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3 Biggest Ponzi Schemes in Singapore

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16 December 2014

Biggest Ponzi Schemes in Singapore

Ever since Charles Ponzi strung along tens of thousands of people in his elaborate scheme involving postal reply coupons back in the 1920s, there have been numerous get-rich-quick scams in Singapore that have fleeced thousands before collapsing. We reveal three of the biggest Ponzi schemes in Singapore.

Last updated 26 May 2015

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Sunshine Empire

What happens when you blend a smooth-talking, self-styled legend a la Warren Buffett with a large population that chases financial success with blinkers on? You get Sunshine Empire, a cautionary tale of excess and greed, the largest Ponzi scheme in Singapore, and the perfect example of the adage "if something is too good to be true, it probably is".

Started by James Phang in 2006, Sunshine Empire was a Ponzi scheme, masquerading as a multi-level marketing business selling tiered lifestyle packages. In a nutshell, members who bought these packages were given points that could be exchanged for returns or used on an e-commerce platform to purchase products. They were also promised incredible returns of up to 10 percent a month. It was an intentional convoluted process to mask the real source of the financial returns – the money from new members – and it worked extremely well.

When Sunshine Empire was finally shut down by the authorities three years later, Phang and his cronies had managed to swindle a whopping S$180 million from retired folks, students and everyone else in between. S$115 million was paid out as "investment returns" while the remaining went into the pockets of Phang, his wife and their business associates. They were hauled to court and officially charged for fraud.

In 2010, Phang was found guilty and sentenced to nine years in jail. He was also fined S$60,000. Of the S$180 million, only an estimated S$21 million was recovered.

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Profitable Group

Before the farce that was EcoHouse, there was Profitable Group, a glitzy investment entity that was most famous for two things – boron bonds and land banking. For both, the group promised an amazing guaranteed return of 25 percent a year for every investor. The company went on a huge marketing drive, purchasing advertisement spots on sports channel ESPN, recruiting football icons such as Bryan Robson and Shebby Singh, and even launched a ridiculous bid for football club Newcastle United that was splashed all over the newspapers.

The company’s strategy worked. People in Singapore handed money hand over fist to them without understanding the energy market or flying to the United Kingdom to take a look at the land they were investing in. They broke the cardinal rule of investing – if you don’t understand a product, you shouldn’t invest in it. The gleaming green from the dollar signs blinded their vision and clouded their judgement.

Biggest Ponzi Schemes in Singapore

If the investors had done their due diligence, they would have seen the warning signs – the three directors of Profitable Group had previously headed a British-based land banking company that winded up after just a year and the land parcels that the Singapore reincarnation purportedly bought in the UK were designated as a green belt area, which meant that any chance of developing them were close to zero.

Most importantly, the one question that the investors (or anyone who is considering an investment opportunity) should have asked themselves was: "If the investment is that great to begin with, why would the people want me to share it with me when they can keep it for themselves?"

Two of the masterminds behind the Profitable Group scam have been sent to jail. The investors collectively lost a total of S$8 million.

—

The Gold Guarantee

Everything seemed well. The company had a certificate from the police to deal in gold. Early investors were getting the promised returns. The owner Lee Song Teck even appeared in a profile piece published in our national broadsheet The Straits Times. In any typical Ponzi scheme though, once the bottom falls out, everything else collapses in a pile of bricks and dust.

For The Gold Guarantee, Lee vanished at the beginning of 2013, taking with him a huge pile of monies that was used to prop up the unsustainable pyramid. Hundreds of investors were left in the lurch.

The Gold Guarantee was a ludicrous gold buyback scheme that had all the trappings of an untenable investment vehicle – high guaranteed returns, a CEO with a shady past, zero hedging in the event of a downturn in the gold market, etc. It was also extremely similar to other failed schemes such as Genneva Gold and Asia Pacific Bullion. The premise of TGG’s insidious scheme was simple.

  1. The Gold Guarantee buys gold at market price.
  2. TGG then sells the purchased gold to investors at an exorbitant mark-up, usually in the region of 25 percent. For the purpose of illustration, the market price of gold is S$100 and TGG sells the gold to investors at S$125.
  3. TGG tells the investor that he or she will be enjoying 1.7 percent discount off the already marked-up price. The plan is that TGG will buy back the gold from the investor at the price of S$125 after three months, and gets to keep the discount.

