D. Zhu Continues to Operate a Web of Interconnected PRC- and US- Based Companies Used in His Fraudulent Activities
In perpetrating IP theft in Canada, Zhu used a network of interconnected companies in the PRC, Canada, and elsewhere that were notionally distinct but, in practice, all subject to Zhu’s direction and control. The Supreme Court of British Columbia found in 2016 that:
Zhu uses his companies, and nominee shareholders and directors, with little or no regard for the notional separate personality of his companies. Rather, he creates corporations and appoints nominees to create the false appearance that a company is not owned or controlled by him, or otherwise to carry out his intentions which, in this case, were unlawful. This is also done to shield himself from liability for such unlawful actions.[1]
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Figure 26 - UMI corporate records showing a loan plan between UMI and IND Dairytech USA. The total amount loaned to UMI through the plan was $240,000. Source: Select Committee.
While operating in the United States, even the limited evidence available to the Select Committee demonstrates that Zhu continued to engage in a similar pattern of behavior with UMI and the other entities Zhu controlled. For example, documents found at the Reedley Biolab indicate that UMI borrowed $240,000 from two of Zhu’s previously established companies—IND Dairytech USA Inc. and International Newtech Development—in 17 installments between January 3, 2021 and September 24, 2022. IND and its various holdings, which were implicated by the Canadian court judgment, were supposed to be defunct in 2021. Even earlier in 2020, a deposit amounting to $125,000 was deposited in IND Dairytech USA Inc.’s bank account.
- ↑ XY, LLC v. Canadian Topsires Selection Inc., 2016 BCSC 1095. (“[I]t is manifestly clear that Zhu uses his companies, and nominee shareholders and directors, with little or no regard for the notional separate personality of his companies. Rather, he creates corporations and appoints nominees to create the false appearance that a company is not owned or controlled by him, or otherwise to carry out his intentions which, in this case, were unlawful. This is also done to shield himself from liability for such unlawful actions.”).
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