Paid-up Capital

[timebomb]

Hi,

A relative introduced me to an investment opportunity recently.

It seems there's a certain private limited company registered in Singapore that's looking for investors. Their offer is one that sounds too good to be true. Here's how it works - if you are willing to put up $20,000 to become a shareholder of the company, the director of the company, a 26 year old young man will top up your investment by another $130,000 to make it a total of $150,000. Supposedly, when the company is listed on the New York stock exchange next year, all shareholders can expect huge profits.

When I heard the offer, I immediately smelled a scam. But my relative insists it's a genuine offer and he intends to raise the $20,000 to invest in the company. I downloaded the business profile of the company from ACRA and was shocked by the figure in the box that indicates their paid-up capital. It was a figure in excess of 700 million Sing dollars. I googled the name of the company and was again shocked to find that its website is hosted on alibaba.com. Here's the link.

Imagine a 700 million company that cannot afford to pay for its own webspace

I'm quite sure the whole thing is a scam but I cannot figure out how their paid-up capital is such a huge sum. I mean, come on, who has 700 million dollars?? I don't think even Sim Mong Hoo has that sort of money lying around.

Their business profile says it's a "Limited Exempt Private Company". On ACRA's website, it says that such a company does not need to have its finances audited. Does it also mean that it's paid-up capital is not verified?

Does anyone know?

Loh K L

[Mizu World]

If something is too good to be true, it usually is.


Ben

[benny]

I was about to say it but Ben said what's on my mind.

Cheers,

[oblivion]

if this is not a scam i don't know what is
1) 20k exchange for 150k + huge profits ==> 7x instant profit + more when listed?
2) list on NYSE next year? its already a huge mess over there and next year will be worse they still want to list there next year?
3) 700 million paid up capital and its NOT already listed. unbelievable

[Sunfire]

Where all the money come from?

Aint this a bit like insider trading - as in, owning shares before they are sold on open market?

Wah so good, just as good as that email I got from Nigeria....

[blue33]

For the 700 million, it could have long being used up, and for "Limited Exempt Private Company" which means the turnover is less than 5 million/year, who would want to invest in a company with less than that, you'll paying them the 20k for his salary and they will tell you the company is making lost later on. You can request the company to produce audited report from the company itself to see if they are making $ if your relatives want to invest, if account is not audited insist to get them audited.

[timebomb]

Thanks for the feedback, guys.

I'm sure it's a scam too but the thing I want to know is how they manage to bluff ACRA that it's paid-up capital is more than 700 million Sing dollars.

On ACRA's site, it is stated that private limited companies have to produce bank statements to prove the amount they have in their paid-up capital. I'm pretty sure the company in question did not have 700 million. Could it be there's some sort of loophole in ACRA's rules that allows directors of Limited Exempt Private Companies to simply "hamtam" any figure as their paid-up capital?

Loh K L

[timebomb]

You can request the company to produce audited report from the company itself to see if they are making $ if your relatives want to invest, if account is not audited insist to get them audited.

I can try to request the financial statements from the company but I'm pretty sure they will turn me down. I was, in fact, invited to a meeting with the director but I declined the invitation. I did not want to go because I know they will throw me out when they hear my questions.

In any case, my relative went. The next day, after the meeting, he called me to say that he's 95% sure the offer is genuine. I asked him why he was so sure but all he could tell me was that their office somewhere in town is very nice and grand. And that they own 2 oil rigs and have several oil refinery tanks in Jurong Island. Oh yes, he also said that the 26 year old director has some special technology that gives him a one-up over other oil refinery companies. As you can surely tell by now, my relative's pretty gullible.

Loh K L

[blue33]

They can buy over a dormant company that has loose all the 700 million paid-up capital for a small consideration like $1. The company may have 700 million paid-up capital at the date of incorporation. But may have used up the money over the years after making losses over the years. Cash at bank and in hand may have little balances now. They need investors money to top up the cash at bank.

[zyblack]

Sunshine Empire ring a bell?Try googling "Ponzi Schemes" to get an idea what you are getting into.

