Public Prosecutor v Kea Meng Cheng

• Jurisdiction: Singapore
• Judge: Toh Yung Cheong
• Judgment Date: 14 June 2012
• Neutral Citation: [2012] SGDC 246
• Court: District Court (Singapore)
• Hearing Date: 08 November 2011,08 June 2011,09 June 2011,22 December 2011,19 December 2011,21 December 2011,23 December 2011,07 June 2011,24 November 2011,11 November 2011,20 December 2011
• Docket Number: DAC 19389/10 & others
• Plaintiff Counsel: Hon Yi and Leong Wing Tuck with Teo Guan Siew & Nakoorsha Abdul Kader (Deputy Public Prosecutors)
• Defendant Counsel: Ramesh Tiwary (M/s Ramesh Tiwary),Subhas Anandan and Sunil Sudheesan (RHTLaw Taylor Wessing LLP)
• Published date: 10 December 2012

District Judge Toh Yung Cheong:

The accused Kea Meng Cheng (“KMC”) and Boon Choon Hock (“BCH”) were convicted after a trial on 5 charges of abetment of an offence of cheating by engaging in a conspiracy to cheat under section 420 read with section 109 of the Penal Code. For ease of reference, I will only reproduce the first charge as the other charges are broadly similar:

DAC 19389/10

You, are charged that you, sometime on May 2006 at No.333 North Bridge Road, K.H Kea Building, Singapore, did engage with one Boon Choon Hock in a conspiracy to do a certain thing, namely to cheat, and in pursuance of the conspiracy and in order to the doing of that thing, an act took place on or about the 15th day of May 2006, at the office of K.H Kea Building, at No. 333 North Bridge Road, Singapore, to wit, you deceived Lawrence Tan Yan Chai into believing that he was participating in a High Yield Investment Program (“HYIP”), also known as Private Placement Investment Program (“PPIP”), which fact you knew was not true, and by such manner of deception, you dishonestly induced the said Lawrence Tan Yan Chai to deliver S$360,000 to you, which he would not have done had he not been so deceived, which act was committed in consequence of your conspiracy, and you have thereby committed an offence punishable under Section 109 read with Section 420 of the Penal Code, Chapter 224.

The accused has appealed against the conviction and sentences imposed. I will now give the reasons for my decision in respect of the accused’s case. The grounds of decision for the co-accused BCH will be issued as a separate judgment. These reasons are an elaboration of the brief oral grounds of decision that I had delivered at the conclusion of the trial.

Prosecution’s Case Summary of facts

It is not disputed that the prosecution witnesses handed over to KMC the sums of money listed in the table below. The main issue where KMC is concerned is whether KMC was involved in a scheme to deceive the witnesses into handing these sums over by promising huge returns at little or no risk:

Charge	Giver	Amount	Whether returned
DAC 19389/101 DAC 19394/10	Lawrence Tan	$360,000	Returned
DAC 19390/10 DAC 19395/10	Shirley Pang (Through Lawrence Tan)	$110,000	Not returned
DAC 19393/10 DAC 19398/10	Lawrence Tan Shirley Pang (Through Lawrence Tan)	$327,000 $115,000 Total $442,000	Not returned
DAC 19392/10 DAC 19397/10	Kristine Teo (Through Lawrence Tan)	$100,000	Not returned
DAC 19391/10 DAC 19396/10	Liaw Kok Wah	$430,000	Not returned
Total	$1,442,000

The 1st accused Kea Meng Cheng (“KMC”) was a member of a family that had a large family business Kea Holding Pte Ltd. The accused was a director of many companies and at the material time his office in an office building bearing his family’s name, KH Kea Building. Two of the five charges state Kea Building as the location where the offences took place. The 2nd accused Boon Choon Hock was a former employee or agent of Prudential Assurance but was working for (or with) KMC at the material time.

PW2 Lawrence Tan Yan Chai (“LT”) and PW5 Liaw Kok Wah (“LKW”) were financial services directors with Prudential Assurance. They handed over large sums of money to the 1st accused KMC. For Lawrence Tan, it was a large portion of his life savings together with the inheritance money of his friend Shirley Pang and the savings of Kristine Teo. For Liaw Kok Wah, he handed over the bulk of the proceeds of the sale of his family home in Perth.

LT and LKW claimed that they handed over the money because KMC and BCH had told them that they were participating in a “small tranche” of a high yield investment known as a Private Placement Investment Program (“PPIP”). KMC signed various acknowledgement letters promising returns such as 80% within 40-60 days (Exhibit P2).

The prosecution’s case is that this was just a fraud designed to fleece the victims of their cash. KMC’s defence is that he was just taking a personal loan from LT and LKW. BCH’s defence is that it was a PPIP and that he believed whatever KMC said and simply passed on the message.

