SINGAPORE: A company director was sentenced to eight months' jail on Wednesday (Jun 3) for crowdfunding more than S$15 million without a licence.
Nancy Tan Mee Khim had consented to Noble Consulting Group carrying on a business of dealing-in-securities without a capital markets services licence (CMSL), the Singapore Police Force said.
Tan is the first person to be prosecuted for such an offence.
In exchange for 15 per cent commission on the funds gathered, the consultancy firm had raised a total of S$15,355,000 from more than 150 lenders for several small- and medium-sized enterprises (SMEs).
Two SMEs subsequently defaulted on their loans, with more than 100 lenders suffering losses totalling about S$9.5 million.
PUBLIC SEMINARS AND FAIRS
Between July 2013 and December 2015, Noble Consulting Group had organised public seminars and took part in investment exhibitions and fairs to meet potential investors.
As a company director, Tan was actively involved in its business operations, the police said.
Lenders were promised interest payments of 12 per cent to 28 per cent per year, and more than 150 lenders came on board.
More than S$15 million was raised for the SMEs. The companies include Krish Chartered Bus Services, Glen Iris (Int'l), Soilwood and three marine group companies, namely Adydas Marine Services, T S Marine Engineering Services and Scantech Marine.
From 2015 to 2016, 23 police reports were made against Soilwood and one report was made against Glen Iris, for defaulting on their repayment obligations, court documents show.
"It appeared from the reports that Noble was the company through which the informants learnt about investment opportunities in the companies that defaulted," the statement of facts read.
About S$6.35 million was raised for Soilwood by Noble between February 2014 and April 2015. More than 91 investments or loan agreements were signed.
Soilwood defaulted on about S$6.33 million, court documents showed.
According to the statement of facts, the company started defaulting on interest repayments in August 2015, and its director Daniel Leong Soon Choy could not be located.
"(Tan) visited the addresses of the main contractors which Leong previously said Soilwood undertook projects from, and discovered that those addresses were actually of a coffee shop and a shophouse," court documents said.
"No main contractors actually operated at the addresses that Leong provided."
Noble also raised about S$4.73 million from 61 investors and lenders between January 2014 and April 2015. It defaulted on about S$3.2 million.
Around February 2015, Glen Iris began to default on interest and principal repayments, the court heard. The company was wound up in mid-2015, and its director was bankrupted in mid-2016.
"This was a large scale business (Noble), handling vast amounts of money, without the necessary licence required by law," said Deputy Public Prosecutor Kenneth Chin.
PROSECUTOR ASKS FOR EIGHT MONTHS' JAIL MINIMUM
He asked for at least eight months' jail, saying that Tan was "clearly operating in an entirely different league" from other convicted offenders.
"The gravamen of the accused’s wrongdoing was her failure to obtain a CMSL, coupled with her lack of sufficient due diligence checks being done on the borrowers, evidenced by the high default rate," said Mr Chin.
"If the accused had applied for the necessary licence, the MAS (Monetary Authority of Singapore) could have supervised or exerted some form of control over her activities."
Without the licence and MAS' oversight, the risk of harm to the investing public was heightened, he said.
"The accused chose to operate outside the licensing regime. Similar business practices need to be deterred."
The police warned members of the public against dealing with unregulated entities or people when they come across such investment opportunities.
They added that the regulatory framework put in place by MAS ensures that only competent and professional persons may provide such financial services.
"If you choose to deal with unregulated entities or persons, you will forgo the protection given under MAS’ regulations," the police said.