How Soo Feng v Public Prosecutor: Fraudulent Trading under Companies Act
How Soo Feng and Iseli Rudolf James Maitland, directors of The Gold Label Pte Ltd (TGL PL), appealed against their conviction and sentence for fraudulent trading under s 340(5) of the Companies Act. The High Court dismissed their appeals, finding they knowingly operated a Ponzi-like gold buyback scheme that was inherently unprofitable and unsustainable. The court held that the appellants were aware of the fraudulent nature of the scheme and their explanations were inconsistent with objective evidence.
1. Case Overview
1.1 Court
High Court of the Republic of Singapore1.2 Outcome
Appeals against conviction and sentence dismissed.
1.3 Case Type
Criminal
1.4 Judgment Type
Judgment
1.5 Jurisdiction
Singapore
1.6 Description
Directors How Soo Feng and Iseli Maitland convicted of fraudulent trading for operating a Ponzi-like gold buyback scheme. Appeals dismissed.
1.7 Decision Date
2. Parties and Outcomes
| Party Name | Role | Type | Outcome | Outcome Type | Counsels |
|---|---|---|---|---|---|
| How Soo Feng | Appellant | Individual | Appeal Dismissed | Lost | Nathan Shashidran, Jeremy Mark Pereira, Carmen Lee |
| Public Prosecutor | Respondent | Government Agency | Appeal Dismissed | Won | Kevin Yong, Edwin Soh, Ong Xin Jie |
| Iseli Rudolf James Maitland | Appellant | Individual | Appeal Dismissed | Lost | Nathan Shashidran, Jeremy Mark Pereira, Carmen Lee |
3. Judges
| Judge Name | Title | Delivered Judgment |
|---|---|---|
| Vincent Hoong | Judge of the High Court | Yes |
4. Counsels
| Counsel Name | Organization |
|---|---|
| Nathan Shashidran | Withers KhattarWong LLP |
| Jeremy Mark Pereira | Withers KhattarWong LLP |
| Carmen Lee | Withers KhattarWong LLP |
| Suresh s/o Damodara | Damodara Ong LLC |
| Leonard Chua Jun Yi | Damodara Ong LLC |
| Kevin Yong | Attorney-General’s Chambers |
| Edwin Soh | Attorney-General’s Chambers |
| Ong Xin Jie | Attorney-General’s Chambers |
4. Facts
- The appellants were directors and majority shareholders of TGL PL.
- TGL PL sold gold bars under a buyback scheme promising guaranteed profits.
- TGL PL's business model involved using revenue from new gold contracts to fund payouts under previous contracts.
- The Gold Buyback Scheme was inherently unprofitable.
- TGL PL did not engage in any investing activity except a time deposit that was fully withdrawn before maturity.
- The appellants were aware that TGL PL was using monies earned from the sale of new contracts to satisfy obligations under older contracts.
- The appellants were aware that TGL PL had no other profit-generating business or investments.
5. Formal Citations
- How Soo Feng v Public Prosecutor, Magistrates’ Appeal No 9173 of 2022, [2023] SGHC 252
- Iseli Rudolf James Maitland v Public Prosecutor, Magistrates’ Appeal No 9189 of 2022, [2023] SGHC 252
6. Timeline
| Date | Event |
|---|---|
| TGL PL incorporated in Singapore | |
| How Soo Feng and Iseli Rudolf James Maitland became directors and majority shareholders of TGL PL | |
| Bank Negara announced investigations into Genneva SB | |
| WongPartnership letter drafted to Monetary Authority of Singapore | |
| Draft letter to IE Singapore outlined TGL PL business model | |
| Wong Kwan Sing became TGL PL's director | |
| TGL PL began selling gold bars under the Gold Buyback Scheme | |
| FTEG Pte Ltd owned remaining shares in TGL PL | |
| Email sent to Gary, copied to appellants, that there had been no transfers made according to the Formula | |
| TGL PL placed a time deposit with Standard Chartered Bank | |
| Email from Joanne to James, Sue and Gary highlighted TGL PL’s dire financial situation | |
| TGL PL fully withdrew the monies from Standard Chartered Bank | |
| FTEG PL sold shares to Sue and James; Gary resigned as director of TGL PL | |
| James and Sue initiated a winding up of TGL PL | |
| Goldvine Investment Pte Ltd acquired all of the appellants’ shares in TGL PL; appellants resigned as directors of TGL PL | |
| TGL PL was wound up through a creditors’ voluntary winding up | |
| Prosecution’s Sentencing Submissions | |
| Petition of Appeal of How Soo Feng | |
| James’ Skeletal Arguments for the Appellant | |
| Respondent’s Submissions | |
| Sue’s Skeletal Arguments | |
| James filed two criminal motions | |
| CM 33 dismissed | |
| CM 34 allowed | |
| James to the Court | |
| James’ Reply Submissions | |
| Sue’s Reply Submissions | |
| Prosecution’s Reply Submissions | |
| Judgment reserved |
7. Legal Issues
- Fraudulent Trading
- Outcome: The court held that the appellants were knowingly parties to carrying on the business of TGL PL for a fraudulent purpose.
