon, T attended another in an office downtown,  
where T described the presentations as “very much the same” as the previous one: Wei  
was talking about the investments, and there was also another man who identified himself  
as the president of the “Platinum Swiss Bank.” At this meeting, T remembered Law  
attending and describing his experience in gold mining in Mali, where there was so much  
gold Law described children trading it for candies. T understood from the presentation  
done by Wei that an investment in DFRF would generate a 15% return, he would receive  
a 5% referral fee if he referred anyone to invest, and that investments were guaranteed by  
an insurance company. Both Wei and Law challenged T’s testimony that they presented  
at this meeting.  
[95] T invested in DFRF multiple times, in his name, his company’s name, and in his wife’s  
name, in a combined amount of over US$50,000. Some of T’s investments included  
money he had received from his uncle. T also referred his brother to DFRF, who  
invested US$15,000.  
[96] Ultimately, T’s brother lost his $15,000 and his uncle lost approximately $10,000. T  
testified he lost approximately $60,000. T testified that the fallout from these  
investments has impacted him not only financially, but personally, as it has had a  
significant and permanent detrimental effect on his relationships with his family.  
(c)  
Investor G  
[97] Investor G is a 38 year old university student in Vancouver, having immigrated to  
Canada in 2012. She works hard at her studies and supports her mother in Jordan.  
[98] G first met Chan through her partner, who had been introduced to Chan through an  
informal networking circle that fostered business relationships and opportunities. G’s  
partner knew Chan for over twenty years prior to G becoming involved in DFRF. The  
first time G heard of DFRF was from Chan, who G explained was very excited about this  
investment opportunity. Chan described DFRF to G as an opportunity to change lives.  
[99] G testified that she met Law, Villarin and Wei at the third presentation involving DFRF  
that she attended, which was conducted by Wei. At the time, G was impressed by Wei,  
who came across as professional and a believer in DFRF. G recalled being told by Wei  
that the investment opportunity was a membership with an asset management  
company. G understood that DFRF made profits through gold production. Further,  
members got a 10% commission referral fee for referring other investors, and DFRF  
would pay 15% interest compounded monthly on investments. Investments were  
supposedly insured through an insurance company in the United Kingdom.  
[100]G’s partner invested $15,000 into DFRF. G also referred friends to DFRF, who also  
subsequently lost their money. G described her experience with DFRF as financially  
devastating and emotional torture.  
28  
(d)  
Investor F  
[101]Investor F is a married mother of four, who lives in Richmond. She immigrated to  
Canada in 1997. She was introduced to DFRF by a third party, and was told that Vincent  
was in Richmond with an investment opportunity. F testified that she “didn’t want to  
miss out” on investing that day, so she arranged for Vincent to attend her home. At that  
meeting, Vincent gave F a presentation on DFRF, including details about referral  
commissions and a 15% return. F invested $1,100 that day.  
[102]After her initial investment, F was invited by Vincent to attend a larger presentation  
about DFRF downtown, given by Wei. Wei told F that she had personally invested  
$90,000. F subsequently attended two more, in her words, formal presentations about  
DFRF. She recalls one at a hotel downtown where Wei gave a powerpoint presentation  
and F thought she was very impressive. She also recalled Villarin attending, and Law  
sharing his experiences in gold mining.  
[103]F referred her husband and a number of family friends to DFRF. She described her  
experience with DFRF as “devastating,” not only because she lost her savings, but her  
friends, all of whom no longer trust her.  
D.  
The Investors’ Lists  
[104]The executive director entered into evidence a series of spreadsheets prepared by  
Commission staff. These spreadsheets (Investors’ Lists) listed the British Columbia  
investors, with particulars on their DFRF investments. The executive director also  
described in these lists how each investor was allegedly connected to one or more of the  
BC Respondents, Chan and Vincent. In some instances, the executive director alleges  
direct or indirect communications between an investor and a BC Respondent. In other  
instances, the executive director submits that the connection was from acts of the BC  
Respondents such as accepting cash from an investor or assisting an investor in the DFRF  
subscription process.  
IV.  
A.  
Legal context  
Burden of Proof  
[105]The standard of proof is proof on a balance of probabilities. In F.H. v. McDougall, 2008  
SCC 53 (), the Supreme Court of Canada held, at paragraph 49:  
In the result, I would reaffirm that in civil cases there is only one standard of  
proof and that is proof on a balance of probabilities. In all civil cases, the trial  
judge must scrutinize the relevant evidence with care to determine whether it is  
more likely than not that an alleged event occurred.  
[106]The Court also held that the evidence “must always be clear, convincing and cogent” to  
satisfy the balance of probabilities test. The executive director does not have to prove  
each evidentiary element on a balance of probabilities. The totality of the evidence must  
establish that the events at issue are more likely than not to have occurred in order to  
satisfy the balance of probabilities test.  
29  
B.  
Orders relying on the findings of other bodies under section 161(6)(b)  
[107]Section 161(6) of the Act states:  
The commission or the executive director may, after providing an opportunity to  
be heard, make an order under subsection (1) in respect of a person if the person  
[]  
(b) has been found by a court in Canada or elsewhere to have contravened the  
laws of the jurisdiction respecting trading in securities or derivatives  
[108]Section 161(6) of the Act facilitates the cooperation between the Commission and other  
securities regulatory authorities, self-regulatory bodies, exchanges and the courts. It is a  
precondition to making an order under this section that a respondent be given the  
opportunity to be heard.  
C.  
Fraud under section 57(b)  
[109]Section 57(b) of the Act was in force at all relevant times. It states:  
57 A person must not, directly or indirectly, engage in or participate in conduct  
relating to securities or exchange contracts if the person knows, or reasonably  
should know, that the conduct  
[…]  
(b) perpetrates a fraud on any person.  
[110]The leading case in Canada regarding the elements of fraud is R. v. Théroux, 1993  
134 (SCC). In that case the accused was the directing mind of a corporation which was  
building residential properties. The corporation, through and on the direction of the  
accused, made statements to a number of buyers that deposits paid by the buyers were  
insured. Many buyers paid deposits and entered into contracts on the basis of those  
statements. The statements were false in that the deposits were not insured. When the  
project failed many buyers were left with no property and no ability to recover their  
deposits. The accused was later charged with fraud. His defense was that he honestly  
believed that the project would be completed and no buyer would suffer a loss as a result  
of his conduct.  
[111]The accused was convicted at trial and the conviction was upheld. The Supreme Court of  
Canada unanimously held that the actus reus of what was at the time section 338(1) of  
the Criminal Code had been proven. The Supreme Court of Canada was divided  
regarding the element of mens rea. McLachlin, J (as she then was), for the majority,  
made some general comments about mens rea, including the following at paragraph 18  
regarding the nature of the appropriate inquiry into the accused’s state of mind:  
A person is not saved from conviction because he or she believes there is nothing  
wrong with what he or she is doing. The question is whether the accused  
30  
subjectively appreciated that certain consequences would follow from his or her  
acts, not whether the accused believed the acts or their consequences to be moral.  
[112]McLachlin J. also stated that:  
the crown need not, in every case, show precisely what thought was in the  
accused’s mind at the time of the criminal act. In certain cases, subjective  
awareness of the consequences can be inferred from the act itself, barring some  
explanation casting doubt on such inference.  
[113]Turning specifically to the mens rea required in relation to a charge under section 338(1)  
of the Criminal Code, McLachlin J. stated:  
Having ventured these general comments on mens rea, I return to the offence of  
fraud. The prohibited act is deceit, falsehood, or some other dishonest act. The  
prohibited consequence is depriving another of what is or should be his, which may,  
as we have seen, consist in merely placing another's property at risk. The mens  
rea would then consist in the subjective awareness that one was undertaking a  
prohibited act (the deceit, falsehood or other dishonest act) which could cause  
deprivation in the sense of depriving another of property or putting that property at  
risk. If this is shown, the crime is complete. The fact that the accused may have  
hoped the deprivation would not take place, or may have felt there was nothing  
wrong with what he or she was doing, provides no defence.  
