SINGAPORE: A director of several car trade-related companies ran a million-dollar scheme deceiving banks into issuing financing by using false documentation of transactions, resulting in massive losses by the banks.
Ho Yik Fuh, 57, was sentenced to 15 years’ jail on Tuesday (Sep 13) for an assortment of charges including cheating and falsifying documents.
His accomplice and supplier, 61-year-old Yeo Kee Siah, was sentenced to 40 months’ jail for his role.
Both men had contested the charges and were found guilty at the close of trial.
The court heard that Ho ran Frankel Motor, Frankel Leasing and Supreme Motor, operating a parallel import car retailing business through these companies.
Yeo was a director in Blue Motor Works, a supplier of parallel imported cars to Ho’s Frankel group of companies.
Ho had an arrangement with Ho such that most of the cars imported into Singapore by Yeo were parked at Frankel Motor’s storage facilities. The storekeeper of Frankel Motor would take over the cars and receive one key for each car.
Under this arrangement, even though Frankel Motor had not formally purchased the cars, the company could offer the cars for sale to their customers.
If the cars were sold, Yeo would be informed and earmark the cars in his records as having been booked by Frankel Motor. Yeo would issue invoices for the cars booked by Frankel Motor depending on whether any of the companies in the Frankel group had available credit in its lines of financing with the banks.
To finance the Frankel group of companies, Ho applied for various loans from different banks and companies. Among these were the Overseas Chinese Banking Corporation (OCBC), VTB Bank Europe Plc, Bank of East Asia (BEA) and GE Money.
To obtain financing from these banks, various documents had to be submitted, including documents showing evidence that cars were delivered to one of the Frankel group’s companies, or that the company had to pay its supplier for the cars.
Between 2006 and 2007, Ho and Yeo deceived banks into giving financing to the Frankel group of companies for the purchase of cars from various suppliers, when in fact there were no cars delivered in accordance with the invoices and delivery notes provided to the banks.
Ho deceived three banks by using double financing – getting financing twice for the same goods – and post-dated financing, by using documents showing that the cars were delivered on a certain date when in fact they had been delivered some time before.
Yeo helped Ho by issuing documents to facilitate both types of financing.
“The fraud perpetrated on the three banks resulted in massive losses, as the Frankel group of companies went under and could not make repayment of the outstanding loans,” said the prosecutor.
“The banks were also left out of pocket, as the double financing and post-dated financing meant that the loans, which were supposed to have been secured by floating charges over the cars which should still have been within the assets of the Frankel group of companies, were in fact unsecured as the underlying cars had already been sold to end-buyers or were already under other financing which took precedence,” he said.
The total amount in Ho’s charges is about S$14.2 million. Of this, Yeo’s involvement is at about S$3.5 million.
VTB was deceived into disbursing S$2.7 million, OCBC was cheated into disbursing S$1.09 million and BEA disbursed about S$659,000.
Ho also cheated Wirana Worldwide into entering a financing arrangement for Frankel Motor over non-existent imported cars. Losses of approximately S$9.7 million were caused to Wirana Worldwide over 29 instances of financing.
The prosecutor said the offenses are a reflection of “a troubling, yet persistent, climate in the Singapore business community where trade financing scams are seen as a convenient way to tide businesses through cashflow problems”.