03-04-2012, 07:48 AM
This shows the importance of being financially literate!
The Straits Times
Apr 3, 2012
Victim of ponzi scheme to get refund
But retiree could lose the $49,000 recovered due to legal costs
By K.C. Vijayan
THE victim of a United States-linked ponzi scheme will get US$39,375 (S$49,510) back but legal costs could wipe out what he can recover.
Retiree Quek Tiong Kheng and his wife had sued OilPods Singapore, its sole director Mark Chang and sales consultant Karin Yan for fraud and conspiracy over their losses in 2008.
District Judge Earnest Lau, in judgment grounds released last week, awarded US$39,375 to Mr Quek but dismissed his wife's suit as a joint plaintiff and their claim against Ms Yan.
The legal costs to be assessed in the dismissal of the two claims could exceed the amount recovered by Mr Quek.
The judge also noted that Mr Chang, a former Republic of Singapore Air Force pilot for about 22 years, is now an Australian permanent resident in Perth and has hardly any assets here.
The company is also dormant which means the plaintiffs may be hard-pressed to get anything back.
The outcome of the case, which came in the wake of the 2008 financial meltdown, is understood to have been monitored by other victims to help decide if they should seek redress.
In November 2008, news reports cited an OilPods spokesman as saying more than 2,000 of its investors, mostly Singaporeans, had invested in Colorado-based Powder River Petroleum which purportedly had gas and oil interests.
About US$46 million worth of working interests in the company were purchased by OilPods investors over four years.
The Queks' investment in 2006 initially yielded a 9 per cent return for a year but in 2008, the payments ceased.
Mr Quek found out that the US firm was embroiled in various legal proceedings and was alleged to have run a ponzi scheme.
A ponzi scheme is an investment fraud where existing investors are paid returns from funds from new investors.
The couple sued the three parties in 2009 through lawyer Winston Quek. The subordinate court hearings, which stretched over 14 days last year, ended last month.
The judge in his 62-page judgment grounds last week noted that Singapore newspapers had run reports of the US company's fraud for three months from August 2008.
It filed for bankruptcy in December 2008.
'Like many Singaporeans, the (couple) are ordinary prudent individuals with some life savings invested in conventional retail financial products such as fixed deposits, shares, foreign currency, gold and land banking mutual funds,' he noted.
The judge found the investment in the case 'smacks of a ponzi scheme' as investors were promised returns even before any gas or oil was produced.
He found that Mr Chang, defended by lawyer Jason Aw, knew that subscription monies were used to pay dividends to new investors.
'A reasonable man would ask why an honest company would do such a thing,' said DJ Lau.
He had harsh words for Mr Chang, noting that the sale of US gas and oil leases to retail investors here was his brainchild.
He found no evidence that Mr Chang suffered any financial loss. Amid the 'sea of victims' from the US firm's fraud, he was the 'major beneficiary', possibly having pocketed US$6.6 million in commissions based on an investment value of US$33 million, and a 5 per cent management fee of $1.75 million.
The judge found that Mr Chang had also offered an investment scheme to the public without approval from the Monetary Authority of Singapore and a prospectus to accompany the sale of the units.
He ordered US$39,375 be refunded to Mr Quek, less dividends received, but dismissed with costs the claim by his wife Lim Soon Boey.
She admitted the investment monies were wholly paid by her husband and she suffered no damage.
Lawyer Andrew Tan, defending Ms Yan, argued that she should not be liable as she marketed the product in an honest belief it was a genuine item.
She had done due diligence to verify the product as expected of someone in her shoes.
DJ Lau agreed, noting that Ms Yan, an accountancy graduate, was herself a victim and had filed a police report against the company.
He ordered her legal costs to be paid by the plaintiffs, pointing out that they could have succeeded in their suit without bringing her in as a defendant.
vijayan@sph.com.sg
The Straits Times
Apr 3, 2012
Victim of ponzi scheme to get refund
But retiree could lose the $49,000 recovered due to legal costs
By K.C. Vijayan
THE victim of a United States-linked ponzi scheme will get US$39,375 (S$49,510) back but legal costs could wipe out what he can recover.
Retiree Quek Tiong Kheng and his wife had sued OilPods Singapore, its sole director Mark Chang and sales consultant Karin Yan for fraud and conspiracy over their losses in 2008.
District Judge Earnest Lau, in judgment grounds released last week, awarded US$39,375 to Mr Quek but dismissed his wife's suit as a joint plaintiff and their claim against Ms Yan.
The legal costs to be assessed in the dismissal of the two claims could exceed the amount recovered by Mr Quek.
The judge also noted that Mr Chang, a former Republic of Singapore Air Force pilot for about 22 years, is now an Australian permanent resident in Perth and has hardly any assets here.
The company is also dormant which means the plaintiffs may be hard-pressed to get anything back.
The outcome of the case, which came in the wake of the 2008 financial meltdown, is understood to have been monitored by other victims to help decide if they should seek redress.
In November 2008, news reports cited an OilPods spokesman as saying more than 2,000 of its investors, mostly Singaporeans, had invested in Colorado-based Powder River Petroleum which purportedly had gas and oil interests.
About US$46 million worth of working interests in the company were purchased by OilPods investors over four years.
The Queks' investment in 2006 initially yielded a 9 per cent return for a year but in 2008, the payments ceased.
Mr Quek found out that the US firm was embroiled in various legal proceedings and was alleged to have run a ponzi scheme.
A ponzi scheme is an investment fraud where existing investors are paid returns from funds from new investors.
The couple sued the three parties in 2009 through lawyer Winston Quek. The subordinate court hearings, which stretched over 14 days last year, ended last month.
The judge in his 62-page judgment grounds last week noted that Singapore newspapers had run reports of the US company's fraud for three months from August 2008.
It filed for bankruptcy in December 2008.
'Like many Singaporeans, the (couple) are ordinary prudent individuals with some life savings invested in conventional retail financial products such as fixed deposits, shares, foreign currency, gold and land banking mutual funds,' he noted.
The judge found the investment in the case 'smacks of a ponzi scheme' as investors were promised returns even before any gas or oil was produced.
He found that Mr Chang, defended by lawyer Jason Aw, knew that subscription monies were used to pay dividends to new investors.
'A reasonable man would ask why an honest company would do such a thing,' said DJ Lau.
He had harsh words for Mr Chang, noting that the sale of US gas and oil leases to retail investors here was his brainchild.
He found no evidence that Mr Chang suffered any financial loss. Amid the 'sea of victims' from the US firm's fraud, he was the 'major beneficiary', possibly having pocketed US$6.6 million in commissions based on an investment value of US$33 million, and a 5 per cent management fee of $1.75 million.
The judge found that Mr Chang had also offered an investment scheme to the public without approval from the Monetary Authority of Singapore and a prospectus to accompany the sale of the units.
He ordered US$39,375 be refunded to Mr Quek, less dividends received, but dismissed with costs the claim by his wife Lim Soon Boey.
She admitted the investment monies were wholly paid by her husband and she suffered no damage.
Lawyer Andrew Tan, defending Ms Yan, argued that she should not be liable as she marketed the product in an honest belief it was a genuine item.
She had done due diligence to verify the product as expected of someone in her shoes.
DJ Lau agreed, noting that Ms Yan, an accountancy graduate, was herself a victim and had filed a police report against the company.
He ordered her legal costs to be paid by the plaintiffs, pointing out that they could have succeeded in their suit without bringing her in as a defendant.
vijayan@sph.com.sg
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