SINGAPORE (Dec 12): Shortly after share prices of Blumont Group, LionGold Corp and Asiasons Capital, since renamed Attilan Group, collapsed in October 2013, wiping more than $8 billion off their combined market value, news reports began circulating that a number of individuals had suffered big losses and were involved in lawsuits.

Notably, The Edge Singapore (Issue 602, Nov 25, 2013) reported that Quah Su-Ling had filed a lawsuit against Goldman Sachs International, accusing the bank of a breach of duty and “dumping” shares she owned in the three companies in the market, starting on Oct 2, 2013, and effectively precipitating the collapse of the penny stocks. The share sales started after the bank demanded Quah repay her margin loan within 1½ hours on Oct 2, and issued a notice of default against her when she failed to do so. In April last year, Quah lost her suit, and the judge ruled that she pay Goldman, which had counter claimed, $15.5 million instead.

Quah, who was CEO of IPCO International at the time, was also named in a suit brought by Interactive Brokers in November 2013. Media reports said the US-based online securities brokerage was seeking to recover about US$68 million in losses stemming from the October crash. It sought to freeze the assets of Quah, as well as those of Neo Kim Hock, Peter Chen Hing Woon, Tan Boon Kiat, Lee Chai Huat and Kuan Ah Ming. Other defendants in the suit were two British Virgin Islands-registered companies — Sun Spirit Group and Neptune Capital Group.

Subsequently, more reports emerged about other financial institutions suing their clients. For instance, Royal Bank of Canada also sued Neo, then chairman of Blumont; James Hong, the company’s executive director; and businessman Nelson Fernandez. The three men are said to owe the bank a total of US$63.3 million. They had used shares shares in Blumont, Asiasons and LionGold as collateral for credit facilities.

Three years on, the authorities are alleging that Quah has been in a romantic relationship with John Soh Chee Wen, and that the pair were the “masterminds behind the manipulation” of shares in Blumont, LionGold and Asiasons. And, the numerous charges they now face involve many of the people whose names came up in news reports after the penny stock crash.

According to the Attorney-General, Monetary Authority of Singapore (MAS) and Commercial Affairs Department (CAD), Soh, Quah and their accomplices perpetrated a “complex and elaborate fraud” using more than 180 trading accounts to trade shares in Asiasons, Blumont and LionGold. Prosecutors allege that those accounts, belonging to 59 individuals and corporate nominees, were actually controlled by Soh and Quah. The two are accused of using these accounts, held across more than a dozen brokerages, “to create an illusion of liquidity and demand” for shares in the three companies, as well as to control the supply of these shares available to the market so as to influence their prices.

Soh and Quah also face six charges each, related to cheating Goldman Sachs International and Interactive Brokers. According to the charge sheets released by prosecutors on Nov 25, Soh and Quah conspired to cheat Goldman Sachs International of $125.8 million in total by concealing from the bank that they were manipulating the market for the three stocks, and thereby “dishonestly induced” Goldman to extend a margin loan facility for the purchase of those shares. They are also accused of conspiring to cheat Interactive Brokers of $57.8 million in the same way.

Another man, Goh Hin Calm, has been accused of being their “key assistant”. Goh was appointed as IPCO’s interim CEO last year after serving as the company’s senior finance and administration manager. He appeared in court on Nov 25 to face six charges in relation to intentionally aiding Soh and Quah in their scheme to create a false market for shares in Asiasons, Blumont and LionGold. Goh allegedly managed the bank and trading accounts used to manipulate the shares.

The authorities and regulators say investigations are continuing against nominee account holders and trading representatives who may have aided Soh and Quah in their scheme. These individuals include directors and members of senior management in Blumont, Asiasons, LionGold and their related companies during the period in question.

CAD and MAS have already raided more than 50 locations and interviewed more than 70 people in a probe that started in April 2014.

This article appeared in the Corporate of Issue 758 (Dec 12) of The Edge Singapore.