Public Prosecutor v Chua Hock Soon James, Harriet International Network Pte Ltd & Harriet Education Group Pte Ltd

JurisdictionSingapore
JudgeWong Choon Ning
Judgment Date23 March 2016
Neutral Citation[2016] SGDC 71
CourtDistrict Court (Singapore)
Docket NumberDAC No 4413 of 2012, DCN No 2 to 3 of 2012
Published date01 April 2016
Year2016
Hearing Date22 January 2015,29 October 2013,28 November 2013,26 November 2013,27 November 2013,31 December 2014,24 January 2015,16 October 2014,28 October 2013,17 January 2015,03 September 2014,01 November 2013,28 November 2014,23 January 2015,21 January 2015,30 October 2013,16 January 2015,04 July 2014,18 February 2014,25 November 2013,10 March 2014,03 October 2014
Plaintiff CounselDPP Ms Kok Shu En, Mr Gordon Oh and Mr Hon Yi
Defendant CounselMr Philip Fong Yeng Fatt, Mr Ong Poh Qin and Mr Lionel Chan (Messrs Harry Elias Partnership LLP)
Citation[2016] SGDC 71
District Judge Wong Choon Ning:

The first, second and third accused persons were convicted after a joint trial of offences under the Multi-Level and Pyramid Selling (Prohibition) Act (Cap 190, 2000 Rev Ed) (hereinafter referred to as “the Act”). The third accused, Harriet Education Group Pte Ltd (hereinafter referred to as “HEG”) was convicted of having, between December 2007 and September 2008 or around the said period, in Singapore, promoted a pyramid selling scheme or arrangement, namely the Global Eduprenenur Program scheme (hereinafter referred to as “the GEP scheme”), which scheme was not an excluded scheme or arrangement described in Paragraph 2 of the Multi-Level and Pyramid Selling (Excluded Schemes and Arrangements) (Amendments) Order 2001, which was an offence under Section 3(1), and punishable under Section 3(2) of the Act.

The second accused, Harriet International Network Pte Ltd (hereinafter referred to as “HIN”), was convicted of having, during the same said period, in Singapore, promoted the said GEP scheme, by allowing its UOB bank account to be used to receive monies paid by participants of the said scheme and to pay out monies being commissions to participants of the said scheme, which was similarly an offence under Section 3(1), and punishable under Section 3(2) of the Act. The first accused, Mr Chua Hock Soon James, was convicted of having, during the said period, been the managing director of HEG when the said company promoted the said GEP scheme, which was an offence under Section 3(2), read with Section 6(1), of the Act.

After hearing the prosecution’s address on sentence and the learned counsel’s mitigation plea, for the charge against the first accused, I imposed a fine of $50,000 or in default 3 months’ imprisonment. For the second accused (HIN), I imposed a fine of $20,000 or in default an order of attachment. For the third accused (HEG), I imposed a fine of $50,000 or in default an order of attachment.

The defence is dissatisfied with the orders of conviction for all three accused persons and now appeals against them. The prosecution is dissatisfied with the order of sentence against the first accused and now appeals against it. The first accused has since paid his fine in full.

UNDISPUTED FACTS OF THE CASE

Pursuant to Section 267(1) of the Criminal Procedure Code (Cap 68), the prosecution and the defence agreed to a set of facts enclosed in the Statement of Agreed Facts (PS 1). It was undisputed that, at all material times, the first accused was the managing director and secretary of HEG and HIN, which were incorporated on 27 Jun 2003 and 22 Apr 2003 respectively.

The first accused was also a director of the following four companies :- Harriet Business School Pte Ltd (hereinafter referred to as “HBS”); Harriet Career Consultancy Pte Ltd (hereinafter referred to as “HCC”); Harriet Teacher Training and Language School Pte Ltd (hereinafter referred to as “HTT”); and Creative Learning Centre Pte Ltd (hereinafter referred to as “CLC”). HEG, HIN and these four companies shared the same registered address. HBS, HTT and CLC were private schools which were registered with the Ministry of Education. They were also all awarded CaseTrust for Education. HCC possessed a licence to operate an employment agency, which was issued by the Commissioner for Labour, Singapore. HIN was a related company of these companies and it was also a shareholder of a number of these companies.