[114]McLachlin J. went on to summarize her conclusions as follows:  
These doctrinal observations suggest that the actus reus of the offence of fraud will  
be established by proof of:  
1. the prohibited act, be it an act of deceit, a falsehood or some other fraudulent  
means; and  
2. deprivation caused by the prohibited act, which may consist in actual loss or  
the placing of the victim's pecuniary interests at risk.  
Correspondingly, the mens rea of fraud is established by proof of:  
1. subjective knowledge of the prohibited act; and  
2. subjective knowledge that the prohibited act could have as a consequence the  
deprivation of another (which deprivation may consist in knowledge that the  
victim's pecuniary interests are put at risk).  
[115]The nature of the mens rea that must be proven to establish fraud under the Act was  
discussed in Anderson v. British Columbia Securities Commission, 2004 BCCA 7. In  
Anderson, the appellants appealed a decision of the Commission concluding that the  
appellants had engaged in fraud. The Commission’s panel made a finding of fraud based  
on conclusions that the appellants had failed to disclose what they ought to have known  
about the material risk. It had been argued in support of the Commission’s panel’s  
31  
approach that section 57(b) of the Act, which created a prohibition against assisting in a  
fraud even for respondents who did not participate in the fraud, indicated that a new,  
broader definition of fraud was applicable under the Act. The Court of Appeal rejected  
that view. It concluded that the elements of fraud under the Act were those identified in  
Théroux and that section 57(b) of the Act could only apply if someone committed a fraud.  
The Court states at paragraph 24:  
[S. 57] creates a statutory prohibition which may extend to persons who ought to  
be aware of the fraud even though they may not be participants in it, but it does  
not dispense with the requirement that there must be a fraud involved in the  
transaction, which requires a guilty state of mind as well as an act.  
[116]In Anderson it was only the appellants who were alleged to have committed fraud, there  
was no suggestion that the appellants were participating in the fraud of others. Without  
evidence of a guilty state of mind by someone involved in the underlying fraud, the  
finding of fraud was set aside.  
[117]As outlined above, the analysis of the Court of Appeal in Anderson includes reference to  
the phrase “reasonably should know” in section 57(b). The court reiterates the  
proposition in paragraph 24 that section 57 extends to persons who ought to be aware of a  
fraud even though they may not be participants in it, when it states in para. 26:  
While not endorsing the reasons in White, I find that it is clear that s. 57(b) does  
not dispense with proof of fraud, including proof of a guilty mind. Derry v. Peek  
(1889), 14 A.C. 337 (H.L.) confirmed that a dishonest intent is required for fraud.  
Section 57(b) simply widens the prohibition against participation in transactions  
to include participants who know or ought to know that a fraud is being  
perpetrated by others, as well as those who participate in perpetrating the fraud. It  
does not eliminate proof of fraud, including proof of subjective knowledge of the  
facts constituting the dishonest act, by someone involved in the transactions.  
[emphasis in original]  
[118]The Court of Appeal in Anderson did not define the mens rea requirement regarding a  
respondent under section 57(b) of the Act who is alleged to have assisted another person  
in perpetrating a fraud. The proper interpretation of section 57(b) in that circumstance  
does not appear to have been squarely raised before this Commission until this  
proceeding. There are some prior rulings which address related issues, but no decisions  
from this tribunal have been put before us that directly address the issue of whether a  
finding that the respondents “should have known” of a fraud perpetrated by others is  
sufficient to find a breach of section 57(b).  
[119]Manna Trading Corp Ltd., 2009 BCSECCOM 426, is a case which arose from a Ponzi  
scheme in which most respondents were found to have knowingly participated. Liability  
was not found with respect to one of the respondents, Perkinson, about whom the panel  
said (emphasis added):  
349 Anderson requires evidence of fraud that is clear and convincing proof of  
the elements of fraud, including the mental element.  
32  
350 The executive director says that Perkinson committed a prohibited act by  
disbursing investors' funds to pay returns to existing investors, to fund Tropical  
Poker, to fund Costa Rica real estate projects, to pay debit card providers, and to  
pay himself as reimbursement for Tropical Poker expenses. The executive  
director says that Perkinson had subjective knowledge of these acts and that  
they could result in the deprivation of others.  
351 Opening bank accounts, acting as signing authority on those accounts,  
and disbursing funds out of the accounts, are not inherently fraudulent. They  
are not "prohibited acts" unless other factors are present. The executive  
director has not alleged misrepresentation by Perkinson - the executive  
director's submission is that in disbursing investor funds as he did, he acted  
wrongfully, and he knew it.  
352 In Perkinson's case, the fraud allegation hinges entirely on his  
knowledge: his conduct in disbursing funds would be wrongful only if he knew  
that it was inconsistent with what investors were then being told, and if he  
knew that investors could be deprived as a consequence of his conduct.  
353 Although we find Perkinson's evidence in several respects confusing and  
unconvincing, the onus is on the executive director to provide "clear and  
convincing proof" that Perkinson had that knowledge. In our opinion the  
evidence does not do so.  
354 Perkinson understood when he invested in October 2005 that Manna's  
business was foreign currency trading, but the evidence does not establish that he  
had any knowledge of what the other respondents were telling investors at the  
time he was disbursing investor funds. The evidence does not establish that  
Perkinson was acting as a de facto director or officer of Manna, or that he was  
even privy to Manna's affairs and operations. There is no evidence that  
Perkinson knew that Manna was not engaged in foreign currency trading, and  
so had no profits to pay investors the promised returns, or that he knew  
anything else about Manna's true financial situation. Absent that evidence, we  
cannot conclude that he knew his conduct was wrongful, or that investors'  
pecuniary interests were being put at risk.  
[120]The distinction between Manna and the matter before us, is that it does not appear that  
the panel in Manna was asked to decide if Perkinson reasonably should have known that  
the conduct of others was perpetrating a fraud, in the manner specifically contemplated  
by the Court of Appeal in Anderson. Instead, the panel considered Perkinson’s direct  
participation in components of the underlying fraud, and found that his subjective  
knowledge was insufficient to find that he knew his conduct was wrongful.  
[121]Another relevant case is Re SPYru Inc., 2015 BCSECCOM 277. In that decision, the  
panel considered a situation where a group of BC residents raised money in this province  
for the production of a sports drink. Amongst the allegations in that proceeding was a  
breach of section 57(b) of the Act by two BC residents, who the executive director  
alleged took money from investors purportedly for producing the sports drink, without  
33  
disclosing their suspicion that the Turks and Caicos person that they were sending the  
money to was not using it for the intended purposes, and sending investors’ money to that  
person after forming their suspicion. While these fraud allegations were dismissed by the  
panel on the basis of insufficient evidence of deceit or prohibited act committed by the  
BC residents, it is important to note that, similar to Manna, this was not a case where it  
was alleged the conduct occurred in circumstances where the BC respondents  
“reasonably should know” that they were participating in fraudulent conduct perpetrated  
by others. In fact, there was no evidence put before the panel that the Turks and Caicos  
person had actually misappropriated investors’ money.  
[122]The executive director submits that guidance can be found in the Ontario Securities  
Commission (OSC) decision Natural Bee Works Apiaries Inc. (Re), 2019 ONSEC 23. He  
submits that this decision involved a similar fact pattern to the one before us. In that  
decision, the OSC considered the fraud allegation made against a respondent who  
accepted extravagant and flamboyant statements at face value, repeating them to  
investors without making further investigation into them. OSC staff alleged that the  
respondent ought to have known the statements were false and as a result participated in  
the fraudulent scheme.  
