Case Studies

Investigation

Investigation - Common Scams/Frauds

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CAD investigates a wide range of white collar crimes.

The 3 main enforcement groups that handle investigations are:
  • Enforcement Group I (EG I)
  • Enforcement Group II (EG II)
  • Financial Investigation Group (FIG)

Reports received by CAD are duly assessed by the respective groups. Some of the common scams, frauds and offences investigated by CAD include:

Scams/Frauds Targeting Members Of Public

Scams/Fraud Involving Businesses

Offences Relating To Conduct Of Business

Money Laundering

Scams/frauds Targeting Members Of Public

Illegal Pyramid Selling Schemes

Illegal Multi-Level Marketing and Pyramid Selling schemes are marketing schemes whereby payment of a fee upfront is required in order to join the scheme and participants are driven to recruit new members to recoup their upfront payment. It usually emphasizes on recruitment of new members instead of the sale of goods and services as in genuine marketing schemes. When there are only few or a limited supply of willing recruits, such scheme will eventually collapse and participants will lose their upfront payments.

The definition of illegal pyramid selling schemes and the conditions for exempted schemes can be found in the Multi-Level Marking and Pyramid Selling (Prohibition) Act. Persons who wish to participate or promote multi-level marketing schemes should acquaint themselves with the relevant laws and seek proper legal advice on the schemes.

Members of the public and consumers should not succumb to high pressure sales tactics that call for immediate payment or execution of an agreement. Insist on taking time to think over the decision and to talk to persons who can give advice such as a lawyer. Ask the promoter to substantiate any claims made in respect of the product and the purported earnings.

Investment Scams

An investment scam is broadly defined as any fraud associated with the purchase or sale of investments. Fraudulent investment schemes could be marketed over the telephone or the Internet. Some of the common investment scams are coldcall or boiler room scams, high yield investment programs ("HYIP") or the advance fee fraud. All these schemes tend to promise high returns to potential buyers/investors but provide vague information on how such returns would be generated.

 Cold Call or Boiler Room Scams

These involve high-pressure phone sales operations by salesmen who may make repeated calls offering the sale of share investments in third party businesses. Boiler-room operators may also maintain websites and provide local contact details to give victims the impression that their operation is proper. Local bank accounts are sometimes used to receive payments from victims but the monies will be quickly dissipated to overseas bank accounts.

Unsolicited phone calls using high pressure sales tactics and promises of extraordinary profit at little or no risk are typical of boiler room operations. Brokers usually deflect questions and use various ruses and misrepresentations to induce people into buying shares they know nothing about or do not really want.

Dishonest brokers may lure new customers by introducing well-known, widely traded "blue chips" shares and later introduce high-risk investments in small, unknown companies with little or no earnings. Many investors find that after buying the "recommended" shares, they are unable to dispose of these shares as there is little real demand for them. In many cases, these brokers would become uncontactable as well.

Our advice to the public is to hang up when hounded by unsolicited phone calls using high-pressure sales tactics. 

Avoid investments you do not understand. Get written information about the firm, the salesperson, and the investment. Verify the information independently through credible sources and seek professional advice if necessary.

Avoid giving out information on your credit card, bank account number or any personal particulars over the phone to strangers.

To protect your interest, deal only with persons regulated by the Monetary Authority of Singapore (MAS). The names of regulated persons in respect of the provision of financial services under the Acts administered by MAS are listed on the MAS website at http://www.mas.gov.sg.

 High Yield Investment Programs

In other instances, victims are persuaded to invest in sophisticated or exotic-sounding schemes commonly known as high yield investment programs ("HYIP"). Such investment schemes are usually offered via the internet with promises of high returns. Usually, the investment and withdrawals are made via e-currency, such as e-gold, e-bullion and INTGold. Many HYIP have turned out to be ponzi scams, where the invested funds from new entrants are used to pay existing investors. HYIP usually discloses little or no details on their management and the underlying investment to generate the promised returns.

The public should be wary of HYIP. Even if you receive your returns, it is often paid from the investment of newer entrants. Furthermore, most of such schemes operate anonymously over the Internet and could operate outside the jurisdiction of Singapore, making it difficult to investigate and recover monies when such scheme collapses.

Members of public should be suspicious of any deals that promise unrealistic returns with little risks. Avoid making hasty or immediate decisions. Find out more about the firm, salesperson and investment through independent and credible sources and seek professional advice if necessary.