THE PROSECUTION’S CASE

The prosecution’s case was that, from early 2007, HEG, HIN and the first accused had begun promoting a scheme known as the GEP. Participants were recruited under the GEP as “consultants” and they were required to enter into a licensing agreement with HEG and pay, inter alia, a licensing fee to HIN. In return, the participant gained the right to recruit students to join the various educational courses run by HEG as well as to recruit other consultants or managers for the GEP. Upon his successful recruitment of a student consultant or manager, the participant would receive a commission which was paid out by HEG using HIN’s bank account. In addition, other participants could also receive a benefit as a result of the successful recruitment. It was the prosecution’s case that, under the GEP, there were other participants known as Country Managers and Global Managers who were entitled to receive overriding commission based on the commission earned by the participant who made the successful recruitment. With these three features, the prosecution’s position was that the GEP amounted to a pyramid selling scheme. By promoting the GEP, the first, second and third accused persons had, therefore, committed the offences of promoting a pyramid selling scheme.1

The prosecution called a total of nine witnesses, who included the general manager of HEG and the Investigating Officer. The remaining seven witnesses were participants in the GEP who had come from three separate teams or groups. For instance, PW 1, PW 2 and PW 9 were the Country Manager, Global Manager and Senior Consultant respectively within one group, while PW 3, PW 4 and PW 6 were the Country Manager, Global Manager and Senior Consultant respectively within another group. PW 5 was the Global Manager within a third group, but the Country Manager for this third group was not called during the trial and there was also no Senior Consultant or Consultant for this third group as PW 5 did not manage to recruit anyone under the GEP.

Evidence of Kelvin Lim (PW 1), Lam Chian Poh (PW 2) and Ronald Quan (PW 9) (Country Manager, Global Manager and Senior Consultant for Team 1)

Mr Kelvin Lim Hsien Ann (PW 1) (hereinafter referred to as “Kelvin Lim”) first became aware of the GEP offered by HEG through a newspaper advertisement. He attended three preview talks conducted by the first accused before he signed up with HEG as an International Student Consultant under its GEP. Kelvin Lim gave evidence that, at the said preview talks, the GEP had been presented as a lucrative business scheme,2 whereby one could easily earn a commission of $10,000 simply by recruiting one GEP student,3 or two or three work and study students.4 This, together with the money back guarantee which HEG was also offering to persons who signed up for the GEP, gave Kelvin Lim the confidence to sign up.5

To sign up for the GEP, Kelvin Lim had to first attend an interview and pay a non-refundable registration fee of $80. After interviewing Kelvin Lim, the first accused told him that he was accepted into the programme. Kelvin Lim then signed two documents, namely the Licensing Agreement (P1) and the Confidentiality Agreement (P2), with the first accused signing both documents on behalf of HEG.

Pursuant to the Licensing Agreement, Kelvin Lim was appointed as an International Student Consultant with HEG for three years (from 6 Sept 2007 to 5 Sept 2010), and he was given the right or licence to represent HEG to recruit students to take up programmes offered in the HEG group of companies, namely, HBS, HTT and CLC. Kelvin Lim would be entitled to receive commissions payable from HEG, based on the following rates calculated on a quarterly basis,6 provided that HEG had received in full the payment of the programme fees from the student recruited :-

Category Commission Rate
First 10 students registered 15% of the tuition fees
Next 11th to 20th student registered 20% of the tuition fees
From 21st student registered onwards 25% of the tuition fees
Students registered for certificates or courses with tuition fees less than $2,000 Flat rate of 15% of the tuition fees
These commission rates were applicable to work and study students.7 For the recruitment of GEP students, the first accused had orally informed Kelvin Lim, at the second preview talk which he attended, that there was a separate commission scheme for the recruitment of GEP consultants, that is, he would receive a commission of $10,000 for every GEP recruit.8 Although this commission scheme for the recruitment of GEP students was not written in the licensing agreement, it did materialise in that Kelvin Lim later received from HEG his $10,000 commission for each GEP student whom he recruited.9

Pursuant to clause 3.9 of the Licensing Agreement, Kelvin Lim was also given a 100% licence fee money back guarantee. Upon completing the 10-month GEP, he had an option to terminate the licensing agreement and receive a full refund of the licence fee of $10,00010, provided that the following conditions were satisfied :- The option to terminate must be exercised in writing by 30 May 2008;11 He must have completed the 10 months GEP and failed to earn $10,000 within one month upon completing the 10 months GEP; He must have attended all sessions of the GEP (which consisted of a three-day group training session and ten group coaching sessions to be held on given specified dates12 for which there would be no make-up sessions for any sessions missed13); and He must have completed the Personalised Success Plan with approval by Harriet within one week from the three-day GEP training sessions.

In return for the right to recruit students to take up programmes offered by HEG and earn commission from HEG for a three-year period and the money back guarantee, Kelvin Lim was obligated to pay HEG a total fee of $22,080,14 which consisted of the following three components :-

Component Amount
Non-refundable Registration Fees $80
Training Fees $12,000
3-year Licence Fees $10,000

Kelvin Lim testified that HEG had organised training sessions which were conducted by the first accused and two speakers from overseas, namely, Mr Ed Sobey and Mr Timothy Stearn.15 Kelvin Lim would not consider these sessions to be proper lectures.16 At these sessions, the speakers merely informed the participants of the kind of...

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