A taxi driver invested $81K in Sunshine Empire and lost most of it. Sunshine Empire collected a total of $180M from Singaporeans and operated for about a year before the authorities stepped in:
a. With a large segment of the population not financially literate, can we afford a 'light-touch' 'buyer beware' approach?
b. Why did the authorities take so long? Is it time the CAD takes a more proactive approach when it comes to such unregulated investment schemes?
How did so many ordinary Singaporeans get cheated by Sunshine Empire? Slick marketing.....watch this:
The man behind Sunshine Empire, James Phang, has a dubious record of operating various scams. One of them involved investing in a resort in Batam known as Magic Kingdom. Investors who lost money approached Case and local authorities but were told nothing can be done about because the scheme was run from Indonesia[Link].
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He mortgaged his house to invest in Sunshine Empire
In 2007, Singaporean bus driver Vincent Leo Teng Fong mortgaged his property in Malaysia for about RM200,000 ($81,980) and invested the money in more than 10 Sunshine Empire Gold Prime packages.
As reported in Shin Min Daily, he only received one rebate of RM26,000 from the company after his initial investment. The New Paper reported that he even introduced the company to his mother.
Vincent Leo testified in court on Oct 7 that he got to know about Sunshine Empire through a friend named Sze Li.
She told him that the company had attractive packages with high rates of return. Sze Li and her husband, Mr Jacky Neo, said that if he bought the most expensive Gold Prime package, he could get rebates of US$700 ($981.19) to US$800 every month, and he will recoup his investment in 10 months.
They also offered him a "buy eight get one free" promotion which they claimed would allow him to "break even" in six months and earn him an additional $60,000 bonus in two years.
A few days after meeting the couple, he was invited to Sunshine Empire's office at the HDB Hub in Toa Payoh for a briefing. At the briefing, Jacky Neo told Vincent Leo that Sunshine Empire was not just a multi-level marketing company.
He said that it was developing theme parks in Malacca and Cebu, and was setting up a radio relay station in Taiwan on top of owning a number of franchises and that the high returns were generated from investments and businesses like these.
Mr Jacky Neo even bought him his first package - a Silver Merchant package. He told Vincent that he didn't have to pay as long as he brought friends up.
The briefing convinced Vincent Leo to buy 10 packages between July and October 2007. According to The New Paper, his mother also bought four Gold Prime packages; in total, his family bought 16 Gold Prime packages. Each package cost $12,000.
The New Paper also reports that Mr Leo went to Malacca to attend the "ground-breaking ceremony" of the "theme park", where he saw James Phang, founder of Sunshine Empire.
In early 2008, he realised that his rebates were shrinking, and they stopped completely in March 2008. When he wanted to withdraw his investment, he found that he could not print out the withdrawal form from the company's website.