Money changer used $865k in investor funds to pay debts, lied that money had been stolen

After he began to suffer losses in his money-changing businesses, a man decided to use money he had received from investors to pay off his debts.

Madarssamarecar Mohamed Bagurudeen, a Singapore permanent resident, lured investors with an investment scheme he promoted in 2017. He promised them monthly interest of up to 3 per cent for convertible loans they provided to his company for a predetermined period.

In total, Madarssamarecar, 48, received $865,000 from four investors into his firm, The Gold Souk Investment Holding. Business records show the firm, which has been struck off, was an investment holding company.

The same business records show Madarssamarecar holds French citizenship.

But just a year later, in 2018, he ran into trouble when at least two of his money-changing businesses started to lose money.

He decided to use the funds he had received from investors to make payment on what he owed in the form of investment returns or refunds to other clients.

He also used money from a prior arrangement with his acquaintance, referred to in court as Farook, to pay his debtors without Farook's knowledge.

On April 4, Madarssamarecar pleaded guilty to five counts of criminal breach of trust. He will be sentenced on April 15.

The court heard that investigations into Madarssamarecar had started over a different case in 2019, after Farook made a police report.

Farook said he had an arrangement since August 2018 with a man named Richard, in which he would help the latter apply for cashier's orders for the purchase of property and vehicles in Singapore.

The cash would come from Richard's foreign clients, and Farook would receive a small commission for each transaction.

In September 2018, Farook roped Madarssamarecar into the arrangement to help him perform the transactions, in exchange for half of his commission.

Between October 2018 and January 2019, Madarssamarecar helped to obtain cashier's orders on more than 10 occasions, pocketing commissions of at least $8,000.

In January 2019, Madarssamarecar closed the bank account he had been using to receive money from Farook. He then asked another man, Sivakumar Madivanan, 40, to help receive the money instead.

Sivakumar worked at Sarmus Exchange, which is one of Madarssamarecar's firms. They both ran two mini-marts together then.

On Jan 30, 2019, Farook deposited $2.7 million into Sivakumar's account, as Richard wanted to purchase a property valued at $8.4 million, and had asked Madarssamarecar to obtain a cashier's order for the deposit.

The next day, Farook attempted to deposit another $2.9 million into Sivakumar's account, but the bank denied the transaction. It was not explained in court why the transaction failed to go through.

Farook then decided to hand over the $2.9 million to Madarssamarecar in cash, so that he could deposit the money himself and apply for the necessary cashier's order.

The two met at a carpark in People's Park Centre, where Farook handed over the money and various documents related to the purchase of property, as well as a copy of the purchaser's passport. This was so Madarssamarecar and Sivakumar could show the documents to the bank when depositing the money.

Unknown to Farook, Madarssamarecar had been informed by Sivakumar around the same time that other moneychangers were pressing him for repayment of currencies that Extract Money Changer and Sarmus Exchange, also owned by Madarssamarecar, had purchased from them.

Madarssamarecar instructed Sivakumar to remove $500,000 from the $2.9 million received, and use it to pay the creditors.

On the same day, Madarssamarecar told Farook that he could not give him the cashier's order for the initial $2.7 million, as the bank had questioned him.

Sceptical, Farook asked for the $2.9 million cash to be returned to him, but Madarssamarecar was able to return only $2.4 million.

Madarssamarecar claimed the remaining $500,000 had been deposited, and that he could not contact the bank account holder, leading Farook to contact the police.

The court heard that Madarssamarecar defaulted on his payments to the investors of The Gold Souk Investment Holding when investigations into Farook's complaint began in January 2019.

To buy time, he lied to the investors on at least two occasions that their money had been stolen in Malaysia, after he had used the funds to purchase $10 million in Malaysian ringgit.

Court documents did not provide details on the status of the $2.7 million that Madarssamarecar had received from Farook.

For each count of criminal breach of trust, Madarssamarecar faces up to 20 years' jail and a fine.

Sivakumar faces two charges for criminal breach of trust for his role in the incident. His case has been fixed for pretrial conference on April 30.