Director of 3 Singapore companies used to funnel US$49,000 from FBI scam fined

SINGAPORE: A director of three companies incorporated by foreigners in Singapore was fined by a court on Thursday (Dec 7), after it emerged that the companies were used to funnel US$49,000 (S$65,800) from a police scam in the United States.

Sathyanarayanan Kannan, 46, was handed a fine of S$5,000 after pleading guilty to one count under the Companies Act of failing to exercise any supervision over a company in which he was a director under the Companies Act. 

Another two similar charges pertaining to two other companies were taken into consideration.

He was also disqualified from being a director for two years.

The Singaporean was working as a technical project manager, earning a monthly salary of S$7,000, when a friend introduced him to co-accused Karunamoorthy Thillainatarajan.

Karunamoorthy was the only director and shareholder of Wisemans Corporate Service, a company that provided corporate secretarial and nominee director services to companies incorporated by foreigners in Singapore.

On average, Wisemans helped to incorporate about two to three companies a month, with a total of 250 to 300 clients, court documents stated.

Karunamoorthy asked Sathyanarayanan if he wanted to be a local director for some companies for extra income. As a resident director, Sathyanarayanan would not have "any visibility and connection to the financial operations of the company", Karunamoorthy said.

Sathyanarayanan agreed to be nominee director for companies in Singapore for foreigners who did not have a director who was a resident in Singapore.

This arrangement circumvented Accounting and Corporate Authority (ACRA) regulatory requirements to have at least one director who is locally resident in Singapore, said the prosecution.

Sathyanarayanan signed directorship papers for three companies: Sapple Connects, Global Dealz and High Innovations.

He did not perform any responsibilities as director of these companies, but earned about S$1,500 for each role. In total, he was a nominee director of 15 companies through Wiseman.

Sapple Connects was incorporated in January 2020, with its principal activities registered with ACRA as "wholesale trade" of a variety of goods.

Sathyanarayanan was the sole resident director of the company, while the other appointed director was an Indian national named Rahul Garg.

Sathyanarayanan did not perform any due diligence checks before agreeing to be a director. He did not know which business or industry the company was in, and was not involved in the running of the business or even that the company had a bank account.

He had agreed to the role for financial gain and had no intention of discharging his duties as a director, the prosecutor said.

He signed an indemnity form in August 2020 which stated that he would not be connected to any financial or operational activities of the company, with Karunamoorthy telling him that this would indemnify him from any penalties or liabilities of the company.

In October 2020, the Commercial Affairs Department (CAD) of the Singapore Police Force received information that a DBS bank account may have received criminal proceeds from a scam in the United States.

A victim in the US named John Cordell fell for a police impersonation scam, where a person called him claiming to be from the Federal Bureau of Investigation (FBI).

The scammer told him that the FBI was baiting a fugitive and needed his help to send money. In return, the FBI would send minted currency to Mr Cordell.

Mr Cordell was cheated of US$49,000, which was transferred to a bank account belonging to a person named Dhola Darshit Ghanshyambhai.

The money was then funnelled through the bank account of Sapple Connects to Global Dealz, then to High Innovations. Sathyanarayanan was a director at all three of these companies.

Sapple Connects has been struck off from the ACRA registry.

Deputy Public Prosecutor Heershan Kaur asked for a fine of between S$4,000 and S$5,000 and to be disqualified from acting as a director or taking part in the management of a company for two to three years.

She said Sathyanarayanan did not supervise or exercise any control over the operations, bank accounts or other activities of the companies.

Instead, he simply left it to the foreign director or Wisemans.

"The accused person's decision to bury his head in the sand was unacceptable," said Ms Kaur.

The court granted an order for the return of the seized amount of about US$49,000 to the vicitm.

For failing to exercise reasonable diligence as a director of a company, an offender can be fined up to S$5,000 or jailed for up to a year.