Justice is served! Be careful of such crooks who come up with elaborate scams!
Jul 17, 2010
Court convicts Sunshine Empire trio They pocketed at least $8 million through Ponzi-like schemeBy Khushwant Singh
THE flamboyant founder of Sunshine Empire, which amassed $180 million in 15 months, was found guilty by a district court yesterday for running a fraudulent scheme and for faking accounts.
James Phang Wah, 50, and former director Jackie Hoo Choon Cheat, 30, had enriched themselves by at least $8 million through Sunshine's multi-level marketing scheme.
Phang's wife Neo Kuon Huay, 47, was found guilty of falsifying payment vouchers together with Phang. They did this so that she could receive commissions amounting to nearly $1 million.
The trio will be sentenced on July 30.
Some 20,000 people bought into the flashy scheme, which promised high returns on its lifestyle packages.
Sunshine sold these packages at its plush Toa Payoh Central office for over 15 months, before it was raided by officers from the Commercial Affairs Department (CAD) in November 2007.
The packages ranged from $240 to $12,000 and offered attractive bonuses and incentives.
What was unique was its customer rebate points (CRP) system, which allowed participants to use the points to buy goods online.
Phang and Hoo had assured participants that CRP was derived from the firm's turnover on its e-commerce platform.
While this sounded impressive, District Judge Jasvender Kaur said it was essentially meaningless, because the e-commerce activity did not add to the firm's income as no revenue was generated for the firm.
Like other Ponzi-like schemes, rewards for participants came from fresh money secured from those joining later.
The judge noted it was clear that the two men misled participants and wanted to conceal the fact that the CRP return was paid out from the sale of new packages.
Noting that the CRP could come up to 160 per cent of the cost of a package, the judge said: 'The abnormally high returns were meant to dazzle and attract participants who had no in-depth knowledge of the scheme.'
Judge Kaur observed that it was a matter of time for such a business model to fail, and new participants would suffer a loss.
While $118 million of the $180 million collected was spent on rebates and incentives to push the purchase of more packages, much of the rest ended up in the pockets of the trio.
Phang pocketed US$5 million (S$7 million) in consultancy fees and allowances from the doomed venture.
Hoo collected about $950,000 by abetting Phang in criminal breach of trust. The two had paid Neo a commission of nearly $950,000 by dishonestly claiming she was the firm's group sales director.
The judge adjourned sentencing for two weeks to allow the trio's lawyers Subhas Anandan and Noor Mohamed Marican to prepare mitigation pleas.
The prosecution also intends to ask the trio to pay its costs in bringing the case to court.
Phang and Neo looked worried when Judge Kaur delivered the verdict to them but Hoo showed no expression.
Outside the courtroom, all three looked relaxed, chatting with about 20 supporters and family members.
All three still face charges of providing false declarations involving affiliated company Empire Communications Technology. Phang is also accused of possessing obscene and uncensored films.
Arrangements will now have to be made for a court to hear these charges.
Phang and Hoo face a maximum $15,000 fine and seven years' jail for fraudulent trading and a maximum of life imprisonment and a fine for the criminal breach of trust offences. The maximum penalty for falsifying accounts is seven years' jail with a fine.
A former director of Empire Investment Group has already been dealt with.
Yong Wai Hong, 28, was fined a total of $24,000 in July last year after he pleaded guilty to authorising a company secretary to give misleading returns to the Accounting and Corporate Regulatory Authority.
This false information had given Sunshine participants the wrong impression that its affiliate firms had strong financial standing.
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