By Lorna Tan & Elena Chong

THE man behind multilevel marketer Sunshine Empire, which pulled in $189 million from investors here, is facing 20 charges, including running a fraudulent business and criminal breach of trust.

James Phang Wah, 49, appeared in the Subordinate Court yesterday, more than a year after the Commercial Affairs Department (CAD) launched a probe into the alleged scam which attracted tens of thousands of unwitting investors.

Another man, Sunshine's president (Asia Pacific) Jackie Hoo Choon Cheat, 29, faced 10 charges including running a fraudulent business. Two other people, including Phang's wife, also faced related charges in court yesterday.

The main charge alleged that the two central figures were running a Ponzi-like scheme involving many millions of dollars raised from members of the public.

In Ponzi schemes, investors are lured to hand over cash on the promise of high returns - but the returns simply come from funds pumped in by new investors.

The charges allege that Sunshine, based at Toa Payoh HDB Hub, was selling packages which offered returns in the form of cash rebates. The returns were paid from the proceeds of packages bought by later Sunshine participants.

According to Deputy Public Prosecutor April Phang, the revenue generated by Sunshine, which has a paid-up capital of $150,000, between August 2006 and November 2007 totalled $189 million.

It is believed that many investors have their money stuck with the company and it is unclear whether they can get it back in full.

Phang and Hoo also faced charges of failing to maintain proper accounts.

The criminal breach of trust charges involve nearly $1 million. Criminal breach of trust takes place when an offender has the responsibility of holding money or assets on behalf of others but misuses the funds by using them for other purposes. The maximum penalty is life imprisonment, along with possible fines.

In addition, Phang faced six charges of falsifying accounts and two related to possessing obscene films. Phang's wife, Neo Kuon Huay, 46, was charged with falsifying accounts in relation to sums exceeding $592,800.

A director of Empire Investment Group, Yong Wai Hong, 27, was charged with making false declarations involving $1.45 million. This had allegedly given Sunshine participants the false sense that its affiliated firms have strong financial standing.

Yong is also chairman and chief executive of a Hong Kong-listed firm Emcom International, which was acquired using Sunshine's sale proceeds.

The prosecutor, Ms Phang, added that the bulk of Phang and Neo's assets are in Hong Kong bank accounts.

Three of the accused, apart from Yong, were arrested on Monday afternoon and spent that night in remand. Yong was on police bail then.

Ms Phang stated that all four are considered a 'high flight risk' as CAD has information that they are involved in some business in Hong Kong.

Their passports were impounded and bail was set at $600,000 for each of them. Last evening, they were released on bail and were driven away in a convoy of Mercedes-Benzes and BMWs.

They were represented by lawyers Noor Mohamed Marican and Subhas Anandan.

Phang, who has four children aged 15 to 23, was addressed as 'Lao Da' ('chief' in Mandarin) as he got into his car.

The Empire Group Alliance, a group spanning several Asian countries, was set up in 2003. It claimed to have interests in network marketing, entertainment, energy, real estate and telecommunications.

This article was first published in The Straits Times on February 04, 2009.