 Advance Fee Fraud

This is usually defined as any scam that tricks victims into paying money upfront on the false hope of receiving a large windfall later. The advance payment is required by the fraudsters as processing fee. Common examples are false offers to lease standby letters of credit which could be used for credit enhancement purposes.

Persons should exercise extreme caution when required to make payments in advance to obtain credit or to receive a windfall.

 

Scams/Fraud Involving Businesses

Maritime And Financing Fraud

Maritime fraud can be broadly categorized into fraud involving vessel, fraud against cargo or cargo theft and documentary fraud.

Scuttling fraud describes the deliberate sinking of a vessel for insurance claim. Usually, such fraud is perpetrated by the vessel owners involving a vessel that is approaching or is past its economic life.

Cargo theft involves the misappropriation of the entire or substantial portion of the cargo to the eventual detriment of the buyers or insurers. In some instances, the cargo delivered differs from that reflected in the commercial invoice.

Documentary credit fraud (also known as letters of credit fraud) involves the issuance of false shipping documents which represents the existence of certain goods, its quality or value. The use of false shipping documents is usually either for the buyer to fraudulently obtain bank financing or for the seller to fraudulently collect monies against a letter of credit.

Financing fraud covers fraudulent attempts to obtain credit, for example using forged supporting documents for a loan application.

Certain measures can be taken by the parties concerned to reduce the risk of maritime fraud. For example, in cargo fraud, a buyer should check the creditworthiness of the suppliers/carriers and engage a reliable surveyor to inspect the quality of goods during and at the time of loading.

 Offences Committed By Bank Employees

Fraud committed by bank or finance company officers acting in their official capacity usually involved breaches of trust emplaced on such officers to carry out financial transactions on behalf customers.

Members of public should check their bank statements and records and report any irregularities to their banks promptly.

 

Offences Relating To Conduct Of Business

Securities And Commodities Market Misconduct

Market misconduct refers to activities that interfere with the genuine forces of demand and supply in the market. Such activities include stockmarket rigging, insider trading and dissemination of false information. These offences are investigated by the Securities & Maritime Fraud Division.

 

Regulatory Breaches Of Licensing And Other Requirements Relating To Financial Services/Capital Market

CAD also investigates into regulatory and other breaches of the securities and commodities laws. These range from the breach of licence conditions required to operate in the relevant market to publicly offering investments without a prospectus. These offences are investigated by the Securities & Maritime Fraud Division.

 

Breaches Of Licensing Requirements For Money Changing And Remittance Businesses

Money changing and remittance business is governed by the Money Changing and Remittance Businesses Act. The Proceeds of Crime Unit investigates offences disclosed under this legislation. It investigates and prosecutes persons and entities who operate money changing businesses and/or a money remittance business without the required licences. Other regulatory breaches under the legislation are dealt with by the regulator, the Monetary Authority of Singapore.

Money Laundering

Offenders who have committed drug trafficking or other serious offences (as stated in the list of offences under the 1st and 2nd Schedule of the CDSA) may seek to hide their illicit gains or proceeds obtained from these crimes by laundering them through a myriad of means such as the use of various financial schemes or instruments, fictitious business transactions, shell companies etc. Sometimes, they would also transfer the proceeds out of Singapore to avoid detection and confiscation by the enforcement authorities. The process of moving or disguising criminal proceeds to conceal its illicit origins is commonly referred to as "money laundering".

As at 1 November 2007, an individual who commits a money laundering offence face a maximum fine of $500,000 or a term of imprisonment of up to 7 years or both. If the offender is a non-individual, a maximum fine of $1 million could be imposed. Under the CDSA, all persons and entities are also required to report any suspicious financial transactions to the Suspicious Transaction Reporting Office. Any person or entity who fails to report may be liable to prosecution.

Money Mule

Such schemes offer the public part-time employment where the mule is required to receive monies from undisclosed persons and to subsequently remit the monies out of Singapore to undisclosed persons under suspicious circumstances. The monies received in the mules' account are in reality proceeds of crime. A person who takes part in such scheme may therefore be assisting a criminal or its syndicate launder illegal proceeds and therefore liable to be prosecuted for money laundering.

Members of public are advised to be careful of offers of lucrative part-time employment which requires them to receive and remit monies under suspicious circumstances. Similarly, they should also be cautious about allowing their bank accounts to be used for activities which they may suspect to be used to facilitate illegal activities or which they have little knowledge of.

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Last Updated on 28 April 2016