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Wednesday, April 24, 2024

Court allows forfeiture of RM1.1mil from illegal deposit-taking scheme investors


The Federal Court found that there was merit in the appeal by the government.
PUTRAJAYA: The government has succeeded in its appeal at the Federal Court to forfeit RM1,112,700 from 79 investors involved in an illegal deposit-taking scheme.

The three-man bench comprising Chief Justice Tengku Maimun Tuan Mat, Court of Appeal president Abang Iskandar Abang Hashim and Federal Court judge Hasnah Hashim today overturned the decisions of the Court of Appeal and the High Court.

Stating that there was merit in the appeal, Tengku Maimun ordered the RM1,112,700 to be forfeited by the government.

Based on the facts of the case, Venus FX was a company that provided a trading platform specialising in foreign exchange, and the respondents (79 investors) were members of the Venus FX scheme.

Representations were made that individuals depositing amounts ranging from US$100 to US$10,000 into the company would be entitled to a daily return on investment ranging from 4% to 6% over 80 days.

They would then be registered as members with access to the company’s webpage. Venus FX members were also paid a commission for every new member they recruited.

In 2016, Venus FX’s management announced that all members should deposit their investment sums into a bank account belonging to Yayasan Usaha Ventures Malaysia (YUVM).

Members were informed that YUVM was an authorised foundation governed by the finance ministry and was Venus FX’s parent company.

The 79 investors deposited money into the YUVM bank account. However, a Venus FX member informed the other members in September 2016 that YUVM was not associated with the company and that the announcement was a scam.

The members were also told that YUVM’s chairman falsely claimed that the foundation was government-authorised and that he was pursuing a banking licence under the Financial Services Act 2013.

This licence was supposed to be held by YUVM, with Venus FX as its subsidiary managing the licence.

It was stated that RM50 million had to be deposited with YUVM to obtain this licence.

Two investors subsequently lodged police reports, and an investigation of Venus FX’s investment scheme showed that two individuals had commenced the forex trading without a Bank Negara Malaysia licence – and that the YUVM chairman and treasurer were also involved.

On Dec 14, 2017, the prosecution applied to the High Court to forfeit RM2.2 million from YUVM on the basis that the funds were illegal proceeds under Section 137 of the Financial Services Act 2013.

A notice was published to allow any third party with an interest in the seized funds to file a claim and present reasons as to why it should not be forfeited.

As a result, one investor, R Sudesh, filed an application with the High Court, seeking to represent 78 other investors, requesting the return of RM1,112,700 out of the RM2.2 million seized.

On May 28, 2019, the High Court ruled in favour of Sudesh and the other investors, ordering the RM1,112,700 be returned to them. This was upheld by the Court of Appeal on Dec 15, 2022.

Deputy public prosecutor (DPP) How May Ling, assisted by DPP Parvin Hameedah, contended that the funds seized from YUVM’s bank account were derived from an illegal activity, therefore, deposits made by third parties were also tainted with illegality, and the respondents could not be considered to have a legitimate legal interest.

She argued that both the High Court and the Court of Appeal erred in law in determining that the respondents were victims of fraud because the evidence indicated that the respondents willingly deposited money into the YUVM bank account as Venus FX investors, expecting returns on their investments, without any coercion.

Lawyer Ravi Nekoo, representing the respondents, submitted that the monies in YUVM’s bank account belonged to the 79 investors, adding that the funds were never removed from the said account to be used for any unlawful activity.

He said his clients were victims of a scam and did not receive or use any proceeds of unlawful activity. - FMT

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