Con-men can go to extremes to hook their victims. Simply rent a high-level office overlooking some landmarks or the sea, do some grand interior decorating, hire a couple of well-dressed professional receptionists and get your victims to go over some brochures which can be faked and printed on glossy material to make them look professional.

Coupled that with a strong handshake, charming personality and some knowledge of basic human behaviour/psychology and viola! You got yourself an impressive looking con job.

I can guarantee you it is a con job. With 2 oil rigs and oil refineries in Singapore, do they need such small-time investor like your relative?

[timebomb]

They can buy over a dormant company that has loose all the 700 million paid-up capital for a small consideration like $1. The company may have 700 million paid-up capital at the date of incorporation. But may have used up the money over the years after making losses over the years. Cash at bank and in hand may have little balances now. They need investors money to top up the cash at bank.

Hmm, I don't know if what you wrote is possible. I would imagine if the original company had 700 million and lost it, this history would be reflected in the business profile. Anyway, according to the profile, the company was registered sometime in 2005.

My guess is ACRA does not verify the paid-up capital of Limited Exempt Private Companies. But I need someone who knows to confirm this. Actually, I called ACRA on the phone but the guy who answered my call couldn't answer my question. He said I can buy the profit-and-loss statements of the company from ACRA but when he checked, he told me that the company has never filed any financial statements in their 3 years of existence.

Loh K L

[timebomb]

I can guarantee you it is a con job. With 2 oil rigs and oil refineries in Singapore, do they need such small-time investor like your relative?

Good point. I think it's a scam too but I want to know more. I'm not satisfied with simply knowing that it's a scam; I also want to know how it works. The most niggling thing that bugs me is how on earth did they manage to have the figure of 700 million as their paid-up capital?

Loh K L

[zyblack]

Good point. I think it's a scam too but I want to know more. I'm not satisfied with simply knowing that it's a scam; I also want to know how it works. The most niggling thing that bugs me is how on earth did they manage to have the figure of 700 million as their paid-up capital?

Loh K L

The most worrying thing is that once you discover that the 700 million paid-up capital is true, your confidence that this is a scam will be once again shaken. Often scam jobs will offer certain details as truth like say the business registration number or testimonials from other more gullible people so as to reassure the new victims about the viability of the scheme.

StudioTraffic is one such Ponzi Scheme which I most unfortunately fell for. Everything looks legit, from the professional online staff and forum moderators to cheques paid out to local Singaporean investors via UOB. It is a well-oiled machine with all the necessary cogs and bolts that makes it seem so real. The funny thing was, the forum moderators were all non-paid volunteers and even they themselves was sold on the "product".

Eventually the "head con-man" disappeared with the money and left the forum moderators to fend themselves. It was so funny that he even convinced the moderators to hold the fort and believe in him whilst he ran from the backdoor.

Luckily I only played with $500 so not much damage. A good lesson learned though.

[timebomb]

The most worrying thing is that once you discover that the 700 million paid-up capital is true, your confidence that this is a scam will be once again shaken.

Thanks for sharing your experience, Avan. I truly appreciate it very much.

You made a good point when you wrote that my confidence that the whole thing is a scam would be shaken if I discover that the 700 million paid-up capital is true. But I don't see it that way.

You see, I'm a skeptic. And a skeptic goes with the evidence. If I were to find out that the company really has 700 million dollars, that would be very very strong evidence in their favour. It would not immediately convince me that the offer is legitimate but it will definitely make me reconsider my stand.

A skeptic does not hold to one view and sticks to that one view all the time. He's likely to flip-flop if the evidence proves that he was wrong. Flip-flopping according to the latest evidence is considered a virtue with people like us

But you may like to know that I've just been informed by someone who's a certified public accountant that ACRA does not verify the paid-up capital of Limited Exempt Private Companies.

So there you have it, mystery solved.

Loh K L

[zyblack]

Thanks for sharing your experience, Avan. I truly appreciate it very much.

