SINGAPORE (Sept 30): Ken Tai Chee Ming was a commissioned dealer at AmFraser Securities (now known as KGI Securities Singapore) in 2010 when he was first introduced to Quah Su-Ling and John Soh Chee Wen – the alleged masterminds behind the penny stock crash of 2013.

Within two years, Tai quickly became “a lot more involved” in the duo’s market operations, and was considered part of the “inner circle” of traders that Soh entrusted with more responsibilities. But the relationship soon soured, amid a tale of betrayal and broken promises.

See: Inner circle to take the stand as trial resumes

And as the second tranche of hearings for masterminds of the 2013 penny stock crash saga kicked off on Monday, Tai took the stand as a witness for the prosecution.

In his conditioned statement, Tai recounts incidents that would hardly be out of place in a television drama: from misplaced loyalty to outright deceit, as well as mentions of anonymous, unregistered “bangla phones” used to communicate with others in the inner circle.

Tai’s statement laid bare Soh and Quah’s modus operandi, and how they would perform “market rolling” activities for shares in Blumont Group, Asiasons Capital (now called Attilan Group) and LionGold Corp.

Soh and Quah are on trial for their alleged role in orchestrating the meteoric surge in the price of the three penny stock counters. When their share prices crashed in early October 2013, some $8 billion in combined market value was destroyed.

Even in the early days of their relationship, when Tai first took Quah on as a client, the dealer had initial suspicions that Soh and Quah was manipulating the market for LionGold and Asiasons.

Tai had done some research of the listed companies related to Quah, and had drawn up a spreadsheet listing out various companies that might be indirectly controlled by Quah through various corporate subsidiaries.

Tai also described the duo’s “operations centre” in LionGold’s office, where all their market operations were coordinated. In October 2012, Tai moved into this meeting room with Soh and Quah.

Later, in March 2013, the operations centre was moved to an office space one floor below LionGold’s office. Here, the three of them, together with Dick Gwee Yow Pin, worked out of a meeting room called the “Dubai” room.

See: Penny stock trial: Argument over procedural unfairness turns the spotlight on the role of a man named Gwee

“Dick Gwee was very experienced at playing the market and I began to treat him as a mentor after a while,” Tai said in the statement.

“He gave me various pointers on how to conduct ‘market operations’, such as how to move the share price up or down, how to avoid trading with ‘aliens’ (third parties trading in the counters), and how to defend the share price of a counter from margin calls,” he added.

For example, Tai said Gwee reprimanded him for completing market rolling operations on Asiasons within the first hour of trading. Gwee told him that it would look suspicious if there was no market activity after that, Tai recounted.

According to Tai, Soh had also instructed him to push down the price of Asiasons shares on Sept 12, 2013 – on the eve of the deal to acquire Black Elk. This was to allow the seller, US-based hedge fund Platinum Partners, to get more Asiasons shares.

See: Was Black Elk the black swan that sank Asiasons, Blumont and LionGold?

Despite all the murky dealings, Tai had felt a sense of indebtedness and gratitude for Soh.

During his difficult times, Soh had provided him with a job. Later, Soh had also offered to underwrite Tai’s monies being held by Interactive Brokers (IB), an American online brokerage firm, for losses incurred by the account holders.

Out of loyalty, Tai said he had been willing to take the rap for Soh. He had lied in a statutory declaration for arbitration, as well as in interviews with the Commercial Affairs Department.

When Tai saw Peter Chen crying and looking distraught at CAD, he also informed Soh, and questioned whether Chen had confessed to the authorities. It was then, Tai said, that Soh told him that he had spoken to Chen to change his statement.

But a series of incidents soon began to change Tai’s mind about Soh.

In the last quarter of 2014, Tai was sued in Malaysia by the group of Malaysians who had opened accounts with IB, who alleged that Tai had opened the accounts without their authorisation.

When asked by Tai, Soh claimed he was unaware of the law suit, and that he had spoken to the plaintiffs’ lawyer, Krishna Kumar, to find out what was happening.

It was later that Tai, through his Malaysian lawyer, uncovered that Soh was Kumar’s “ultimate client”.

“I was extremely upset by what I had learnt because it seemed that [Soh] had been lying to me all this while and that he was the one actually orchestrating the Malaysian lawsuits against me,” Tai said.

Meanwhile, Soh had also not made good on his promise of underwriting the personal monies being withheld by IB.

Tai then spoke to others, who advised him it wasn’t worth being Soh’s fall guy.

After deliberating for a month, Tai decided to cooperate with CAD at the end of April 2015, and revealed the full extent of Soh and Quah’s involvement in the penny stock crash saga.

The trial resumes on Oct 1, where Tai will be examined by the prosecution on his statement.

What the 2013 Penny Stock Crash trial is about

John Soh Chee Wen is the alleged mastermind behind the penny stock crash of 2013, which prosecutors have called “the most audacious, extensive and injurious market manipulation scheme ever in Singapore”.

Together with his alleged co-conspirator and girlfriend Quah Su-Ling, Soh and his associates are alleged to have been behind the massive rise and sudden collapse of shares in Blumont Group, LionGold Corp and Asiasons Capital (now Attilan Group), which wiped out some $8 billion in market value.

Subscribers can click here to read our 8-page special pullout on the penny stock crash trial.

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