[123]The relevant legislative provision in Ontario, substantially the same as that in British  
Columbia, was section 126.1(1)(b) of the Ontario Securities Act, RSO 1990, c.S.5:  
A person or company shall not, directly or indirectly, engage or participate in any  
act, practice or course of conduct relating to securities that the person or  
company knows or reasonably ought to know,  
[…]  
(b) perpetrates a fraud on any person or company  
[124]In Natural Bee Works, the OSC reviewed the legal test for mens rea of fraud, where one  
respondent knowingly orchestrated the fraudulent scheme, and the other respondent did  
not have subjective knowledge of the underlying fraud. The panel found the following:  
134 The Act's legal test for fraud also widens the effect of the fraud provision  
such that another participant in the scheme may be found to have committed  
fraud if they ought to have known that a fraud was being perpetrated by another  
person involved in the scheme. Mr. Landucci knew about the fraudulent  
misconduct. He was the mind and management of NBW and created all the facts  
that were fed to Ms. Chickalo to put into the Marketing Materials for the sole  
purpose of soliciting funds from investors. He was the architect of the scheme  
and NBW was his company. As stated above at paragraph [115], Ms. Chickalo  
followed along in this scheme, never asking questions and turning a blind eye to  
the consequences of passing on the false information she was given by Mr.  
Landucci and her other actions in furtherance of the scheme. Considering the  
information being provided to her by Mr. Landucci, she reasonably ought to have  
known that Mr. Landucci's statements were highly questionable and as a director  
and one-time president of NBW she ought to have taken steps to understand what  
34  
was actually going on at NBW. Her recklessness in her sales efforts demonstrates  
that she reasonably ought to have known that a fraud was being perpetrated. As a  
result, investors were harmed and deprived.  
[125]Drawing together all of the above analysis, we conclude that a plain reading of section  
57(b) of the Act, as well as the specific guidance from the Court of Appeal in Anderson,  
make it clear that a person can be in breach of that section by contributing to another  
person’s fraud. We concur with the analysis of the OSC in Natural Bee Works. In this  
context, when alleging that a person acted contrary to section 57(b) by participating in a  
fraudulent scheme perpetrated by others, the executive director must prove that:  
(a) there was a fraud or an attempted fraud by someone relating to a security,  
including satisfying both the tests for the actus reus and mens rea as outlined in  
Théroux and consistently applied by this Commission and others; and  
(b) the respondent must have participated in the conduct of the person engaging in  
the fraud, at a time when the respondent knew or reasonably should know that  
that person was perpetrating the fraud.  
D.  
Misrepresentations under section 50(1)(d)  
[126]Given that misrepresentation is alleged in the alternative to the primary allegations  
against the BC Respondents, and given our findings related to those primary allegations,  
we do not need to provide our analysis of section 50(1)(d) of the Act.  
E.  
Definition of “Security”  
[127]Section 1(1) of the Act defines “security” to include:  
(d) a ... share, stock, unit, unit certificate, participation certificate, certificate of  
share or interest ...  
or  
(l) an investment contract.  
[128]Although not defined in the Act, the Supreme Court of Canada defined an “investment  
contract” in Pacific Coast Coin Exchange v. Ontario Securities Commission, [1978] 2  
SCR 112 (SCC), as an investment in a common enterprise from which an investor  
expected to profit from the efforts of others.  
V.  
A.  
Positions of the Parties Regarding the BC Respondents  
Positions of the Parties Regarding Wei  
[129]The executive director argues that Wei participated in the DFRF fraudulent scheme  
which was led by Filho. The executive director supports these arguments first by pointing  
to certain specific conduct by Wei which advanced the DFRF fraudulent scheme in  
British Columbia and secondly by pointing to what he refers to as red flags which did or  
should have alerted Wei to the fraudulent nature of the DFRF scheme. Most of the facts  
related to the alleged red flags are common to all of the BC Respondents and, to  
minimize duplication, those are addressed in a global way below.  
35  
[130]Regarding Wei’s participation, the executive director places particular emphasis on the  
following:  
(a) Wei scheduled and presented at many of the investor opportunity meetings that  
British Columbia investors attended. Starting in December, 2014, in  
presentations and in direct communications, Wei spoke on behalf of and as a  
representative for DFRF and in so doing deceived investors by telling them  
that:  
DFRF was in the business of producing gold;  
DFRF paid a return of 15% per month;  
The money people invested in DFRF was insured;  
DFRF was producing 10 tons of gold per month in Mali and selling that  
gold for twice as much as it cost to produce;  
DFRF had gold reserves in Brazil that were independently verified and  
valued at USD $3.5 billion.  
(b) Starting in March, 2015, Wei began telling people that DFRF:  
Was about to go public;  
Was trading publicly;  
Was trading publicly but still could be purchased in a private transaction  
at a special price that could be converted into the public share price that  
was 300% higher.  
(c) Wei’s presentations typically included Law. She introduced him as an  
experienced gold miner who had experience on the ground in Mali.  
(d) The information Wei gave potential investors was essentially the same  
information that was contained in the DFRF Power Point Presentation that was in  
use at the time. Her presentations were typically in the same form as her  
presentation at the Fairmont Pacific Rim in Vancouver on May 1, 2015, a video  
recording of which is in evidence.  
(e) Wei sent out notices and gathered personal information from members under the  
signature “DFRF Canada.” Her connection to the Pony Mountain Owner is the  
reason DFRF opportunity meetings were held at the Jameson House office and  
how it came to be listed and known, as she in her own presentation referred to it,  
as “our Canadian Headquarters” in presentations to investors.  
(f) Wei travelled to Florida and appeared with Filho in the May 6, 2015 interview  
styled presentation that drew out the usual promotional claims about DFRF.  
36  
(g) Wei counseled other BC participants on how to deal with challenges they  
incurred from selling the DFRF investments and counselled the others to  
downplay the importance of the Commission’s Investor Alert.  
(h) Wei directly or indirectly participated in the fraud against the investors listed  
under her name on the Wei Investor List.  
[131]The executive director argues that all of the emails sent from the DFRF Enterprises  
Canada address were emails authored and sent by Wei. Some of those emails were signed  
by Wei, other emails were not signed by a specific individual.  
[132]The executive director asks the panel to find that each investor on the Wei Investor List  
(a subset of the names on the Investors’ Lists) is connected to Wei.  
[133]The executive director also argues that Wei diverted funds from investors in DFRF to her  
own use. In support of that, the executive director points to admissions from Wei during  
her cross examination that there were funds totaling $481,428 sent by investors to the  
account of another company for investments in DFRF at Wei’s direction. The executive  
director also points to evidence, which the executive director characterizes as  
uncontradicted by Wei, that some of those funds, approximately $90,000, were further  
transferred and used for the personal benefit of Wei.  
[134]Wei’s position includes some general themes and some specific facts and arguments.  
[135]First, Wei argues that the investigation and the executive director’s presentation at this  
proceeding were biased and improperly conducted. Wei alleges that the investigators  
failed to interview important witnesses, rejected opportunities to interview her, led a one  
sided version of the evidence and alleged many facts which the executive director failed  
to prove.  
[136]Further, Wei submits that throughout the relevant time period she was not promoting  
investments in DFRF, she was advancing the business of Pony Mountain. Wei asserts  
that Pony Mountain was a legitimate business venture, that it was her legitimate role to  
raise funds for Pony Mountain, and that her connections with DFRF were developed for  
the legitimate purpose of raising funds for Pony Mountain.  
