Singaporeans lose thousands after US property scheme turns sour

Singaporeans lose thousands after US property scheme turns sour
https://shar.es/1l6vCZ
Posted on 3 February 2015

Judith Tan

The New Paper

Feb 01, 2015

 

Almost all his savings were wiped out. This included money for his family, two schoolgoing children and holiday plans.

 

Mr Kenneth Ng, 43, never imagined himself to be a real estate investor, but after listening to a speaker at a property seminar, he invested almost all of his $80,000 savings.

 

The supply chain executive, who earns $8,000 a month, bought a "fixer-upper" in the US city of Memphis for US$55,000 (S$74,500).

A fixer-upper is real estate slang for a property that needs maintenance work, such as redecoration, reconstruction or redesign, before it can be lived in. That was in 2013. Mr Ng never got the promised returns.

 

The property guru who made the sales pitch? She stopped taking calls and answering e-mails. Then out of the blue, Mr Ng received letters from lawyers in the US telling him to pay up or the property would face foreclosure.

 

Mr Ng, who has never been to the US, sent two cheques of US$4,000 and US$5,000 to keep the bank at bay. He is not the only one to put their trust in the US property scheme - others had invested in houses in Indianapolis.

 

One investor bought two properties - the first in Memphis, the other in Indianapolis - through the same scheme. She even made a video 10 months ago, praising the scheme and the woman behind it.

 

Now, the same investor is singing a different tune, saying that her cheques to the banks to stop the foreclosure of her homes are currently stuck at a US lawyer's office.

And the promised returns? She said she only received one month's worth of rent from the Memphis property. The investor, who spoke to The New Paper on Sunday, declined to be identified and is holding out for money to be returned.

 

A group of these investors contacted TNPS to tell their story. Some are civil servants. A couple are in between jobs, but most have regular jobs.

All of them have put their trust in a woman who allegedly told them she would handle everything, from the loans to legal letters.

 

There was nothing for the investors to do other than to wait for their money to grow at returns of between 14.5 and 22.3 per cent.

 

They were told they would own the properties, which would be repaired before being rented out within three to six months. And when values go up, they would be flipped. It was just too easy.

 

Mr Ng said: "I'm not familiar with the US property market - none of the investors are. But the presentation by CTL Property was good and its founder Clara Tan was very convincing,"

 

He met her at real estate seminars held at Marina Bay Sands, first in December 2012 and again in February 2013.

 

"What drew many of us in was, CTL is a one-stop shop, offering full services from tax submissions, tax filing, getting legal representations and so forth," he said.

 

He said like him, the other investors even signed over their power of attorney - that meant legally, she could decide for them.

 

"I'm not a detailed person, so when CTL said it will hold all the documents, I didn't demand a copy of the contracts for myself," Mr Ng said.

 

That was the start of a massive headache. CTL Group and its founder and director, Ms Clara Tan, were hot in the property scene between 2008 and 2012.

 

Her seminars on topics such as maximising rental yield, spotting prime property below market value, need-to-know tips for foreign markets and the power of leverage saw robust turnouts, and were sometimes over-subscribed.

 

Believing in her business model, several Singaporeans invested their hard-earned savings in her projects in Memphis and Indianapolis, where she said she "flipped" properties.

 

When the US housing bubble burst and the 2008 banking crisis followed, owners in many US cities, including Memphis and Indianapolis, were badly hit.

 

Many simply abandoned the properties they could no longer make payments for. The Singaporean investors bought over these houses.

Their money was supposed to be used to repair dozens of homes in some of the most down-and-out neighbourhoods of the two cities. The investors paid in full and the cost was supposed to cover all renovations. There were not supposed to be bank loans.

 

They also owned the US properties but to minimise work on their part, they signed the power of attorney over to Ms Tan's company for CTL to manage the properties.

 

But only one of the 12 investors TNPS met received a title deed. The rest never got their documents because they were told the documents would all be posted online on the company's website. It never happened.

 

In Indianapolis, Ms Tan's company popped up in county land sales records of 2013 as the buyer of at least 18 low-priced homes in Center Township. These purchases stood out, because at least eight were sold by non-profit group New Day Residential.

