Sunshine Empire: The Sun Ain't Gonna Shine anymore...on this Empire

And please, don't bring it back, baby!

Reading about the trial of Sunshine Empire trio enriching themselves--the infamous three are the firm's founder James Phang Wah, former director Jackie Hoo Choon Cheat and the group sales director who is also Phang's wife Neo Kuon Huay--makes me want to start my own evil empire of Multi Level Marketing.

Or at the very least, to pen a how-to book with an attractive title like, "Setting up a Multi Level Marketing empire for evil dummy" or "How to run fraudulent trades & investment schemes without getting caught -- Exclusive insights from Former Convicts".

Nah, too troublesome. Much easier to just rant about it here & to monitor the case closely. (For those who have no idea what this hoo-ha is all about, you may want to check the Wikipedia entry on Sunshine Empire here & the Commercial Affairs Department, or in short CAD, FAQs on Sunshine Empire here.)

PS. The title is partially inspired by this song, "The Sun Ain't Gonna Shine".

The Sunshine Empire would not have survived for long as its business model was flawed, a district court heard on Monday.

That did not bother the firm's founder James Phang Wah, former director Jackie Hoo Choon Cheat, and Phang's wife, as they were merely out to enrich themselves, said the prosecution.

In his opening statement at the trial opening, Deputy Public Prosecutor Aedit Abdullah noted that Sunshine collected more than $180 million through the sale of lifestyle packages that included personal and beauty health care products. Participants were offered generous rebates in excess of the amount they paid.

Some $118 million was spent on these rebates and incentives to push the purchase of more packages, but much of the rest allegedly went into the pockets of the trio, who have denied the charges.

Phang, 49, is believed to have collected some US$5 million (S$7.05 million) in consultancy fees and allowances between August 2006 and November 2007. Sunshine also made loans amounting to millions of dollars to affiliated companies.

The prosecution also intends to prove that that Phang instructed Hoo to appoint Phang's wife Neo Kuon Huay, 46, as group sales director so that she would be entitled to a sales commission. She then received nearly $950,000 between October 2005 and August 2007.

The trial continues.

From Straits Times, "Trio enriched themselves".



Update: Wikipedia has an interesting entry on 'Ponzi scheme'. The defence team will have an uphill task to prove Sunshine Empire has a very viable business system. Viable & profitable, of course! (But for who? Just for the terrible trio?)

Although the prosecution maintained that multi-level marketing company Sunshine Empire was a shady operation, a district court was told on Tuesday that no customer had complained against the company.

Instead, the complaints came from 'concerned individuals whose parents or friends wanted to join the Empire trading scheme,' prompting the Commercial Affairs Department (CAD) to act, senior investigation officer Darren Gan told a district court. Investigations revealed that the accounts were in a mess.

The firm's founder Phang Wah, 49, and ex-director Jackie Hoo Choon Cheat, 29, are on trial for operating Singapore's biggest Ponzi-like scheme. They also face charges for criminal breach of trust and failing to keep proper accounts. Phang's wife his Neo Kuon Huay, 46, is accused of falsifying accounts to allegedly pocket nearly $950,000 as commission from sales revenue. All three have denied the charges.

International forensic accountant Luke Steadman, who was engaged by the CAD to see if the Empire's business model was sustainable, noted that participants who bought lifestyle packages received immediate as well as consumer rebate privileges (CRPs) over the next 15 months.

Mr Steadman calculated that those who bought the Prime Gold plan for $12,000 stood to receive $19,200 by way of CRPs. To pay for these, Empire had to generate returns of 349 per cent a year, yet the firm had no other source of substantial income except for the sale of its lifestyle packages, he pointed out in his report.

After the hearing was adjourned for the day, defence lawyer Subhas Anandan brushed aside Mr Steadman's testimony as 'mere opinion,' saying that the defence team had its own expert to show that Sunshine was a very viable business system.

From Straits Times, "Complaints from families".



Update on 29/03/10: James Phang Wah the infamous founder of the infamous Sunshine Empire claims that he never intended to cheat anyone. Sure. I believe that's all con persons will insist to say in their defense.

Founder of the now-defunct multi-level marketing company, Sunshine Empire, took the stand in court on Monday.

James Phang Wah, who has been charged with fraud, falsifying accounts and criminal breach of trust, told the court he never intended to cheat anyone.

He said he spent a long time studying how to make a multi-level marketing company work.

49-year-old Phang said he had often tried to explain to his members that there are no guaranteed returns.

He said they were determined by Sunshine Empire's profit.

Phang faces 20 charges involving some S$3.5 million, while his wife Neo Kuon Huay faces seven charges amounting to about S$700,000.

The company's ex-director Jackie Hoo Choon Cheat faces 10 charges that involve more than S$900,000.

Phang said after he suffered a S$6-million loss in investments in Indonesia, he went behind the scenes and worked as a consultant, helping students to set up multi-level marketing companies.

Even though Phang is the founder of Sunshine Empire, he said his roles in the company are as consultant and manager.

However, the prosecution said Phang played a big role in setting the direction of the company, as the top management paid great attention to his words.

From Channel NewsAsia, "Sunshine Empire founder tells court he never intended to cheat".

THE founder of Sunshine Empire, which allegedly operated a multimillion-dollar scam, denied it was a fraudulent business.

James Phang Wah, 49, maintained this when cross-examined by Deputy Public Prosecutor Aedit Abdullah in court on Tuesday.

The prosecution had alleged that the firm's business was not sustainable as it had no substantial source of income except for the sale of its lifestyle packages, which would increase the costs of rebates as there would be more customers.

Phang disagreed and said that the total costs did not amount to 50 per cent. He had also delayed payment of his consultancy fee for 1 1/2 years until October 2007, and even then, the US$5 million (S$7 million) he received did not amount to the agreed 5 per cent of sales turnover. He told the court that there was nothing sinister or illegal about Sunshine's business.

Also on trial with Phang are the firm's president Jackie Hoo Choon Cheat, 29, and Phang's wife Neo Kuon Huay, 46, who was described as the group sales director.

Hoo is also accused of receiving about $950,000 by abetting Phang in criminal breach of trust, while Neo is said the have falsified payment vouchers to receive nearly $1 million in commissions.

Hoo is expected to testify next.

From Straits Times, "'There was nothing sinister'".

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