[137]Wei’s third argument is that she carried out extensive and appropriate due diligence  
regarding Filho and DFRF. Wei asserted in her evidence and in her arguments that she  
was convinced about the legitimacy of DFRF because of the extensive efforts made by  
Filho and DFRF to hide their dishonesty and to wrap their claims in a cloak of  
legitimacy. Wei notes, for example, that her due diligence included:  
(a) traveling to DFRF’s Florida offices at her own expense where she saw various  
assets of DFRF, including a gold plated Lamborghini and a gold plated Mercedes  
bus;  
37  
(b) inquiring into the legitimacy of the guarantee of principal provided by Accedium;  
(c) speaking with two lawyers in Florida who were associated with DFRF and who  
were members in good standing of the Florida bar;  
(d) investigating DFRF’s claims that it owns a resource in Brazil and has a technical  
report related to that resource; and  
(e) asking many questions about DFRF and receiving convincing answers from Filho  
and other DFRF representatives.  
[138]Wei notes that although she had access to the email address DFRF Enterprises Canada  
and she sometimes used that address to send and receive messages, she was not the only  
person to use that address. Wei denies sending many of the emails which were sent from  
that email address.  
[139]With respect to the Wei Investor List, Wei points out in her testimony, in argument, and  
in her cross examination of the Commission investigator who testified, that she did not  
have direct communications with many investors on the list, that some investors on the  
list made their investments before meeting her, and that the list contains other errors as  
well as unsupported assumptions that she wrote all emails sent from the DFRF  
Enterprises Canada email address. Wei also disputes the assertion (reflected in the list)  
that if Wei sent information to one investor who passed it on to other investors, that was  
sufficient to attribute all of the investments made by that group to Wei. Wei submits that  
the Wei Investor List is not reliable in general and does not establish a connection  
between her and the named investors.  
[140]Wei testified that although she became aware of the Framingham lawsuit around the time  
it was publicized and she saw the email circulating information about the Earlier Florida  
Proceeding around the time of that email (February 12, 2015), she was not overly  
concerned by those events because, as she put it:  
This is an article that was written by someone. We all know the media likes to be  
able to, like hype things up. That’s their job. The thing is, if it was really found to  
be so, why were they not charged? And that is important because Filho was never  
criminally charged.  
[141]Wei argues that she had no idea that DFRF was fraudulent, and she was duped like the  
investors. In support of that, Wei points to her continuing efforts to remain in contact  
with DFRF representatives and to seek repayment for investors during the period  
extending for months after the SEC proceeding began.  
[142]Wei asserts that the evidence that she should have known of DFRF’s fraud is weak  
evidence, insufficient to meet the onus which is on the executive director to prove every  
element of the NOH and every element of the alleged breaches of the Act. Wei agrees  
that she made some mistakes by making presentations which gave the appearance that  
she spoke for DFRF, but she was never a DFRF representative.  
38  
[143]Wei also says that she was careful not to represent that DFRF would always pay a 15%  
return, she says that she was careful to assert only that returns would be “up to” 15%.  
[144]Wei denies that she acted fraudulently by diverting funds from DFRF. Wei says she was  
authorized by Filho and DFRF to pay the investor funds to the other company by  
depositing the money into that other company’s account, and the DFRF investors who  
sent those funds received the DFRF membership interests they purchased with those  
funds. She further says that she had authorization from the owner of that other company  
to transfer out the $90,000 for her personal use.  
B.  
Positions of the Parties Regarding Law  
[145]The executive director’s main submissions regarding Law’s participation are:  
(a) Law’s participation was different than Wei’s but he also deceived investors.  
(b) Law did not repeat Filho’s claims verbatim like Wei and Villarin did. Instead he  
supported and defended Filho’s claims by speaking about his own experiences  
“on the ground in Mali.” Law’s presentations revolved around fanciful stories  
that encouraged investors to believe there was a particular abundance of gold in  
Mali and that DFRF was “able to do what we do” because there was “that much  
gold.”  
(c) Law further defended Filho’s claims by saying he drilled Valdes with  
questions about gold mining in Mali and that Valdes had all the right answers  
to his questions.  
(d) Law’s presentations were generally similar in form and content to the  
presentation he made to investors and potential investors at the Fairmont  
Pacific Rim in Vancouver on May 1, 2015, a video recording of which is in  
evidence.  
(e) Law performed administrative and organizational tasks necessary to help  
investors purchase the DFRF investments. He also accepted cash from  
investors as payment for the investments.  
[146]Law submits that his role in the activities of DFRF was very limited. Law notes that of all  
of the thousands of pages of documents in the record of this proceeding only a small  
number show his involvement in any way. Law emphasizes that the number of times he  
spoke was very limited and that he received no monies related to DFRF activities. Law  
argues that although there are some records indicating he handled funds, he was doing so  
only as a conduit for the benefit of others. He suggests there is no evidence to contradict  
his arguments.  
[147]Law, in his written submissions, reviews the list of DFRF investors alleged by the  
executive director to have invested based on the actions of Law. In each case, Law makes  
39  
submissions about why his involvement with those investors was either non-existent or is  
over-stated by the executive director.  
[148]Law addresses his involvement at the Fairmont Pacific Rim presentation by arguing that  
he was helping his friends and he merely reported his own experience. He disagrees with  
the executive director’s description of his anecdote about trading mango gummies for  
large quantities of gold as “fanciful.” Law argues, as did Wei, that the executive director  
was selective and unfair in his investigation, including in his choice of what parts of the  
Fairmont Pacific Rim presentation to place into evidence.  
C.  
Positions of the Parties Regarding Villarin  
[149]The executive director argues that Villarin’s participation in the fraud is established by  
Villarin’s conduct, especially the following:  
(a) Villarin prepared the December 19, 2014 one page flyer described above which  
referenced 15% monthly returns with a 100% guarantee on capital;  
(b) Villarin received a considerable volume of other promotional materials from  
DFRF and forwarded those materials to existing and potential investors, along  
with encouragement for existing and potential investors to forward the materials  
on to others;  
(c) Villarin spoke to many existing and potential investors and answered their  
concerns about DFRF by reiterating information provided by DFRF;  
(d) Villarin provided technical support at many presentations, including the set up for  
video presentations;  
(e) Villarin brought in a number of DFRF investors and earned commissions for  
doing so (although he was not paid the commissions);  
(f) Villarin attempted to minimize the impact of the Commission’s Investor Alert by  
telling existing and potential DFRF investors attending a meeting that the  
Commission had acknowledged it had received a tip from an unreliable source;  
(g) Villarin allowed a DFRF investment to be made by an investor through Villarin’s  
personal bank account after the Commission’s Investor Alert, and Villarin kept  
those funds for his own use.  
[150]Villarin, in turn, emphasizes that his assistance was in many ways clerical and was  
provided under the direction of others.  
[151]With respect to his state of knowledge, Villarin points to evidence from his interview  
transcript to argue that although Villarin initially had significant concerns about whether  
DFRF was a scam he looked further into DFRF and concluded that DFRF was legitimate.  
40  
[152]Villarin described the various materials he saw in the course of his dealings with DFRF,  
written and in video form. Villarin notes that those materials were all calculated to  
answer concerns by investors and Villarin says he believed what DFRF said. Villarin says  
he went further than relying on materials which were generally available. He spoke  
directly to many of the people involved and relied on their assurances that Filho and  
DFRF were legitimate. Villarin notes that he did some background checks on the people  
he spoke to and they appeared to be what they claimed to be, whether that was a lawyer, a  
representative of an insurance company or a former FBI agent. Villarin suggests that the  
information provided by DFRF are all calculated to create an impression which he  
accepted.  
[153]Villarin notes that although he was licensed for a brief period in 2006 to 2010 to sell life  
insurance and mutual funds, Villarin has worked primarily in the field of multi-level  
marketing. Villarin notes that many of the people he promoted DFRF to were friends and  
family members. Villarin submits that he was fooled in the same way they were fooled.  