You made a good point when you wrote that my confidence that the whole thing is a scam would be shaken if I discover that the 700 million paid-up capital is true. But I don't see it that way.

You see, I'm a skeptic. And a skeptic goes with the evidence. If I were to find out that the company really has 700 million dollars, that would be very very strong evidence in their favour. It would not immediately convince me that the offer is legitimate but it will definitely make me reconsider my stand.

A skeptic does not hold to one view and sticks to that one view all the time. He's likely to flip-flop if the evidence proves that he was wrong. Flip-flopping according to the latest evidence is considered a virtue with people like us

But you may like to know that I've just been informed by someone who's a certified public accountant that ACRA does not verify the paid-up capital of Limited Exempt Private Companies.

So there you have it, mystery solved.

Loh K L

LOL! Okay that is a skeptic for you!

Flip-flopping is a virtue if it saves you from trouble but would be a bad habit if it keeps you from taking action.

I think you may have to sit your relative down and have a good talk with him. $20,000 is a lot of money....

[blue33]

Yes. $20k is alot. I agree with zyblack said.

[oblivion]

I can try to request the financial statements from the company but I'm pretty sure they will turn me down. I was, in fact, invited to a meeting with the director but I declined the invitation. I did not want to go because I know they will throw me out when they hear my questions.

In any case, my relative went. The next day, after the meeting, he called me to say that he's 95% sure the offer is genuine. I asked him why he was so sure but all he could tell me was that their office somewhere in town is very nice and grand. And that they own 2 oil rigs and have several oil refinery tanks in Jurong Island. Oh yes, he also said that the 26 year old director has some special technology that gives him a one-up over other oil refinery companies. As you can surely tell by now, my relative's pretty gullible.

Loh K L

Sunshine Empire ring a bell?Try googling "Ponzi Schemes" to get an idea what you are getting into.

Con-men can go to extremes to hook their victims. Simply rent a high-level office overlooking some landmarks or the sea, do some grand interior decorating, hire a couple of well-dressed professional receptionists and get your victims to go over some brochures which can be faked and printed on glossy material to make them look professional.

Coupled that with a strong handshake, charming personality and some knowledge of basic human behaviour/psychology and viola! You got yourself an impressive looking con job.

I can guarantee you it is a con job. With 2 oil rigs and oil refineries in Singapore, do they need such small-time investor like your relative?

reminds me of a particular investment "seminar" organised by an " exclusive private venture capital firm" i once attended some years back

nice posh looking hotel conference room ==> check
well-dressed professional looking staff ==> check
wonderful spread of snacks & drinks for the participants ==> check

i walked out after 15mins, after the presenter mentioned their own "special" stock pricing method while at the same time doing a hash of a job explaining interest rates and returns (a poly business student could probably do better)
the killer that did it for me was when he said by using their "special" method they are very confident STI will hit 10k pts by 2010

[timebomb]

Yes. $20k is alot. I agree with zyblack said.

Oh yes, 20K is definitely a lot of money, especially to my relative who does not have this amount. He has to raise it first, either by selling his van or borrowing from relatives.

I've already tried to convince him that the whole thing is a scam but he won't listen. In such cases, there comes a time when one has to shut up and let people make their own decisions.

The director of the company is going to hold another meeting with potential investors sometime early next month My relative who has already been to one wants to attend this meeting too. Actually, the only thing that's stopping him from putting in the money now is the fact that he does not have the 20K.

Loh K L

[Orion]

It is really sad to see a scam and at the same time powerless to stop people from getting cheated.

Now times are so bad, more of these 'dirty tricks' will be getting common.

Different people have different temperament and some will always be too trusting and get cheated easily...

[blue33]

You can check with CAD(Commercial Affair Department) on this matter, you can Click >Here< on the details on Sunshine Empire case. Hope this helps.

CAD contacts:
You can contact the CAD office at 6557 3918 during office hours. Our office hours are 8.30 am to 6.00 pm on Mondays to Thursdays and 8.30 am to 5.30 pm on Fridays.