The problem with this though is that it only works if the gold market continues trending upwards and that TGG continues getting more investors to put their money in than investors who cash out. If the market crashes (as it always will) and a glut of investors ask for their money back, the company collapses.

Furthermore, in the case of TGG, investors never actually physically owned the gold nugget. Rather, they were given a printed piece of paper. Whether TGG actually purchased any gold bars in the first place is still shrouded in mystery and will probably remain so until the Commercial Affairs Department Singapore completes its investigations.

How much has been burned? Estimates are unclear but it’s definitely in the millions. Lee’s whereabouts are still unknown.

Similarly, a gold buyback scheme run by local firm Suisse International has mysteriously disappeared with about S$7 million of investors’ money. The company’s investment scheme was incredibly convoluted and just like any other Ponzi scheme, promised ludicrous guaranteed returns. All the typical signs of a Ponzi scheme finally bursting were there too – "cashflow problems", an up- and down-line system that gave you better rates if you invited friends, etc.

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Update:

Imagine a sweet, virtually "no-risk" deal promising around 30% returns, simply by buying and selling properties in Singapore’s choicest districts. Add on to that a jovial friend who jokes with you, hangs out with you, and even goes on vacations together. Is it any wonder why investors fell for the allegedly multi-million dollar Ponzi scheme run by Ms Leong Lai Yee?

The premise was a catchy one: using insider "advice" from a banker, Ms Leong would purchase distressed properties in Orchard, Tanglin and Newton on the verge of being repossessed by banks, then sell them to buyers in China for a profit. Investors who pumped in money to fund the purchase would get returns ranging from 10-48% over a period of four to eight months. Even if the buyers backed out, they would have already paid a 40% downpayment on the property, meaning that the investors’ expected returns were still "guaranteed".

For some 15 years, the scheme ran smoothly. But the house of cards started collapsing over the last few years, when Ms Leong started attempting to lure in fresh funds from new investors to pay earlier investors — a classic sign of a Ponzi scheme at work. Payments to existing investors were also repeatedly delayed, dragging from September last year to May this year.

Things came to a head a few days before 18 May, which was supposed to be the latest deadline for payment. Instead of payment invoices, investors received a dramatic letter from Ms Leong, saying that the money was gone and that she was going to take her life. Since then, she and her husband have gone AWOL, leaving investors high and dry — especially those who had withdrawn their CPF savings, borrowed from their insurance policies, or even taken a second mortgage on their house to free up cash to invest.

Moral of the story? Even if there are glowing testimonials from prior investors, it is always best to exercise due caution and constantly keep track of how well your investments are doing. And be prudent about how you manage your money. Investing, Ponzi scheme or not, shouldn’t be done at the expense of your retirement savings.

By | December 16th, 2014 | Culture and Living, Lifestyle | 62 Comments

The editor of DrWealth.com, Farhan has written for a variety of publications such as Esquire Singapore, TOAST, Reader's Digest, Family & Life, and Poached Mag. He has also acquired the superpower of differentiating between 0 and O on a laptop screen while standing five metres away from it.

62 Responses to "3 Biggest Ponzi Schemes in Singapore"

  1. helo says:

    What about genneva gold?

    • Farhan says:

      Hi helo,

      Thank you for reading. Yes, Genneva Gold is another Ponzi scheme similar to The Gold Guarantee that has gone awry. We didn’t add it in to the article because it’s similar in nature and method to TGG and happened earlier.

  2. blur says:

    Any idea if EMGOLDEX a ponzi too?

  3. Hamesh Ransa Varendra says:

    do any of u know anything about this company profit on land?
    http://www.investwithpol.com/
    they sound like a ponzi scheme but i'm not sure.

    POL Strategic Investment
    INVESTWITHPOL.COM|BY CREATEIT

  4. Hamesh Ransa Varendra says:

    .
    what about the company profit on land?
    http://www.investwithpol.com/
    sounds like a ponzi scheme to me…

  5. Vinson Lim says:

    What about shenton wealth holdings and dolphin capital?