 

In May 2013, the president of New Day Residential was among five people charged in a kickback and bribery scandal involving vacant homes sold by the city-run Indy Land Bank.

 

One John Hawkins pleaded guilty to wire fraud in an alleged scheme to reap kickbacks from the sale of abandoned properties last June.

 

On Sept 2013, The Indianapolis Star reported that CTL Global Holdings had already resold some of its Indianapolis properties "at prices sharply higher than it paid for them to buyers with Asian names".

 

For instance, records in 2013 showed two side-by-side houses bought by CTL were sold by the Land Bank to New Day for US$2,500 (S$3,390) in March.

 

They were resold that same month to CTL for US$10,000 and in April, CTL "flipped" the houses for US$38,334 each to the current owners. Both homes remain unrenovated.

 

"The first sign of trouble was six months after, when the property management company engaged by CTL started communicating directly with us, the investors," said Mr Kenneth Ng. The property management company in question is in the US.

 

Mr Ng's troubles were echoed by many other investors and The New Paper on Sunday met with seven of them on Jan 24. A 60-year-old investor told TNPS on Friday that he bought two properties in Indianapolis and paid in full, spending about $100,000 in all.

 

"I was given the two title deeds but in the US, the homes were not really under my name - it was under CTL Global Holdings LLC," he said.

The purchases were finalised in July 2013 and he was receiving rental payment from one of the properties until September last year.

 

The investors were supposed to receive rental income, ranging from US$400 to US$600 (S$540 to S$810), three to six months after they became owners of the houses. The delay was to ensure renovations to the houses were completed and tenants secured.

 

But after six months, the seven investors claimed they had received no returns from the rentals. Instead, US banks sent them letters for mortgages unpaid and warned of foreclosing the properties.

 

"The last we heard was that 12 properties owned by Singaporeans have been foreclosed and six are waiting for foreclosure," said another investor, a civil servant who wanted to be known only as Ms Tan.

 

"With 12 properties foreclosed and each costing about US$50,000, our losses amount to US$600,000," she added. At first, the investors claimed, Ms Clara Tan called them regularly to update them.

 

But around mid-2014, the calls slowed down and eventually died. The investors grew worried when US banks wrote to them, telling them to make good the mortgage payment or their properties might face foreclosure.

 

The investors then wrote to Ms Tan repeatedly. They also called and even visited her Pemimpin Drive office and home address, a condominium at Upper Thomson Road. She could not be reached.

 

One investor, however, managed to get her on Skype sometime in November and she claimed she was being detained in Indianapolis by the US Federal Bureau of Investigation (FBI) and her passport had been impounded.

 

Some investors decided to group together to find some way to get themselves out of trouble. They made separate police reports on Jan 17 and 18,and reported to the Council for Estate Agencies on Jan 29.

Police confirmed the reports had been lodged and would only say that they were looking into the matter. TNPS also contacted FBI Special Agent and Media Representative (Indianapolis) Wendy Osborne.

 

Are they looking into land purchases by CTL Global and is it linked to a land bank scandal? Is the FBI or another law-enforcement agency holding Ms Tan? Ms Osborne would only say that the FBI does not confirm or deny investigations.

 

Often, when a Singaporean is in trouble overseas, a relative might contact the Ministry of Foreign Affairs for assistance. But an MFA spokesman says the ministry has not been approached for assistance.

 

The New Paper on Sunday team visited the CTL Global office at One Pemimpin twice, and the door was locked on both occasions. Calls to the numbers listed on the website also went unanswered.

 

A check with neighbouring offices found that no one had been seen going in or coming out of the unit since three months ago. Twice, the team visited her condominium, but nobody answered the door even though Chinese New Year decorations were up.

 

An e-mail sent to Ms Tan also went unanswered. But TNPS understands that Tan and CTL Global are not only foraying into Cambodia, but have also conducted webinars (seminars via the Web) since Jan 8 to attract investors from the country.

 

 

Investors left in the lurch as diamond firm Asia Fine Diamonds folds up

Investors left in the lurch as diamond firm Asia Fine Diamonds folds up http://str.sg/ZvLR

Source: The Straits Times
4 April 2016

Along with other customers of Asia Fine Diamonds (AFD), Mr Stephen Yeo learnt the hard way that diamonds are not his best friend after his investment in rare coloured diamonds went awry.