- Category: Substantive
- Sub-Issues:
- Carrying on business for fraudulent purpose
- Knowledge of fraudulent purpose
- Unsustainable business model
- Related Cases:
- [2012] 1 SLR 64
- [1999] 2 SLR(R) 262
- Disclosure Obligations
- Outcome: The court held that the Prosecution did not breach its disclosure obligations.
- Category: Procedural
- Sub-Issues:
- Disclosure of material witnesses
- Disclosure of statements
- Related Cases:
- [2020] 1 SLR 984
- Sentencing Parity
- Outcome: The court held that the sentences imposed on the appellants did not offend the principle of parity.
- Category: Procedural
- Sub-Issues:
- Mitigating factors
- Aggravating factors
- Guilty plea
8. Remedies Sought
- Appeal against conviction
- Appeal against sentence
9. Cause of Actions
- Fraudulent Trading
10. Practice Areas
- Criminal Litigation
11. Industries
- Finance
- Investment
12. Cited Cases
| Case Name | Court | Affirmed | Citation | Jurisdiction | Significance |
|---|---|---|---|---|---|
| Phang Wah v Public Prosecutor | High Court | Yes | [2012] 1 SLR 64 | Singapore | Cited for the definition of 'fraudulent purpose' and the concept of turning a blind eye to the obvious. |
| R v Grantham | Queen's Bench | Yes | [1984] QB 675 | England and Wales | Cited for the definition of 'fraudulent purpose'. |
| Re Patrick Lyon Ltd | Chancery Division | Yes | [1933] Ch 786 | England and Wales | Cited for the definition of 'fraudulent purpose'. |
| Tan Hung Yeoh v Public Prosecutor | Court of Appeal | Yes | [1999] 2 SLR(R) 262 | Singapore | Cited for the requirement of actual knowledge for fraudulent trading under s 340 of the Companies Act and the definition of 'party to carrying on business'. |
| R v Hunter (Peter) and another | Court of Appeal | Yes | [2022] 3 WLR 485 | England and Wales | Cited in the context of the similarly worded s 993(1) of the UK Companies Act 2006 (c 46). |
| Iseli Rudolf James Maitland v Public Prosecutor | High Court | No | [2023] SGHC 145 | Singapore | Procedural history of the case. |
| Muhammad Nabill bin Mohd Fuad v Public Prosecutor | High Court | No | [2020] 1 SLR 984 | Singapore | Cited for the Prosecution’s duty in relation to material witnesses. |
| Public Prosecutor v Iseli Rudolf James Maitland and another | District Court | No | [2022] SGDC 204 | Singapore | Decisions of the District Judge in respect of the appellants’ convictions. |
| Public Prosecutor v Iseli Rudolf James Maitland and another | District Court | No | [2022] SGDC 211 | Singapore | Decisions of the District Judge in respect of the appellants’ sentences. |
| Lim Hong Boon v Public Prosecutor | High Court | No | [2022] SGHC 200 | Singapore | The sentence imposed on the appellants was in line with precedents. |
| Public Prosecutor v BWJ | Court of Appeal | No | [2023] SGCA 2 | Singapore | Some credit should be given for a person who complies strictly with the court's directions. |
13. Applicable Rules
| Rule Name |
|---|
| No applicable rules |
14. Applicable Statutes
| Statute Name | Jurisdiction |
|---|---|
| Companies Act (Cap 50, 2006 Rev Ed) | Singapore |
| Section 340(5) of the Companies Act (Cap 50, 2006 Rev Ed) | Singapore |
| Section 340(1) of the Companies Act (Cap 50, 2006 Rev Ed) | Singapore |
| Criminal Procedure Code (Cap 68, 2012 Rev Ed) | Singapore |
| Section 103(5)(c) of the Criminal Procedure Code (Cap 68, 2012 Rev Ed) | Singapore |
| Evidence Act (Cap 97, 1997 Rev Ed) | Singapore |
| Section 147(3) of the Evidence Act (Cap 97, 1997 Rev Ed) | Singapore |
| Section 157(c) of the Evidence Act (Cap 97, 1997 Rev Ed) | Singapore |
| Penal Code (Cap 224, 2008 Rev Ed) | Singapore |
| Sections 375(1)(a) and 375(3)(a)(i) of the Penal Code (Cap 224, 2008 Rev Ed) | Singapore |
15. Key Terms and Keywords
15.1 Key Terms
- Gold Buyback Scheme
- Fraudulent Purpose
- Formula
- Rolling Scheme
- Sell-Back Option
- TGL PL Selling Price
- Daily Reports
- Ponzi Scheme
15.2 Keywords
- Fraudulent trading
- Companies Act
- Gold buyback scheme
- Ponzi scheme
- Directors' duties
16. Subjects
- Company Law
- Criminal Law
- Fraud
- Ponzi Schemes
17. Areas of Law
- Criminal Law
- Statutory Offences
- Company Law
- Fraudulent Trading