SINGAPORE: A court on Friday (Jan 3) handed down prison sentences and a hefty penalty to two men who ran a S$23 million (US$17 million) multi-level marketing (MLM) scheme that promised investors returns from foreign exchange trades.
The pyramid scheme, which District Judge Soh Tze Bian described as “one of the most severe” cases of fraudulent trading, ran from 2014 to 2015.
About 4,500 investors were deceived, of whom more than 2,400 were in Singapore. Combined losses likely exceeded US$13.7 million, with unrecovered losses of more than US$10 million, the judge said.
Leong Koon Wah, 51, was the director of Singliworld, which offered the forex trading scheme known as Singliforex. He was also the director of two brokerages – Triumph Global (Asia) and Union Markets – that purported to carry out the forex trades.
After 88 days of trial, the Malaysian pleaded guilty to running Singliworld as an unlicensed forex trading business and promoting a pyramid scheme.
He was further convicted of fraudulent trading and running Triumph Global and Union Markets, which were also unlicensed forex trading businesses.
Leong was the central figure orchestrating the MLM scheme and involved in all aspects of its creation and promotion, Judge Soh found.
He was sentenced to 10 years and six months’ jail, and ordered to pay a penalty of about S$3.66 million or serve one-and-a-half years in jail. He indicated he would not be paying the penalty.
Ng Kuan Chuan, 38, was a director of Triumph Global and a manager at Union Markets. Judge Soh found he was crucial in maintaining the illusion of legitimate forex trading while facilitating the misappropriation of investors’ funds.
Ng was convicted after a trial on two charges of running the unlicensed brokerages and one charge of fraudulent trading.
The Malaysian was sentenced to seven years and six months’ jail, and a fine of S$300,000. He has appealed against his conviction and sentence.
Singliforex was marketed to investors as a scheme where professional traders would trade forex on their behalf. Investors were told that returns averaged 7.54 per cent a month, and that they could keep 70 per cent of the profits.
Investors were required to transfer their investment funds to trading accounts in Triumph Global and Union Markets. They were locked out of the accounts and not allowed to do their own trading.
They were also given incentives, in the form of rebates, to recruit other investors into the scheme.
In reality, there were no professional traders and no forex trades were ever carried out by the supposed brokerages, according to Deputy Public Prosecutors Nicholas Tan, Michelle Tay and Suriya Prakash.
Singliforex’s daily trading statements and trading account balances that investors received were false, and withdrawal requests were fulfilled by paying off the recipient from other investors’ capital.
The MLM scheme grew exponentially and rapidly, reaching at least 55 levels of downlines. Judge Soh said this made the scheme highly dangerous, with the potential to cause widespread harm.
Leong placed himself and his wife at the apex of the pyramid, resulting in recorded gains of US$6.5 million in rebates in their bank accounts.
Leong cashed out by transferring US$2.7 million from Triumph Global’s bank account to his own Hong Kong bank account, claiming that these were rebates owed to him. He also transferred more than S$500,000 to his wife’s Singapore bank account.
Ng admitted to gaining at least US$300,000 from the scheme, although inconsistent evidence at trial suggested a higher sum was possible, Judge Soh found.
A “dubious” transfer of almost US$530,000, supposedly for an investment into the African Development Funding Group, was also made from Triumph Global to another bank account without investors’ approval, according to the prosecution.
These misappropriations, where Leong and Ng allowed investors’ funds to be used to pay themselves, Leong’s wife, and the bogus African Development Funding Group scheme, demonstrated “a higher level of personal gain and a more extensive breach of trust”, the judge.
“The involvement of a family member, Leong’s wife, suggests a broader conspiracy and a more entrenched pattern of fraudulent behaviour,” he added.
In sentencing, he pointed out the high level of sophistication and premeditation involved in the fraudulent scheme.
“These include the use of complex subject matter like forex trading, coupled with technical jargon and false explanations to confuse investors,” said the judge.
“The scheme also employed a sophisticated overseas corporate structure with shell companies and strategic incorporation in New Zealand to appear legitimate.”
Leong and Ng used foreign bank accounts, legal documents, custom-built websites and promotional operations to further the illusion of illegitimacy, he added.
Judge Soh also highlighted that Leong’s 18 years of experience in the MLM business and his choice to use this model for Singliworld showed a high degree of premeditation and awareness that it could be harmful and illegal.
At trial, both men showed a significant lack of remorse and were dishonest, lying in their testimony and attempting to shift the blame to each other and other people, the judge noted.
Both men tried to diminish their responsibility, and Ng was “cavalier” about the mishandling of millions in investors’ funds. These were aggravating factors that justified heavier sentences, he said.
Leong applied to defer his sentence until after Chinese New Year. Defence lawyer Mr Ronnie Tan argued that Leong would be going into prison for a long time, and stressed his compliance with attendance throughout the investigations and trial.
Leong was granted the deferment with bail at S$300,000, after agreeing to report to his investigation officer thrice a week until he starts serving his jail term on Jan 31.
Ng, who did not have a lawyer, was granted a stay of execution on his sentence pending his appeal. His bail was doubled from S$150,000 to S$300,000, and he must report to his investigation officer every two weeks.
