How even the savviest get conned
Slick operators abound, building trust with their smooth ways. An Indonesian businessman tells TEH HOOI LING how he and his son were taken for a ride here
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Slick operators abound, building trust with their smooth ways. An Indonesian businessman tells TEH HOOI LING how he and his son were taken for a ride here
18 April 2012
He is an Indonesian businessman who started in the timber business before eventually venturing into real estate development. In the very unforgiving world of business, he has been savvy enough to suss out projects which are worth investing in and people who are trustworthy. He has survived and thrived for 40 years.
About three years ago, he decided to have a slower pace of life and let his eldest son take the driver’s seat in his business. He moved to Singapore and invested some money in real estate here.
It was here that he got to know a young banker in a local bank who had serviced him in his mortgage loans. One fateful night, this young banker called and arranged dinner, saying he’d like to introduce the Indonesian businessman, let’s call him Mr IB, to a “fund manager”.
That was in March 2010. The young banker said he had recommended a few of his clients to the “fund manager”, and they had all made good returns by putting their money with her. The “fund manager” told Mr IB that she was with an asset management firm and was personally able to get access to shares of hot initial public offerings that her clients would be able to sell upon listing for almost certain profits.
That the “fund manager” was introduced by the banker lent credibility to her and her “business”. Said Mr IB in Mandarin: “She appeared experienced, professional and confident. And she looked honest.”
A day or two after that dinner meeting, the young banker called to say that there was an IPO which was closing the following day, and that the “fund manager” had some shares that her clients could subscribe to.
“The thing is, they didn’t give us a lot of time to think about it. They called and said they’d come and pick up the cheque within half an hour,” said Mr IB.
The first cheque Mr IB handed over was for $460,000. The cheque was picked up by the young banker. Within two weeks, Mr IB got back that entire sum, plus an 8 per cent return.
Mr IB got his 30-year-old son to invest with the “fund manager” as well.
Over the next few months, there were many such calls, and the sum demanded grew over time. The young banker acted as the liaison for the “fund manager”, and did extensive emails and calls on her behalf.
Mr IB said: “Sometimes, I’d get three calls in a week from the banker. Once, I had to go to Gleneagles for my heart check-up. The ‘fund manager’ came to meet me at the cafe of the hospital to pick up the cheque from me. Always, there was a time pressure element. We were asked to hand over the cheque on short notice.” And many of the cheques were written out in the “fund manager’s” name.
For the first few transactions, the “fund manager” paid back the capital and investment returns promptly. But by about September that year, Mr IB said the “fund manager” started to give excuses in delaying repayment of the capital. And when she did write out cheques, some would bounce. Mr IB also asked for the statement of all the stocks and shares he had supposedly invested in. But the “fund manager” couldn’t produce such a statement.
Both father and son have more than 20 bounced cheques to date, and have since found out that the originating bank accounts have been closed.
After numerous failed attempts to get back their money, Mr IB and his son decided to report the case to the police and commenced legal action against the “fund manager” in the hope of recovering their money.
Last April, Mr IB sued the fund manager for $4.55 million, and his son filed his claim for $1.2 million in November. These are the outstanding amounts claimed. The actual amount transferred to her, allege the father and son, is way more.
After they started legal proceedings, they found out there were others in the same boat. Including theirs, there were a total of 17 suits filed against the “fund manager”. Some of the suits were withdrawn, and refiled again after she promised but then failed yet again to repay the amounts owed.
Since then, three of the plaintiffs have obtained judgements against her: one for a claim amount of $3.57 million, another for $4.73 million, and yet another for $5.34 million.
Mr IB and his son have incurred substantial legal costs in pursuing their claims against the “fund manager”.
The son, who used to work in the financial sector in the US, said: “All these are before we even go to trial. If we go to trial, it’s going to cost my father another $300,000 to $500,000.” And there is no guarantee that the plaintiffs will get any of the claimed amount back.
In the meantime, while the Commercial Affairs Department (CAD) is investigating the business dealings of the “fund manager”, she is free to dispose of her personal assets including real estate and move her funds around. And there is nothing stopping her from continuing to take money from new clients, he noted.
A civil case is prohibitively expensive to pursue, and there is no guarantee that it will be a worthwhile exercise, he said. The “fund manager” is fighting the civil suits against her, and is incurring huge legal costs as well. “She’s using our money to fight against us,” opined the son.
“From my experience of the whole episode, I felt that there are just not enough sanctions against people who gave false testimonies and people who commit white-collar crimes in Singapore,” he said.
When asked to crunch down into one sentence the main lesson learnt from the entire episode, he pondered over it for some 10 minutes and said: “It’s easy to brush it off as greed. But there were a lot of elements involved. It’s the trust established because of the introduction by an officer from an established bank in Singapore. It’s also the time pressure tactic and the tactic of gaining your trust in the first few transactions.”
His elder brother, who avoided any loss by virtue of the fact that he wasn’t in Singapore at the time, made a salient observation.
“It’s probably because we are in Singapore that you let your guard down. Singapore has the reputation of being a well-regulated financial centre. So you were lulled into this sense of safety. If we were in Indonesia, we would have our eyes wide open.
“It’s just like driving in Singapore. It’s so easy to drive here; you just look straight. In Indonesia, you have to keep a look-out in all directions.”