SINGAPORE: Two former directors of a company that sold gold bars in a buyback arrangement which turned out to be the multimillion-dollar Ponzi structure were sentenced to jail on Monday (Sep 12).
Iseli Rudolf James Maitland, 63, and How Soo Feng, 48, were each given three years and 10 months’ prison for fraudulent investing.
They were discovered guilty of a cost each of being a party to a business for the deceptive purpose of selling precious metal bars under a structure promising returns.
The company, The Gold Label, ran the gold buyback company between 2009 plus 2011. The company sold gold bars to its clients at a premium of more than 20 per cent above prevailing gold market prices in contracts lasting three or six months.
In exchange, customers were guaranteed returns as high as 24 per cent per annum. At the end of the contract period, customers can sell the precious metal bars back to The particular Gold Label exact same price that they got bought the precious metal bars.
Theoretically, this allowed customers to recoup their own initial investment quantity in full while making guaranteed returns, developing a semblance of risk-free investment with appealing returns.
Throughout its operations, The Gold Label received more than 2, 500 customers and accumulated sales of about S$150 million.
However , the company had no profit-generating business, nor any sustainable means to honour the transaction and buyback responsibilities owed to its customers. Instead, it relied entirely upon new sales arises from subsequent customers to pay for obligations owed in order to earlier customers.
In October the year 2010, within a year of starting its sale for gold bars, the organization filed to end up, and had a total liability of S$85. 3 or more million at the time.
By then, its pay out and buyback commitments to its customers had amounted in order to more than S$85 million.
Both Maitland and How had contested the particular charges . From trial, they argued that the company had a formula which could generate sufficient profits for the firm to honour its obligations.
However , the court found that there has been no such formulation and that the pair knew this from the start.
“The time of the winding upward seems to indicate that will their decision was not borne out of benevolence to save their clients, but desperation to cover up the Ponzi structure that was soon to be exposed, ” stated the judge.
Maitland was permitted to defer his jail term to Sep 29.
Just for fraudulent trading underneath the Companies Act, the particular pair could have been jailed for up to seven years, fined up to S$15, 000, or both.
A third previous director, Wong Kwan Sing, had been sentenced to two years plus 10 months jail in January. He was nabbed after absconding to Malaysia.