  6. Farhan Shah says:

    Hi Vinson,

    Shenton Wealth Holdings and Dolphin Capital are both on MAS's Investor Alert List (http://www.mas.gov.sg/IAL.aspx?sc_p=A), so you might want to proceed with caution and do your due diligence.

  7. Farhan Shah says:

    Hi Ramesh,

    POL Strategic Investments has been listed on MAS's Investor Alert List (http://www.mas.gov.sg/IAL.aspx?sc_p=P). A few simple things you can look out for are if the investment offers somewhat astronomical guaranteed returns, require you to bring in more people willing to invest, or have a convoluted investment scheme that you can't understand despite multiple readings. Always, always do your due diligence.

  8. Johnny Voon says:

    I did not invest with shenton or dolphin, MAS alert list simply means MAS does not regulate. Not necessary

  9. Hamesh Ransa Varendra says:

    Farhan Shah .
    thanks! so what does this mean?
    one of my friends spoke to them. they claim to be an investment company but refuse apply for investment license as they are not allowed to give such high returns as they are giving now. if they are truly a property investment company, they should apply for an investment license and present themselves as an REIT.
    do u know if I can speak to anyone in MAS about this?

    thank you!

  10. Farhan Shah says:

    Hi Johnny,

    I appreciate that you read the article. You're right that the IAL is not a be-all and end-all of investment safety. I do, however, think that it's a good place for someone who isn't very au fait with investment matters to start at (:

  11. Farhan Shah says:

    Hi Hamesh Ransa Varendra,

    Investments in Singapore work on the basis of caveat emptor, or "buyer beware". The authorities (usually) won't step in until something has gone incredibly awry. So, MAS won't give you any other information other than what is already publicly listed i.e. the Investor Alert List. In the meantime, you indeed have raised a few good questions and if the answers that the company gives isn't to your satisfaction, do walk away. Remember, if something is too good to be true, it probably is.

  12. World Venture uses MLM concept. What is you opinion on it?

  13. Farhan Shah says:

    Personally, I feel that any business venture that requires you to spend more time recruiting people than selling the actual product is something you should stay away from.

  14. Louis Tan says:

    Suckers are born every day. Greed is the perpetual driver. If anything is too good to be true it probably is. What about Bitcoin? better than cold hard cash and printed currency? Where does its value stem from after removing all the fluff?

  15. N21 says:

    How about Network 21? Is it legal to operate in Singapore?

  16. Profitable Group is hardly in the top 3 when it comes to scams. U have to include Eco-House. Double digit millions for that scam which left many Singaporeans high and dry

  17. Melo Asdghdjhdads says:

    nice article!

  18. Wonderer says:

    what about world venture? hiding behind the pretext of selling tour packages.. which the main income is to through recruit new members. Is it also a Ponzi scheme and how come the authorities are not doing anything about this and allow people to squeeze the hard earn money out of singaporeans

  19. Rickee Ng says:

    These are nothing as compared to the so many other legalised ones. And the #1 Ponzi Scheme in Singapore, almost everyone is in it, including the self-employed and the guest workers.

  20. Tan says:

    What about Wing Foong that disappeared with our deposits in 1997
    for the Waterfront project in Johor Bahru ?
    This Eric Tan still lurking around in Malacca , using his son as the front man .
    Anyone knows more details ?

  22. hhh says:

    Ah duh, the biggest, leegalised one?

  23. Gordon Hatch says:

    If one suspected a Ponzi Scheme in Singapore, which government agency is appointed to investigate? MAS appears to handle public securities only.

  24. Gordon Hatch says:

    Which government agency administers investigation into possible Ponzi schemes?

    • Farhan says:

      Hi Gordon,

      When the authorities in Singapore suspect that the company of committing fraud, the Commercial Affairs Department usually comes in to investigate.

  26. Ronald Ng says:

    I hailed the remarkable salesmanship of these scheme. I could hardly convinced people to buy various blue chip which gives 4-5% yield plus decent capital appreciaiton

  27. David says:

    What about S888?

  28. John says:

    How about Castlewood?