Villarin insists that he was naïve and not dishonest.  
VI.  
A.  
Analysis US Principals  
Findings regarding the scheme  
[154] Membership units in DFRF are an example of what this Commission have consistently  
held to be investment contracts. DFRF investors were investing in a common enterprise  
with other investors, where their funds were purportedly managed and used by DFRF.  
There was no expectation that investors would participate in the business of DFRF,  
except to provide investment capital and wait to receive their returns. On that basis, we  
conclude that DFRF investments meet the definition of a security under the Act.  
[155]The proceeding against the US Respondents resulted in findings against them and in final  
judgments against them which included various penalties, disgorgement orders and  
orders that they be permanently enjoined from future violations.  
[156]The NOH in this hearing alleges that Filho committed fraud. In order to find that in this  
context we must find that all of the elements identified in Théroux have been proven,  
including that Filho committed acts of deceit or falsehood or which were otherwise  
fraudulent and knew that his actions could put the investors’ pecuniary interests at risk.  
The evidence to support such findings is overwhelming. To summarize briefly, we find:  
(a) Filho held himself out to be the managing member of DFRF;  
(b) Filho lied about DFRF having gold mines and other assets;  
(c) Filho lied about DFRF having any legitimate business activity;  
(d) Filho lied about DFRF paying profits to support charities;  
(e) Filho lied about investors being paid returns of 15% a month, or any other  
amount;  
41  
(f) Filho lied about investorscapital and accumulated returns and referral  
commissions being insured and guaranteed;  
(g) Filho lied about steady monthly earnings being deposited in Platinum Swiss Trust  
Bank;  
(h) Filho lied about investors receiving debit or credit cards connected to an account  
in investors names which could be used to withdraw investment returns at any  
time;  
(i) Filho lied to rebut lawsuits and regulatory and related proceedings against him,  
DFRF and his associates in the United States;  
(j) Filho lied about DFRF going public;  
(k) Filho lied about the reasons underlying the false sense of urgency for making  
investments and additional investments in DFRF; and  
(l) Filho lied about the risks of investing in DFRF.  
[157]The truth behind the DFRF was far more sinister. Contrary to what was told to investors,  
there were no mining operations, insured deposits, regular monthly returns or debit card  
program. Instead, it was an elaborate scheme created to attract unwitting investors  
through deceitful acts and statements and dupe them out of their money.  
[158]Taken individually, each one of Filho’s lies constitutes a prohibited act under the test for  
fraud. Collectively, they demonstrate that Filho orchestrated a scheme to commit fraud  
by deceiving investors into paying funds into the Citibank Account, where he  
subsequently diverted them for other purposes. His actions caused actual deprivation to  
investors. The actus reus of Filho’s fraudulent conduct is well established.  
[159]As the creator and directing mind of DFRF, the mens rea component of Filho’s fraud is  
equally apparent. There is uncontradicted evidence that DFRF had no business  
operations at all. The only activities that are reflected in the Citibank Account and other  
DFRF bank accounts relate to raising funds from investors and using those funds for  
purposes which were not related to mining in Mali or anywhere else for that matter. Filho  
opened the Citibank Account and had signing authority over it. He would have  
subjectively known that virtually every claim he made about the activities of DFRF, and  
the potential for returns by investors, was completely false.  
[160]We conclude that all of the elements of fraud, under section 57(b) of the Act, have been  
proven against Filho. We reach this conclusion based on the evidence before us,  
including the evidence which supported the findings made in the US proceeding. We  
saw all of the evidence needed to reach those conclusions, including the videos and  
written evidence showing Filho making the false claims alleged in this proceeding.  
42  
[161]We should be explicit about our finding about the scope of the fraud connected to British  
Columbia. Every British Columbia investor who purchased a membership unit in DFRF  
or who made a payment for that purpose was defrauded, including those investors whose  
funds were not deposited into DFRF’s Citibank Account. In terms of British Columbia  
investors, the NOH alleges that the number of investors was 137 and that those investors  
lost approximately US$1,152,000 and Cdn$2,000. We are satisfied that the amounts from  
British Columbia investors shown to have been deposited into the Citibank Account or  
paid to British Columbia participants including the BC Respondents in return for DFRF  
memberships totaled approximately US$1,152,000.  
B.  
Application of section 161(6)(b) and 161(1)  
[162]In addition to alleging that Filho engaged in fraudulent conduct, the NOH seeks relief  
under section 161(6)(b) of the Act based on the findings in the US proceeding.  
[163]Section 161(6) facilitates cooperation between the Commission and other securities  
regulatory authorities, self-regulatory bodies, exchanges and the courts. Section 161(6)(b)  
in particular allows the Commission to rely on findings of courts in other jurisdictions  
made against persons who have contravened the laws of that jurisdiction respecting the  
trade of securities or derivatives. Where the requirements of the section are met and it is  
in the public interest, the Commission may issue orders without the need for inefficient  
parallel and duplicative proceedings in British Columbia (McLean v. British Columbia  
(Securities Commission) [2013] 3 S.C.R. 895 at para. 54) or before the Commission.  
[164]The evidence before us establishes that each of the US Respondents has been found by a  
court in the United States to have contravened US laws respecting trading in securities. It  
is clear from the facts and findings against Filho in the US proceeding that Filho, using  
the two DFRF entities, orchestrated a sophisticated securities fraud of over US$15  
million that harmed investors in British Columbia, and Valdes aided him in carrying out  
the fraud. The purpose of section 161(6) is to ensure that those who take advantage of  
the investing public in other jurisdictions are prevented from doing so in this one. It is  
clear from the evidence presented in this proceeding that the US Respondents are unfit to  
participate in the capital markets of British Columbia. This panel will consider  
appropriate orders against them under section 161 of the Act after the parties make  
submissions at the sanctions phase of these proceedings.  
VII. Analysis - BC Respondents - Red Flags  
[165]The executive director alleges that there were various “red flags” which should have been  
apparent to the BC Respondents, and pointed out specific red flags. The executive  
director submits that we can infer from the evidence that the BC Respondents actually  
knew DFRF was a fraud, but at the very least, we should find that they reasonably should  
have known, before December 18, 2014, that Filho was perpetrating a fraud on people.  
[166]The BC Respondents have not responded directly to the specific red flags pointed to by  
the executive director. The response of the BC Respondents has been directed towards  
explaining what they thought during the relevant period and what steps they personally  
took to confirm that DFRF was a real business paying real returns.  
43  
[167]It is important for our purposes to consider both the existence and clarity of any “red  
flags” and also to consider the timing of when any particular red flag would have been  
apparent to the BC Respondents.  
[168]What follows is a chart setting out what we consider, after evaluation of all of the  
evidence, to have been the most important red flags which are relevant to the BC  
Respondents:  
Circumstances Which Amounted to a Red Flag  
Date When These  
Circumstances would  
have been Apparent  
January 1, 2015  
(a) The return offered by DFRF was unreasonably high. The BC  
Respondents participated in presentations which included  
reference to the 15% monthly compounding chart mentioned  
above. That chart describes the return expected on a $10,000  
investment earning interest compounding at 15% per month.  
According to that chart, a $10,000 investment would increase by  
530% to $53,502.50 in a year. It is not explicitly stated in the  
chart, but the math included in the chart indicates that in the  
second year the initial $10,000 invested would increase by a  
further 530% to $283,556 by the end of that year and by a further  
530% to $1,502,871 at the end of year 3. That type of return is at  
least unreasonable and, more correctly, absurd on its face.  
Although Wei claimed that she always described the return was  
“up to 15%,there was at least one statement from her, and many  
from Filho and others, indicating that a 15% return should be  
expected.  