Last December, Mr Yeo, 55, who works in the medical sector, invested $17,785.12 in a 0.21-carat round cut diamond - described as "fancy intense purplish pink" - from AFD. He never laid hands on it.

This is the latest firm to come under scrutiny after recent reports by The Straits Times on two other firms - One Plantation Capital and Tropical Forestry Venture - which offered attractive returns in their agarwood investment schemes to retail investors.

Last month, Mr Yeo filed a police report against AFD, which used to have an office in Maybank Tower in Battery Road.

Not only are AFD customers crying foul, according to company staff, but employees are also up in arms as they have not been paid their wages and commissions for a few months. According to an AFD employee who spoke to The Straits Times on condition of anonymity, about 20 AFD staff involved in sales, telemarketing and administrative functions have not been paid for about two months. The office closed down in January.

Under AFD's two-year scheme, customers are offered a choice of coloured diamonds from a brochure. After selecting a diamond of their choice, they pay the cost of the diamond upfront. The average cost per diamond was about $15,000.

Customers sign an acquisition form which acts as a request for AFD to buy the diamonds on their behalf. They also sign a "storage and buy-back contract" with AFD. In the contract, customers are described as "the storer", while AFD is "the storage provider".

They were told to expect delivery of their diamonds one month later. However, they were advised that to avoid paying GST for their diamonds, AFD would store them in Christie's Fine Art Storage Services at Changi Airport. They would be given access to the warehouse for the purpose of viewing their diamonds.

There would be a 15 per cent annual return on the investment sum for two years, payable at the end of each year. This works out to a total return of 30 per cent - about $5,300 in the case of Mr Yeo's investment.

At the end of two years, the customers can opt to exercise the option for AFD to buy back the diamonds and return them their initial investment sums. If they wish to keep the diamond, they will forgo the 30 per cent returns.

Mr Yeo said he knew something had gone wrong only when he was not contacted by AFD to say that his diamond had been delivered to the Changi warehouse more than a month after he had paid and signed the documents. He was later informed by an AFD employee that the firm was in financial difficulties and that the chief executive and owner had gone missing.

"I was greedy and tempted by the high returns of 30 per cent. I was very angry initially because I should have done due diligence. But the AFD office looked very nice and it is registered here. I took a gamble and decided to see what comes out of it," said Mr Yeo.

He recalled that AFD's 4,000 sq ft office was luxuriously decorated and there was a showcase of diamonds in one of the rooms. He was also trying to help a friend who had sold him a property in the Philippines in her previous employment before moving to AFD as a sales consultant.

AFD was set up last June and has a paid-up capital of $10,000, Acra records show. It stated that the firm's director, Mr Guillianno Norberto R. Mata Pena, is from the Dominican Republic.

Mr David Gerald, president and chief executive of Securities Investor Association of Singapore, cautioned retail investors to look out for telltale signs when something looks too good to be true.

"There have been a number of scams reported and yet some people are falling for scams over and over again. People must get smart and ask basic questions before parting with hard-earned money," he said.

"Telltale signs include high returns which are more than what banks and good growth companies can offer. They must ring bells in our minds. How can others offer such high returns? Don't get carried away by high returns or a good sales pitch. Ask for advice and don't deal with unregulated entities."

Spot the scam

Spot the scam http://str.sg/Zyfm

Source: Straits Times

PUBLISHED

FEB 28, 2016, 5:00 AM SGT

 

Red flags include high return, low risk claims, pressure selling tactics

News that about 70 retail investors were crying foul over an exotic agarwood tree investment scheme made headlines yet this sort of story is far from rare.

Time and time again, the lure of reaping easy and high returns continues to lead retail investors into a minefield of financial risks.

In this latest case, investors outlaid sums ranging from $5,000 to $60,000 with Tropical Forestry Venture (TFV) to grow aquilaria trees that would be harvested for its valuable agarwood and oud oil used in fragrances and spas.

These investors were expecting high returns of between three and seven times the sums invested.

However, TFV has folded with no compensation in sight for those who made investments. It is just another new twist on a sad old tale.