Lawrence Tan Yan Chai’s (“LT”) investment

Lawrence Tan was a Financial Services Director with Prudential Assurance. In 2005, he met his colleague Lawrence Ng on a company incentive trip. He learnt about an investment called a “High Yield Programme” (“HYP”) that could deliver enormous returns who no risk to the investor. Lawrence Ng also told LT that he had a friend called Boon Choon Hock (the 2nd accused BCH) who was in charge of marketing this programme. LT also received a write-up on HYP which was admitted as exhibit P22.

Subsequently, LT met BCH and spoke to him about the HY. BCH mentioned that the programme was sanctioned by the US Federal Reserve² and that he was working for the 1st accused Kea Meng Cheng (“KMC”). There was a minimum investment amount of US$10m. KMC was a broker or agent for HYP. LT met BCH more than once and talked to him about HYP. LT also performed an ACRA search (Exhibit P30) and learnt about KMC’s various directorships and shareholdings.

May 2006 “small tranche”

In May 2006, BCH informed LT that there was a US$100m HYP that was “stuck” because within that tranche of money, there was some “dirty money.” As such, the persons running the HYP needed to find investors to make up these small pockets of money in order for the HYP to proceed. For ease of reference I refer to this particular investment as the “small tranche” This particular program was not being run by KMC but by another broker though the word had filtered to KMC. The return was 80% for 3 months. Unlike normal HYP where the money never left the investors bank account, the small investor was required to pay cash upfront. BCH described this as a once in a lifetime opportunity for small investors to get into the program.³

It just happened that at that time, LT had two wealthy Indonesian friends in Singapore. He called BCH to set up the meeting. At this meeting, LT, BCH, KMC and the two Indonesians were present. KMC spoke in Hokkien and talked about HYP. However, the Indonesians were not interested in investing.

As the returns were so high, LT decided to ask BCH whether he could invest in the small tranche. BCH consulted KMC and replied that he could but the minimum amount was $100,000. BCH also told him to make out the cheque to KMC. LT then took $360,000 of his life savings to invest.

Lawrence Tan’s first investment of $360,000

On 15 May 2006, LT went to KMC’s office and handed him a cheque for $360,000 (Exhibit P8). KMC then gave him an acknowledgement letter (Exhibit P2). LT wondered why there was no other documentation but did not question KMC as BCH told him never to question KMC and never ask questions as that might upset him.⁴ Instead, KMC asked BCH and BCH said that there were no other documents as KMC was not the broker for this program. LT accepted this because of his belief that KMC was a very wealthy person.

Shirley Pang’s investment of $110,000 through LT

Having invested his savings with KMC, LT was excited and shared his good fortune with a close friend, Shirley Pang (“SP”). SP agreed to participate in the small tranche with $110,000 of her inheritance money. LT contacted BCH and BCH said that SP could invest and the cheque was to be made out to KMC (Exhibit P10). LT then handed SP’s cheque to KMC and received an acknowledgement from KMC (Exhibit P3).

Delay and return of only $360,000.

The maturity date of the small tranche arrived and there was no sign of the money. BCH told LT that the tranche was not run by KMC and the other side was delaying the payment. LT did not contact KMC directly as BCH said that KMC would not talk to anybody else except through him.⁵

Seven months later in December, KMC met LT in a hotel and gave him a cheque for $360,000. BCH was present. KMC explained that he had a liquidity problem and could not pay him in full.

With $360,000 returned, this left SP’s $110,000 plus the accrued profits from the investment outstanding. LT was chased for the rest of the money but to no avail. LT then asked KMC whether there was another programme like this coming up as he wanted to “roll over” the money.

BCH subsequently told LT that there was another small tranche but he did not know what the returns were. However, BCH reassured him that the earlier delay was just a blip. LT told BCH that he could not afford to lose the money and BCH reassured him that it was perfectly safe.

December 2006: LT's and SP's second investment of $442,000

LT decided to invest a second time and wrote out a cheque for $307,000 followed by a cheque for $20,000. This time, BCH told him to make the cheque out to Kea Sui Hong. This sum was supposed to be added to the monies outstanding, namely SP’s $110,000 and the profits promised in KMC’s earlier acknowledgement letters. When LT told SP about his plan, SP was also interested and she wrote a cash cheque for $115,000 (Exhibit P18-4). BCH told LT that SP’s cheque had to be a cash cheque as it was near the Christmas holiday and it would be hard to clear the cheque in time for this tranche because the traders will be going for their Christmas holiday.

After the cheques were handed over before Christmas between 20-24 December, the usual acknowledgement from KMC was only given to LT on 26 December. The letter acknowledged receipt of a total sum of $1m and stated that there would be a capital enhancement of up to 30%. KMC told LT that this round he could only get a 30% programme.⁶

December 2006: Kristine Teo through LT - $100,000

Kristine Teo (“CT”) was an insurance agent whom LT recruited. LT mentioned the HYP to her and she was interested. In July 2006, LT mentioned to CT that his payment had been delayed so there was no discussion of CT investing at that point....