(b) It is a fundamental tenent of investing that a relationship exists  
between expected risk and expected return. Put more directly, the  
less expected risk associated with holding an investment, the less  
one would expect in return for making such investment. On the  
other hand, the more expected risk associated with holding an  
investment, the more one would expect in return. That is why  
securities distributed by issuers having high credit ratings in  
stable industries invariably provide investors with lower rates of  
return. Liquid investments generally offer lower rates of return.  
Here, we have an otherwise unknown gold producer an industry  
that would, in the normal course, attract a higher risk outlook  
from investors promising investors a guarantee of their  
invested capital together with liquidity and exceptionally high  
possible returns available on a compounded basis. This is at the  
very least a red flag.  
January 1, 2015  
44  
(c) The minimum investment was US$1,000 and, notwithstanding  
the scale of the purported enterprise, capital raising activity was  
targeted at small investors.  
January 1, 2015  
(d) The possibility that a legitimate business would be able to pay the January 1, 2015  
size of return advertised is even more absurd given the business  
was paying a 10% bonus finder’s fee for all investments made  
provided investments were made quickly  
(e) The details related to DFRF shifted in material ways from  
presentation to presentation. For example Filho’s statements were  
not consistent regarding whether DFRF paid 25% or 35% of its  
earnings to charity, or whether DFRF’s gold mining revenue  
came from Mali or from other countries.  
By May of 2015  
(f) DFRF never provided information which would normally be  
provided for a business of its magnitude. DFRF described itself  
as a major company with revenues from mining operations, with  
massive philanthropic operations and immediate, then  
January 1, 2015, or at  
the latest whenever any  
of the BC Respondents  
conducted his or her  
implemented plans to go public. It is contrary to regular business own inquiries  
practices for legitimate enterprises of this magnitude to conceal  
information such as financial statements, the names and locations  
of its mines and the details of its philanthropy. Such information  
was never forthcoming from DFRF.  
(g) Investors could never access funds which were supposed to be  
immediately available. Several times during the first six months  
of 2015, in response to complaints by investors that they could  
Throughout, and  
increasing month by  
month as the pattern  
not access funds as promised by DFRF, Filho would make a new continued  
statement setting out a new reason why investor access to funds  
was delayed due to events beyond the control of DFRF.  
(h) The reason that investor funds were being solicited by DFRF was January 1, 2015  
never explained in a coherent way. At times, Filho explained that  
DFRF had no need for funds, but DFRF was allowing select  
people to join what was essentially a club. This explanation is not  
consistent with the reality that DFRF membership was not  
restricted to some form of selection process other than a  
willingness to invest money. The explanation is also inconsistent  
with Filho’s other explanation that investors’ funds were sought  
because DFRF’s own funds were held with DFRF’s bonding  
company and new investments allowed those funds to be  
released.  
(i) The information that DFRF’s preferred shares were trading at  
higher and higher prices (but investors could still buy in at the  
lower price) coupled with the suggestion that DFRF could not  
reveal the trading symbol of these shares was non-sensical. It was  
never made clear in any evidence or submissions presented to this  
panel how a preferred share with a fixed return could reasonably  
be expected to increase in value from $15.06 at the time of  
From late May of 2015  
45  
investment to over $50 within a 30 day period following  
conversion.  
(j) The information about the Earlier Florida Proceeding became  
known to at least Wei and Villarin.  
February 12, 2015  
March 5, 2015  
(k) The information about the Framingham lawsuit against DFRF  
and Filho which included allegations of a pyramid scheme  
became known to the BC Respondents, if not before at least by  
the time Filho released a video explaining the lawsuit in terms of  
people “not liking what DFRF was doing because it was making  
more millionaires in history than anyone else…”  
(l) This Commission issues an Investor Alert warning against  
investments in DFRF.  
May 6, 2015  
[169]The identification of red flags is useful but it is only a part of the necessary analysis.  
Ultimately, we must decide whether the BC Respondents knew or should have known  
that they were assisting Filho in fraudulent conduct. In some proceedings, the element of  
subjective knowledge might be admitted by some respondents. More commonly, the  
subjective knowledge of a respondent must be inferred, or not, based on all of the  
circumstances. Certainly findings about what a respondent should have known will often  
turn on the circumstances. A respondent’s awareness of a red flag will be one of the  
circumstances to consider. But that circumstance must not be considered in a vacuum.  
Other factors will also be relevant, including the sophistication of the respondent, the  
attention that the respondent paid to the fundraising activities in question and any other  
information known to the respondent which would make any particular red flag, or  
combination of red flags, salient.  
[170]We provide our analysis and conclusions below regarding what each individual BC  
Respondent knew or should have known, and when.  
VIII. Analysis Application of section 57(b) to Wei  
A.  
Nature and degree of Wei’s conduct  
[171]As we have already noted, we conclude that investors entered into an investment contract  
which was a security under the Act.  
[172]We conclude that the evidence establishes Wei participated in the conduct of Filho  
related to securities that perpetrated a fraud. Some of Wei’s conduct which leads us to our  
conclusion is the following:  
(a) Wei arranged to have the Jameson House office made available so that she and  
others could make presentations to prospective investors in DFRF. In addition  
Wei at least acquiesced in allowing a photograph of the relevant building used in  
DFRF marketing materials;  
(b) Wei applied her organizational skills to DFRF’s efforts to solicit investments in  
the Vancouver region. Her contributions included scheduling presentations made  
by herself and others to potential investors, arranging venues such as a ball room  
46  
at the Fairmont Pacific Rim, acting as a conduit for information between DFRF  
representatives and what became a British Columbia based team of recruiters for  
DFRF and helping to craft messages to British Columbia investors regarding  
DFRF;  
(c) Wei made many presentations to existing and potential investors extolling the  
benefits of investing in DFRF;  
(d) Wei allowed herself to be portrayed as a representative of DFRF, both in terms of  
the presentations she made to the public and in her management of the other BC  
Respondents. For example, Wei acted as a spokesperson for DFRF including  
during the meeting at the Fairmont Pacific Rim and in her videotaped interview  
with Filho on May 6, 2015. In addition, even considering only the emails signed  
by Wei, she was consistently giving direction to Villarin, Chan and others  
regarding what messages to convey to investors regarding investments and  
regarding disturbing circumstances such as the issuance of the Commission’s  
Investor Alert.  
[173]Wei placed her personal credibility behind DFRF. For example, when she spoke at the  
Fairmont Pacific Rim presentation in May 2015, she began speaking by mentioning  
several reasons why she had particular experience and knowledge that was relevant to  
investors considering an investment in DFRF. Earlier in 2015, Wei had confirmed that  
both she and Law would be attending and speaking at a prospective investor dinner and  
expressly clarified by email how she and Law should be identified. We conclude that this  
was done to reinforce their professional stature and experience when introduced to  
potential investors. This evidence suggests, and we find, based on such evidence, that  
Wei intended that such references have the effect of enhancing their respective credibility  
and expertise and improving the likelihood that potential investors could rely on their  
views and representations when considering the material delivered in the DFRF  
investment presentations.  
[174]In reaching our conclusion that Wei participated in the fraud perpetrated by Filho we do  
not find it necessary to resolve the issue of whether Wei authored and sent every email  
sent from the DFRF Canada Enterprises email address. There are sufficient emails which,  
as confirmed by Wei’s testimony or signature, did come from her, as well as other  
evidence of involvement, that proved her willing participation as outlined above.  
[175]Wei’s participation in Filho’s fraud consisted of a combination of direct sales  
presentations to existing and potential investors and the described organizational and  
managerial functions.  