Besides TFV, there have been several firms, including The Gold Guarantee, Profitable Plots and Sunshine Empire, that have surfaced in recent years at the shady end of Singapore's financial services sector.

Beware of "too good to be true" investment schemes which typically offer promises of attractive returns and low or no risk. The use of pressure selling tactics is another giveaway. The growth of the Internet means these tricksters may be a click away.

Mr Puah Soon Lim, investment specialist at Finexis Advisory, says that most scams are the doing of smart conmen.

"The ones that are skilful are deliberate and understand human psychology. They make use of social triggers like reciprocity, scarcity, social proof and authority. This is very much the work of a smart con artist," he notes. "The first step is to know that everyone has some blind spots and can be vulnerable. Be able to recognise some red flags and persuasion techniques."

Here are some things you should know.

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Avoid falling victim to investment scams

DEALING WITH REGULATED PEOPLE

It often starts with an unsolicited call from a person marketing an investment scheme that may include non-existent stocks or exotic investments like wine, raw land and trees. You could be asked to make payment to a bank account or be invited to attend a sales presentation at the office.

It may appear normal except that the marketing person may be carrying out a financial activity not regulated by the Monetary Authority of Singapore (MAS).

Check whether the person is regulated by the MAS. If you choose to deal with unauthorised individuals and firms, you forgo the protection afforded under the laws administered by the MAS, especially if they are based overseas.

The regulations mean that such schemes cannot be sold to retail investors without the MAS first authorising or recognising them. Sellers will have to make their scheme details and business plans known to the authorities and, in some cases, register prospectuses. They will also have to disclose material information to consumers so that they can make well-informed decisions.

These requirements will make it harder for such schemes to offer lofty promises and claims to retail investors that they cannot deliver.

Consumers can expect to be given licensed financial advice from trained advisers on some of these products and be brought through an advisory process where a reasonable basis for recommending them is established. They may also seek recourse when these investments fall through.

A spokesman for MAS said: "Consumers seeking investments are encouraged to deal only with entities regulated by MAS. Our regulatory regime seeks to ensure that investors receive adequate information to make well-informed investment decisions, and are dealt with fairly by product distributors."

NEW RULES TO PROTECT INVESTORS

In September last year, the MAS said that it will regulate investment schemes such as gold buybacks and collective landbanking. The proposed changes are targeted to be tabled in Parliament.

The proposed regulation covers collectively-managed investment schemes that are in substance similar to traditional regulated investment funds such as mutual funds but do not pool investors' contributions. Traditional collective investment schemes involve investors pooling their funds to invest in an asset or a group of assets, while unregulated collectively managed investment schemes require each investor to buy his or her own direct stake in the asset, such as a small plot in a large tract of land.

In typical plantation investment schemes, investors buy sub-divided plots of land on which crops are to be grown or even specific trees on a plot of land, to participate in profits arising from the future harvesting and sale of the crops or trees.

If the arrangements are such that investors do not have day-to-day control of the property, and the scheme's property is managed as a whole like a collective investment scheme, it is likely to fall under MAS' proposed regulation.

Under the proposed rules, some schemes may no longer solicit funds from the public but can do so only from investors who are deemed more sophisticated.

Schemes intended for retail investors will require MAS authorisation and be restricted to investments in securities or other assets that are liquid (for example, precious metals), or have stable income-generating ability, such as completed real estate.

A full assessment of how a scheme is operated will need to be done in order to determine if it would likely fall within the proposed MAS regulation.

This means that operators of schemes peddling illiquid assets such as land banks or agricultural products would no longer be able to market their products to retail investors. Investors who are already committed to such schemes might not be able to exit their investments easily, especially as the pool of potential buyers will shrink considerably.

MAS INVESTOR ALERT LIST

The investor alert list provides a listing of unregulated persons who, based on information received by the MAS, may have been wrongly perceived as being licensed or authorised. The central bank assesses public feedback as well as documentary evidence on the entity before placing it on the list.

The list, which can be found on the MAS and MoneySense websites, acts as an early warning alert to investors. It is not exhaustive and is periodically updated. The fact that a company is not listed does not mean that it is credible.

So consumers must exercise caution when dealing with all unregulated entities, not just those listed.

