Jail for 2 ex-directors who pocketed over $1.2m in their firm’s gold investment Ponzi scheme
Two former directors who pocketed a total of more than $1.2 million in their firm’s Ponzi scheme were each sentenced to three years and 10 months’ jail on Monday.
At the time of the offenses between December 2009 and October 2010, Singaporean Iseli Rudolf James Maitland, now 63, and Malaysian How Soo Feng, now 48, were directors of The Gold Label (TGL), which sold gold to more than 2,000 customers.
The company had promised its customers a return on their investments and high payouts.
TGL, which has since wound up, took in more than $120 million under a so-called “buyback” scheme.
The scheme, however, was not backed by any real investments. Instead, the company depended on the money from new gold sales to satisfy the payment obligations to its older customers, the court heard.
Following a trial, the pair were each convicted on Sept 1 of carrying on a fraudulent business, an offence under the Companies Act.
Maitland and How were directors and shareholders of TGL from July 7, 2009, to Nov 15, 2010. It was not stated how much money they pocketed individually.
In January this year, a third former director, Wong Kwan Sing, 50, was sentenced to two years and 10 months’ jail after pleading guilty to an offence under the Act.
According to sources, Wong, a Malaysian, who is also known as “Gary”, pocketed at least $598,000 from the scheme.
TGL sold gold bars to its customers at a premium of more than 20 percent above prevailing gold market prices in contracts lasting three or six months, the police said in a statement on Monday.
In exchange, the customers were promised guaranteed returns as high as 24 percent per annum.
The police said that at the end of the contract period, customers had the option to sell the gold bars back to TGL at the same price that they were bought.
“This effectively allowed the customers to recoup their initial investment amount in full, while still making guaranteed returns, creating a semblance of a risk-free investment with attractive returns,” said the police.
Deputy Public Prosecutors Kevin Yong, Edwin Soh and Ong Xin Jie said in their submissions: “Behind the scenes, TGL… had no investments or profit-generating business to sustain the payouts… (Maitland and How) were fully aware that TGL’s business was carried out with this fraudulent purpose. They handsomely enriched themselves in the process, with reckless disregard for the potential losses to TGL’s… clients.”
Over time, TGL was unable to sell new contracts and the business broke down.
Its payout and buyback obligations to clients totaled more than $85 million, but the company had just over $450,000 in its bank accounts as at Oct 7, 2010.
The prosecution urged District Judge Ng Peng Hong to sentence Maitland and How to at least three years and 10 months in jail each, stressing that the pair had reaped greater profits than Wong.
How’s bail was set at $120,000 on Monday and the court heard that she intends to appeal against her conviction and sentence.
Maitland was offered bail of $80,000 on Monday and was ordered to surrender himself at the State Courts on Sept 29 to begin serving his sentence.