Woman jailed over 5 years for cheating investors into putting S$2.2m into fake trading firm
SINGAPORE — Her "clients" thought their money was being used in foreign exchange (forex) trading for profit but in reality, Wan Lai Kuan never intended to use the funds in any genuine investments.
- Wan Lai Kuan's company promised clients up to 5 per cent monthly returns
- The clients thought their money was being used for forex trading
- In reality, she partially repaid them with money from other investors she cheated
- Even her business partner who referred clients to her was unaware of the scheme
SINGAPORE — Her "clients" thought their money was being used in foreign exchange (forex) trading for profit but in reality, Wan Lai Kuan never intended to use the money in any genuine investments.
Instead, she partially repaid her "investors" with money obtained from other victims of the scam, thereby deceiving these victims into giving her fraudulent company Skycastle Capital LLP even more funds.
From 2015 to 2017, she cheated 18 clients and led them to put about S$2.2 million into Skycastle. After factoring in the repayments, the customers suffered a combined loss of S$860,065.
On Tuesday (Aug 30), the 34-year-old was jailed for five years and nine months, after she pleaded guilty to six counts of cheating. Thirteen similar charges were taken into consideration during sentencing.
No compensation has been made to the victims because Wan is an undischarged bankrupt and has no means of paying them back, her lawyer Andrew Chua from Drew and Napier law firm said.
Deputy Public Prosecutor (DPP) Lee Wei Liang told the court that much of the proceeds she earned from her scam were spent on her personal expenses, which included her own cafe business and repayment of loans.
The court heard that Wan had started Skycastle with two partners Chan Xuan Feng and Ang Shi Yi in December 2014 as a fund management business. It ran forex trading by using leveraged, or borrowed, funds for profit.
Leverage is commonly used in forex trading as a way to accelerate returns but it can also magnify losses. It often involves borrowing money from a broker for investment by using an amount of cash as collateral.
Ang ceased to be a partner three days after registration, DPP Lee said. Court documents did not state why Ang had quit.
Skycastle had a corporate bank account but no physical office.
Wan’s role was to conduct leveraged forex trades on behalf of clients, while Chan referred investors to Chan for a monthly commission of between 0.5 per cent and 1 per cent of the clients’ investment value.
Through written contracts, clients of Skycastle were promised a monthly performance return of up to 5 per cent of their invested funds. They were, however, not allowed to withdraw their capital for a period of between three and six months.
The authorities discovered Wan's scam after 10 investors filed police reports against Skycastle between March 2017 and October 2018. Wan was arrested on July 15 last year.
At all times, Chan was unaware of Wan’s deception when he referred investors to Skycastle.
On April 21 this year, he was fined S$5,000 after he pleaded guilty to one charge under the Securities and Futures Act for consenting to Skycastle carrying on a business of fund management between December 2014 and January 2015 without a licence.
In September 2015, Skycastle changed its registered name to ASDF LLP, though DPP Lee noted that the contracts signed by the investors stated the company’s name as Skycastle Capital and they had all understood the firm to be called Skycastle rather than ASDF.
Seeking a jail term of between 70 and 76 months, DPP Lee argued that Wan should be considered a serial offender for cheating multiple victims over a period of close to three years.
“(Wan) had taken deliberate steps to prolong the scheme and evade detection of her wrongdoing,” he said. “The victims given partial repayments would have been lured into a false sense of security, until the scheme ultimately became unsustainable and unravelled.”
“The victims given partial repayments would have been lured into a false sense of security, until the scheme ultimately became unsustainable and unravelled.Deputy Public Prosecutor Lee Wei Liang”
This was because Wan’s scheme was not a sophisticated one, but an “amateurish” and “rudimentary” Ponzi scheme that was bound to unravel, he said.
He described the scheme as a “financial misadventure”, but District Judge Janet Wang interjected to say that Wan’s deliberate scam should not be characterised as something that was brought about by an instance of misfortune.
Wan’s jail sentence was backdated to July 15 last year, which was when she was taken into remand.
For each count of cheating, she could have been jailed for up to 10 years and also been liable to a fine.