The list has swelled to 229 firms, well up from the 25 recorded in mid-2004 when it was made public. The public is also encouraged to check the MAS website for the list of MAS-registered prospectuses, authorised retail investment funds and regulated financial institutions.

DUE DILIGENCE

The consumer watchdog says investors should always exercise caution and do their own thorough research on any investment scheme, particularly those that promise high returns with seemingly low risks.

"Consumers who use the services of such entities for investing should ensure that they are regulated by the MAS and keep an eye on the investor alert list highlighted on the MAS website. Consumers who are not familiar with such collective investment should not get involved," says Mr Seah Seng Choon, executive director of the Consumers Association of Singapore (Case).

Do not get carried away by promises of high gains. Ask for brochures and documents such as sales agreements to be sent to you first so you can review them and check the legal terms. It is also prudent to find out the jurisdictions that the companies operate in.

Consider if the investment is a good fit with your financial goals and circumstances. And remember that high returns are always accompanied by higher risks.

Mr Puah warns against investing based solely on the recommendations of friends and family.

"Make sure you independently validate the claims. Check on their credentials. All authorised companies and individuals offering investment products can be traced at MAS directory," he says.

He added that the "grey and tricky" areas include landbanking and gold as there is no proper directory of such firms. However, the Accounting and Corporate Regulatory Authority (Acra) would have their records if they are based in Singapore. "Pay $5.50 at Acra and obtain information such as company registration dates and paid up capital. If they are new and unheard of, it's a big red flag. If they are from overseas and difficult to check, avoid altogether. I also register my phone number with PDPA and don't entertain cold calls at all," said Mr Puah, referring to the Do Not Call Registry under the Personal Data Protection Act.

He suggested avoiding free seminars related to such firms so as not to fall for their sales pitch.

FINANCIAL ADVISERS ACT (FAA)

The FAA regulates how companies and individuals provide advice on investment products to consumers.

It is administered by the MAS and covers advice on products such as unit trusts, foreign exchange and life insurance policies.

Under the FAA, no one is allowed to provide advice in relation to any investment product unless he is licensed to do so - or specifically exempted - under the Act. Anyone flouting this regulation faces heavy fines and/or jail time if convicted.

The MAS administers the FAA and may take enforcement action. Where there is an apparent breach of the law, it will refer the case to the Commercial Affairs Department (CAD), the principal white-collar crime investigation agency here, for investigation.

REPORT FRAUDULENT BUSINESSES

Regardless of whether an entity is regulated by the MAS, it is an offence to operate a fraudulent or deceptive business.

If you suspect that you have been scammed or there may be some criminal wrongdoing or fraud, you can report the matter to the CAD.

Do not get carried away by promises of high gains. Ask for brochures and documents such as sales agreements to be sent to you first so you can review them and check the legal terms.

Learning from past cases

Learning from past cases http://str.sg/ZyfB

Source: Straits Times

PUBLISHED

FEB 28, 2016, 5:00 AM SGT

ALL THAT GLITTERS IS NOT GOLD Last year, disgruntled customers lodged reports against investment firms Valiant Capital and Suisse International. Both companies offered gold buy-back schemes but failed to pay investors the money promised.

In 2013, The Gold Guarantee founder Lee Song Teck went on the run and, a year earlier, more than 10,000 investors lost their money to Genneva Gold.

PROFITABLE PLOTS The firm's land-banking scheme offered an opportunity to invest in properties in Britain.

Clients were lured with promises of 12.5 per cent returns within six months. Instead, they lost $3.1 million after part of the returns was used to pay Profitable Plots' existing debts.

The firm's directors, Britons Timothy Goldring and John Nordmann, were jailed for 15 years for cheating investors after a 64-day trial that started in April 2013.

SUNSHINE EMPIRE Multi-level marketing firm Sunshine Empire sold "lifestyle packages", which included health supplements, electronics goods and other products. Returns were paid out by recycling funds from new participants.

It was likened to a Ponzi scheme where the operator does not make real profits but pays returns using funds from new investors.

It sold almost 26,000 packages and amassed about $180 million from August 2006 to October 2007.

The business ceased in 2007, and founder James Phang Wah is serving a nine-year jail term for fraud.