    • Farhan says:

      Hi John,

      It’s hard to differentiate between a Ponzi scheme and a legitimate business venture. You’ll only know whether a venture is illegitimate when the bottom falls out, unfortunately. As always, practise due diligence and only invest in something that you understand.

  29. MartinLee.sg says:

    What about Genneva Gold?

  30. Henry Heok says:

    These SOBs are crooks out to cheat any simpleton of their hard-earned cash without any remorse. These victims trusted them believing they would deliver accordingly. Actually those convicted in courts should be made to cough out all the funds they have swindled or locked up indefinitely so that they cannot enjoy the spoils.

  31. Khalid Suresh says:

    Great article
    How about Emgoldex? Spreading in facebook site here in Singapore. I see a lot of pinos doing it. You recruit 2 they recruit 2 and so on and ypu move to the top and you exit once you reach the top.

  32. Astrid says:

    Hello,

    Any idea about Islandia/Legendia (or Legenda whichever way its spelt)?

  33. tana says:

    biggest of them all was the

    • Winnie says:

      Hi Tony,

      I’m afraid I’m not at liberty to speculate on whether it is a Ponzi scheme, but you’re welcome to run a search online for reviews. One thing you might want to note is that the company is on MAS’s Investor Alert list.

  35. S. Fogg says:

    Hi
    What about Efzinitus Capital Pte Ltd?
    It is also promising great returns, over a 3 year holding period.
    Has anyone heard about it?

    • Jay says:

      Yes, i heard about it before, the offer is good but do you find out is the company reliable and can be trust?

      • Jason says:

        Hello, I would like to know more too. It seems is working and was holding a 66301 license. And declare the it allow collect up to 10b USD OF FUND. any idea jan until now how was the rerun?

  36. Kevin Kaze says:

    Another one busted recently is a gambling investment. So call Masters in calculation can beat the odds in a casino. Sad thing is doctors, teachers and other professionals also got conned. All down to greed. Without greed nobody can con you

  37. So is world venture a Ponzi scheme? Seems they focus on recruiting than selling actual travel packages

  38. Norman Ng says:

    Please be aware that Singapore's regulator is among the worst with supervision and regulation. It is almost always behind the curve and only pay attention when other countries taken action on a particular investment scheme or when corpse started falling out from the closet. For example, Swiss Gold was brought to their attention but nothing happened and only after Bank Negara took action against them did MAS paid attention.

  39. J says:

    Hi, how about Efzinitus?

  40. Rakesh says:

    Any idea on profit in land.
    http://www.investwithpol.com
    Are they for real? They are also on MAS invested alert list.

    It seems they got some awards like promising SME500, singapore enterprise awards 2015 and singapore prestige awards 2015.

    What does these awards mean to us? Is it trustable?
    I need your feed back guys.

  41. Jameson says:

    Has anyone heard of this one?

    https://www.mttbsystem.com/

    Seems to promise easy commission streams. My questions is what do you have to sell to get these commissions? All the information I’ve found so far allude to reselling the system by recruiting more buyers.

  43. help says:

    Can anyone help me to find out a so call singapore capital fund license company name Efzinitus is ponzi scam company?

  45. Sharon Lee says:

    What about Efzinitus Capital Pte Ltd?

  46. Yeoh Hooi Hai says:

    I need more details about efzinitus capital pte ltd, some of my relatives & friends have involved in this scheme.

  47. Has anybody invested in Efzinitus Capital Pte Ltd? Seems too good to be true!

  48. A.Ridwan says:

    I aslo want to know about EFZINITUS. Is there anyone can share about this type of investment?

  49. Lim says:

    What about FX United which deal in forex

  50. Jess Wu says:

    I made a decision in 2013 to invest in Shenton Wealth Holdings and have successfully received my invested amount with profit 2 months back.
    I think we just have to proceed with caution. Some things that are too good to be true, it is.
    For this instance, i did a check on the company with whatever information i can grab hold of and after reading their contract etc, i decided to invest.
    Investment comes with risks, and we have to determine if the amount of risk is worth us investing. Overall we just have to know where did the investment profits come from. Is it from other investors? If it is then you have to walk away from this.
    We should exercise our own due diligence, In in this instance, i had.

  51. Jega says:

    Would like to know more about Efzinitus Capital Pte Ltd too.

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