10 years’ jail for woman who cheated debt factoring houses of S$25 million

SINGAPORE — With fake invoices that showed several companies — including restaurant chain Fish & Co — owed her firm money, the 35-year-old owner of a construction firm conned two debt factoring houses of S$25 million over two years.

Choy Peiyi then proceeded to splurge her dishonest proceeds on luxury goods, including a second-hand BMW car and a condominium unit. She gambled at the Marina Bay Sands' casino, invested in a venture capital firm, and also spent more than S$1.3 million to pay off her business' bad debts and operating expenses.

On Thursday (June 28), Choy, the sole director and shareholder of Vanguard Project Management, was sentenced to 10 years' jail over 23 charges of cheating Capital Springboard, an Irish debt factoring company which is now suffering a loss of close to S$7 million due to her deception.

A total of 214 charges, including two money laundering charges, were taken into consideration for the purposes of sentencing.

Debt factoring, also known as accounts receivable financing, is a common practice used by small and medium sized enterprises to improve their cash flow. When a customer takes too long to pay up, what these companies do is they sell the debt that is owed to them to a debt factoring house — at a discount. It then becomes the factoring house's responsibility to collect the debt.

Court documents stated that Choy's offences started sometime in late 2014 when she was introduced to a factoring house called Arc Trade Finance Fund and struck a "receivables purchase arrangement" with them.

Under the deal, all entities controlled by Choy would assign the account receivables for their transactions to Arc, which would pay her 80 per cent of her outstanding invoice amounts.

Sometime in 2016, Capital Springboard took over the contract after Arc told Choy that the factoring arrangement must be done through a company and not a sole proprietorship like Vanguard.

Under its agreement with Choy's firm, Capital Springboard paid Choy for a bulk of the outstanding invoice and purchase order amounts — without knowing that many of them were fake. A broker was also paid about S$800,000 for facilitating the factoring arrangement between the two firms.

To pass off the fictitious invoices and purchase orders as genuine, Choy made ink stamps of various companies, including that of Evershine Services, Fish & Co Restaurants, Lithan Academy, and PPG Coatings (Singapore).

It was not mentioned in court how Choy's offences was uncovered, but TODAY understands Capital Springboard found out about her ruse after going through her company's accounts when it wanted to make some adjustments to their arrangement.

When the police conducted a search of Choy's home, the companies' fake ink stamps were recovered, along with an ink stamp belonging to an employee of Mount Elizabeth Hospital, which is part of Parkway Hospitals Singapore — a company Vanguard falsely claimed owed it money as well.

Asking for a sentence of at least 11 years for Choy, Deputy Public Prosecutor Leong Weng Tat said more than S$1.3 million of the ill-gotten money still could not be traced, and Choy did not disclose an investment of S$1.708 million in Kinetic Venture Capital to the police.

She admitted to the investment only when the Commercial Affairs Department (CAD) established the fact through funds tracing. The CAD has to date seized S$80,000 from Kinetic.

Added DPP Leong: "The accused had clearly acted out of her own self-interest as she had spent significant sums of the misappropriated money on herself. (Besides) the loss (of S$6.8 million) caused by the accused in this case is staggering."

Choy will start serving her sentence on July 12 as she asked for a deferment of her sentence to settle her business dealings in view of the long sentence. She is currently out on a S$300,000 bail.

For each of her cheating charges, Choy could have been sentenced for up to 10 years in jail and fined.