Another agarwood investment scheme under scrutiny

Another agarwood investment scheme under scrutiny http://str.sg/ZFau

Source: Straits Times 14 Mar 2016

Another firm offering agarwood investment schemes with lucrative returns has come under scrutiny.

Over the past two years, home-grown firm One Plantation Capital (OPC) has attracted $9.5 million of investments from some 425 customers in a scheme to grow aquilaria trees - prized for the valuable agarwood or oud oil that is harvested from them and then used in perfumes and by spas.

Last month, The Straits Times reported that 70 investors here have cried foul over another firm - Tropical Forestry Venture (TFV) - offering an agarwood investment scheme. TFV has closed its office with no compensation in sight for its investors, who put in sums ranging from $5,000 to $60,000.

Several investors have filed police reports against TFV.

Experts have raised concerns about OPC's scheme, noting, for example, that the seller is effectively an overseas entity.

They also say it appears to be an investment product with guaranteed returns over a fixed period of time, but is a type of investment product not regulated by the Monetary Authority of Singapore (MAS).

One OPC investor, who declined to be named, appealed to The Straits Times for help. "Can you help to check on this scheme, please? I had joined the scheme because of a friend. I'm just hoping for the best."

Under the OPC scheme, investors are offered a low entry level of a minimum investable sum of $10,000 to buy 10 semi-mature aquilaria trees ($1,000 per tree), due for harvesting in 3 1/2 years.

The sale and purchase, and management agreement obtained by The Straits Times after attending a sales presentation stated that there would be "yearly gains/profit distribution" of 5 per cent of the purchase amount for three years.

In addition, after 31/2 years, the firm pays investors $1,550, or 155 per cent, return for the sale of each tree. This works out to total investment returns of 170 per cent, or 20 per cent a year on an annualised basis - a high rate of return. This translates to total gains of $7,000 for an investment sum of $10,000.

OPC claimed that as the trees are growing, before they are harvested, it is able to offer annual returns to customers from the sales of its line of oud tea which is sold in China.

Besides buying the trees, OPC customers pay a one-time $500 administrative fee which is purportedly the premium payment for an insurance cover from a performance bond, purchased from Indonesian insurer PT Asuransi Asei. The insurance cover - 130 per cent of the purchase price - is meant to protect the customer in case OPC defaults.

The Straits Times notes that the "applicant" stated in the performance bond document is not OPC but a third party, Malaysia-based Gold Assurance Asset Management Company. The sum insured is stated as US$5 million (S$6.9 million).

Clause 6 of the bond states that any dispute concerning the bond falls under the Arbitration Act of Indonesia.

OPC managing director Benjamin Song said the bond covers the agreement between OPC and the purchaser and, in the event of default by OPC, the insurer will pay the clients. Mr Song added that in the sales agreement, OPC is not the seller. Rather it is OPC's overseas entity - for example, One Plantation (Cambodia) Venture - that holds the lease (minimum five years) that is the seller. Its role is to assist the buyer to sell the trees upon maturity in 31/2 years.

OPC has a paid-up capital of $100,000, Acra records show. The tree plantations are in Cambodia, Laos and Thailand, said Mr Song.

Mr Seah Seng Choon, executive director of the Consumers Association of Singapore, warned that as such investment schemes are not regulated by MAS, investors will not be afforded MAS' regulatory framework protection.

"In this instance, we note that the seller and the issuer of the performance bond are foreign entities, which are not subject to Singapore's regulatory framework. Seeking redress from a foreign entity is always cumbersome and uncertain as their laws are different from ours," he added. "Moreover, the cost of seeking redress could also be high."

He added that, in general, investors should always exercise caution and do their own thorough research on any investment schemes that promise high returns with seemingly low risks. Investors who are not prepared to stomach such high-risk ventures should not get involved.

A lawyer noted that as the agreement seems to involve entities in different jurisdictions, it makes it practically impossible to use one jurisdiction to enforce the agreement.

Mr Patrick Lim, associate director at financial advisory PromiseLand Independent, highlighted that clause 3.4 of the sales agreement states that "the purchase amount shall not be refunded (whether in whole or in part) under any circumstances whatsoever".