[176]In reaching our conclusion that Wei participated in the fraud perpetrated by Filho, we do  
not find it necessary to make findings on her connection to the individual investors, nor  
when or if she made a presentation to any specific investor. The promotion of DFRF in  
British Columbia was carried out through mass distributions of promotional materials (on  
the internet, by email and in person presentations) and by word of mouth, designed to  
47  
reach an audience of potential investors beyond those who attended any given  
presentation or received any specific email. The process was organized and given overall  
direction. Wei (and Law and Villarin) played a key role from the beginning in building  
the success of the promotion in British Columbia. Wei (and Law) added credibility to the  
DFRF scheme, Wei gave direction on organizing investors’ presentations, and direction  
to DFRF recruiters on how to address challenging news.  
[177]Filho created and orchestrated the fraud. The level of culpability of Wei for the fraud is  
lower than Filho’s culpability. However, Wei participated in Filho’s fraud in the various  
ways that we have identified. Her participation facilitated the fraud in a material way.  
[178]We should express our conclusions regarding Wei’s argument that she was only working  
on the Pony Mountain project and she was not participating in Filho’s efforts to obtain  
funds from investors. Wei led significant evidence to establish that Pony Mountain was a  
real, operating mine and Wei strongly contradicted evidence led by the executive director  
suggesting that Pony Mountain was a dormant business with no real prospects. We  
conclude that neither the executive director nor Wei fully established what each asserted.  
[179]We do not find on a balance of probabilities that Pony Mountain existed only in name. It  
may well be that the owners of Pony Mountain believed they had a real business and they  
had contracted with Wei to obtain financing for the business.  
[180]At the same time, we reject Wei’s suggestion that the existence of an intention to bring  
Pony Mountain into full production establishes that she was not participating in Filho’s  
fraudulent scheme. The fact that Pony Mountain may have been Wei’s prime motivation  
for promoting DFRF is not relevant. As we have described above, Wei took many steps  
to advance the efforts of DFRF to raise funds from residents of British Columbia. That  
reality existed even if Wei was motivated to do so in part for the benefit of Pony  
Mountain.  
[181]We refer back to Wei’s own words in her January 16. 2015 email, quoted more  
completely above:  
Both James and myself are dedicated to work with you building the DFRF  
membership worldwide!  
[182]Those were the words which Wei used at the time and, based on all of the other evidence  
we heard, we conclude that Wei meant those words at the time and acted on them. The  
evidence supports a conclusion and we find that Wei was a leader of the mass solicitation  
effort of DFRF in British Columbia starting by January 1, 2015.  
B.  
Wei’s Knowledge, Conclusions about Liability  
[183]Wei denies that she knew about Filho’s fraud and she denies that she should have known  
Filho and DFRF were acting fraudulently. Any finding otherwise will have to be based  
on conclusions that Wei should have known or that Wei knew but is not admitting what  
48  
she knew. Objective factors must be considered, including for the purpose of reaching a  
conclusion about what Wei subjectively knew.  
[184]Wei is an intelligent woman. She represented to investors that she had experience in the  
financial services field and in mining development. It would be expected that she would  
be less naïve than most others. We find that her ongoing presence and stature within  
DFRF influenced the perceptions of both DFRF investors and prospective investors  
whether or not she introduced them directly to DFRF. Wei chose to present the DFRF  
investment proposition while using the possessive pronoun “our” when speaking of  
DFRF’s gold operations. Those hearing such statements from her would reasonably form  
the impression that she was a qualified spokesperson for and on behalf of DFRF.  
[185]Wei was exposed to all of the red flags which warned of concerns about the legitimacy of  
the DFRF scheme. The unreasonable characteristics of the investment, the absurd  
statements relating to DFRF going public, the concerns about Filho being involved in a  
prior pyramid scheme, the concerns about the Framingham litigation, the Commission’s  
Investor Alert and all other concerns were brought directly to Wei’s attention.  
[186]Wei points to the due diligence steps which she undertook in an effort to show that it was  
reasonable for her to believe the claims which DFRF was making. With respect, most of  
the steps Wei points to consisted of asking insiders of DFRF to confirm DFRF’s good  
intentions, even after she learned of the news articles and class action lawsuits in  
February-March 2015. Wei’s other steps, such as confirming that certain DFRF related  
parties who were providing her with information were members of the bar in good  
standing, are useful steps but far from adequate in light of the overwhelming  
circumstances which were announcing to Wei that DFRF was fraudulent.  
[187]The inadequacy of Wei’s inquiries is especially evident when one considers Wei’s  
training and professional experience as an accountant. Wei would have known that an  
operating business would have financial statements and a business going public would  
necessarily have audited financial statements. Wei did not ask for such financial  
statements from DFRF, or at least she did not indicate to us that she made such a request.  
Wei overlooked a fast and easy way to confirm or disprove the claims Filho was making.  
Wei had previously worked as an articled student auditor with a major accounting firm.  
Auditors are professionally trained to detect fraud. As was quite evident in the evidence  
adduced in this case, Wei strategically referred to her training as an accountant when  
presenting in front of potential DFRF investors and when such reference worked to her  
advantage. It is reasonable to infer that she did so to build credibility with audiences and  
investors notwithstanding that she was uniquely positioned, because of such training, to  
detect and ultimately recognize fraud in these circumstances when and as the indicia of  
such fraud emerged. As a case in point, we need only examine the role Wei played as  
host of the meeting delivered via video from Florida in which Filho provides details of  
the purported public listing of DFRF “shares.” The video shows Wei praising Filho  
effusively while setting the stage, topic by topic, for Filho to run through his talking  
points. There was nothing in the video, and no evidence was led by Wei, that suggests  
she in any way challenged or questioned the underlying nonsensical premise of the  
49  
apparent good news surrounding the public listing. Rather, she chose to further enable  
Filho’s deceitful acts by enthusiastically promoting it.  
[188]These circumstances prove to a degree which exceeds the balance of probabilities  
standard that Wei should have known that Filho and his accomplices were perpetrating a  
fraud. Although the number and significance of the red flags increased over time, we find  
that Wei should have known, as soon as she had time to consider the initial information  
presented to her, that Filho was perpetrating a fraud. We conclude that by January 1,  
2015, Wei reasonably should have known that Filho was perpetrating a fraud.  
[189]We turn to the question as to whether Wei had actual knowledge that Filho was  
perpetrating a fraud.  
[190]All of the evidence which supports our conclusion that Wei should have known Filho was  
perpetrating a fraud also provides support for an inference that she actually knew a fraud  
was being perpetrated by Filho. We choose not to repeat all of the evidence set out above,  
but we are keeping it in mind as we consider the question of whether the evidence proves  
Wei actually knew that Filho was perpetrating a fraud.  
[191]The evidence which causes us the greatest concern about Wei’s degree of subjective  
knowledge is found in her response to the information which Wei received in February  
and March of 2015, which suggested both that Filho had previously participated in a  
Ponzi scheme involving gold and that accusations were currently being made that DFRF  
was an illegal pyramid scheme. It is important to look at the detail of the information then  
made available to Wei, and to Wei’s reaction to the information.  
[192]The newspaper article describing the Earlier Florida Proceeding was sent to a group,  
including Wei, by email on February 12, 2015. The article is scathing and, although  
elements of the article refer collectively to Ponzi schemes in Florida at the time, some  
references are quite specific to Filho. The article states that US officials were  
investigating Filho and an associate in Florida for a Ponzi scheme and had seized  
significant assets.  
[193]Recipients of the email and the newspaper article would be expected to be quite alarmed.  
A reasonable reaction from anyone promoting DFRF would be to consider whether they  
should do more vigorous due diligence, stop promoting investment in DFRF and share  
the article with existing and potential investors. Wei’s responding email read “hi all, will  
discuss with you in person.” Wei’s response is revealing of both the leadership role Wei  
had assumed with this group and Wei’s intention to tell the group how they should  
respond to the alarming news they had just received. We have no evidence of what she  
said to the group but the outcome was that the Earlier Florida Proceeding was not brought  
to the attention of existing and potential investors. Wei’s explanation for her conduct, as  
explained during her cross examination was, to summarize, that Filho was not criminally  
charged, the implication being that this information was not at a level which should lead  
her to stop the promotion of DFRF nor bring that information to the attention of the  
investors to whom Wei was promoting DFRF. Wei’s explanation is not believable it is  
50  
not what a reasonable person would do, let alone someone with her training and  
experience. It is also not consistent with Wei’s portrayal of herself as a prudent business  
person who had carefully conducted due diligence about DFRF and concluded it was a  
real business.  
[194]The significance of the Earlier Florida Proceeding must have been even more apparent to  
Wei when word reached her of the Framingham law suit alleging that DFRF was an  
illegal pyramid scheme. The Framingham law suit was explained by Filho in a video  
which was not convincing. In his video, Filho criticizes the claimants in the Framingham  
law suit as people he did not know and he speaks angrily about people not wanting DFRF  
to succeed. Filho went on to speak about DFRF’s massive size and its significant  
charitable activities. The presentation was incoherent and vague - a conclusion which  
would be shared by anyone with any modest level of sophistication. Wei had a  
reasonably advanced level of professional experience and sophistication. Wei explained  
away the Framingham law suit on the basis that it was discontinued and Filho’s lawyer  
said there was no evidence to support the claim. Wei’s explanation is not believable. If  
Wei had truly wanted to be satisfied that the plaintiffs in that law suit had no evidence,  
she could have contacted the plaintiffslawyers, not just Filho’s lawyers. Further, and  
more importantly, the allegations of dishonesty in the Framingham law suit echoed the  
concerns which Wei and all of the BC Respondents argue they conducted due diligence  
about. Simply asking questions of Filho’s lawyer is a woefully inadequate and odd  
reaction for someone with Wei’s background and sophistication.  
[195]When the factors which led us to find that Wei should have known the DFRF promotion  
was a device being used by Filho to perpetrate a fraud are coupled with the information  
delivered to Wei about the Earlier Florida Proceeding and the Framingham litigation,  
Filho’s response to that Framingham litigation, and her responses to these developments,  
it is appropriate to draw the inference that Wei, with her level of professional experience  
and sophistication, knew that DFRF was a fraud at that point and chose to continue with  
promoting DFRF. By March 19, 2015, when DFRF announced it was going public, Wei  
had been aware of the Framingham law suit and the Earlier Florida Proceeding for  
several weeks and had time to reflect on each. But Wei continued her support of DFRF.  
We find that from March 19, 2015, Wei’s acts of participation in the fraudulent conduct  
perpetrated by Filho was accompanied by actual knowledge of the underlying fraud.  
[196]Wei’s activities were a significant part of the foundation upon which all investments in  
DFRF from British Columbia were based. We find that Wei breached section 57(b) of the  
Act through her significant participation in the fraud perpetrated by Filho.  
[197]For the purposes of sanction, if the parties consider it relevant to provide submissions  
regarding which specific investors’ investment decisions were directly or indirectly  
influenced by Wei’s conduct, we invite them to do so.  
51  
IX.  
A.  
Analysis Application of section 57(b) to Law  
Nature and degree of Law’s conduct  
[198]It is clear that the extent of Law’s activities related to DFRF was more limited than  
Wei’s.  
[199]The only video evidence we have showing Law as a speaker at investor events is from the  
Fairmont Pacific Rim Hotel presentation. The words Law used during that presentation  
are presented in reasonable detail above. Law argues that his words were presented out of  
context and that part of the presentation was left out. However, Law’s bare assertion  
regarding that point is not convincing. We do not have any evidence or argument of what  
part of the presentation was left out or how such further content would have significantly  
modified the impressions created by the part of Law’s presentation which we saw. On the  
contrary, some investor witnesses described Law’s presentations at other events in a way  
that was consistent with what we saw in the video.  
[200]What we know of the context is that the event was promoted to investors and potential  
investors in DFRF. It is reasonable to infer that the attendees would have been  
considering whether to make an initial investment, whether to add to an existing  
investment, whether to take monthly returns of up to 15% and withdraw those returns or  
let them compound, and whether to ask for a return of invested capital. In addition, each  
investor and each prospective investor would have been considering the implicit question  
related to DFRF at all times, namely “is this for real, or is it too good to be true that one  
company makes so much money from gold mines in Mali and is willing to let us invest  
on these terms?” In that context, Law presented himself as a knowledgeable insider of  
DFRF and contributed his personal credibility to the DFRF opportunity.  
[201]Law’s presentation followed a speech by Wei which can only be described as a calculated  
effort to add credibility to DFRF and to present Law as an authority on gold mining in  
Mali based on his personal experience. Specifically, we find that Law represented, when  
called upon to do so, that he held substantive knowledge and experience with respect to  
gold extraction and mining operations in Africa. We also find that he chose to leverage  
such represented position with intent to influence the views of current and prospective  
investors in British Columbia on the prospects and ongoing credibility of the DFRF  
investment.  
[202] Law’s presentation was followed by a presentation by Filho during which he presented  
many false claims designed to encourage further investment.  
[203]Having viewed Law’s presentation carefully, we conclude that it was an important  
element in DFRF’s efforts at the time to maximize investment contributions from British  
Columbia residents. In doing so, Law contributed to the fraud that Filho was perpetrating.  
[204]We note that the Fairmont Pacific Rim presentation was not the first time that Law used  
his apparent familiarity with gold to suggest that the DFRF claims were credible. As is  
described above, at the time the generic DFRF presentation slides were updated to  
include a Canadian connection, a photo was added showing Law crouching beside an  
52  
impressive volume of gold. By participating in the DFRF promotion in that manner, Law  
further participated in the fraud being perpetrated by Filho in British Columbia.  
[205]We find that Law also contributed to the fraud which Filho was perpetrating by attending  
some of the presentations given by Wei and others as described by several of the investor  
witnesses as summarized above. We find that Law made a presentation at more than one  
investor presentation, as implied by the schedules we have seen showing Law being  
assigned to presentation sessions and as described by Investor M in her evidence. We  
recognize that Investor M’s evidence was challenged and that some aspects of what  
Investor M described, such as the dates of meetings, was uncertain. Law similarly  
challenged Investor T’s testimony on whether Law had presented at a certain meeting  
with investors. However, it was made abundantly clear before this panel that,  
notwithstanding any challenges any particular witness may have had recalling specific  
dates and meetings, the details of and intended conclusions to be drawn from Law’s  
presentations were remembered clearly and consistently by investor witnesses and,  
because of this, the sustained impact of his role cannot be understated. Investor M and  
others recalled with clarity Law telling them his mango gummy anecdote at an individual  
presentation. We accept that evidence as convincing. The panel saw and heard the same  
anecdote in the video of the Fairmont presentation.  
B.  
Law’s Knowledge, Conclusions about Liability  
[206]Law did not have Wei’s professional background as an accountant. There is no evidence  
that Law had a level of financial knowledge which approached the level Wei had.  
[207]Law suggested in his written submissions that he had “drilled Valdez” about DFRF, but  
Law did not enter any evidence on such efforts. Even if he had, his efforts focused on  
asking questions of DFRF representatives and were inadequate in light of the red flags  
about DFRF and the DFRF investment scheme.  
[208]Law demonstrated himself to be an intelligent, alert individual. He was present alongside  
Wei at key events. He was copied on many key emails. He was involved, although not  
extensively, in facilitating payments of funds by some investors. He represented that he  
had specific knowledge about mining and about gold in Africa. Law had the level of  
sophistication needed to understand the red flags which surrounded DFRF, including  
those red flags which were inherent in the structure of DFRF and in