Multi-level marketing probe: US agency takes local firm director to court
US citizen's parent company being investigated for fraud
A director of an investment company here has been taken to court in the US by the country's Securities and Exchange Commission (SEC) over problems with his firm there.
In late September, the USFIA Inc headquarters in Los Angeles (LA) was raided by the Federal Bureau of Investigation in a probe alleging a multi-level marketing scam or pyramid scheme.
US citizen Steve Chen, along with other associates and companies said to be owned by Mr Chen, were named in a civil suit filed by the SEC. The US authorities have frozen bank accounts and US$32 million (S$44.8 million) of Mr Chen's assets and placed them under receivership.
Similarly, an LA law firm representing overseas investors has sued Mr Chen for US$100 million (S$140 million) in a class action suit.
Mr Chen is also a shareholder of USFIA Singapore, which was registered here in April 2014.
The Singapore firm seeks investments in amber mines and gemcoins, a virtual currency.
USFIA stands for "United States Fine Investment Arts".
Among the "false and misleading representations" the SEC said Mr Chen has made were claims that USFIA owns several large amber mines in the Dominican Republic and Argentina, an investment in USFIA was assured to increase in value 64 times over a short period and that USFIA was going to conduct an initial public offering (IPO).
The civil suit filed by SEC said "no IPO ever took place" and that the amber given to investors was "practically worthless".
The SEC told The New Paper that it had issued a directive to freeze Mr Chen's assets and other US-based companies under his control.
Investors wanting to file complaints can do so at www.usfiareceiver.com.
Attorney Long Liu from LA filed the class action suit on behalf of several people in China, most of whom are senior citizens.
He told TNP last Wednesday that he was not aware that USFIA Inc had operations in Singapore..
Mr Long's lawsuit, filed in the Superior Court of California on Oct 5, accuses Mr Chen, among others, of fraud, breach of contract and negligent misrepresentation.
USFIA Singapore sells amber products.
On its website, USFIA Singapore said "through e-commerce and franchising, we provide our global consumers and operators with genuine AMN amber products".
Located on the fifth storey of AZ@Paya Lebar building, USFIA Singapore houses a large office lined with amber stones encased in glass shelves.
During our visit to the USFIA Singapore office last Wednesday, we saw smartly dressed salesmen greeting elderly visitors.
However, when we requested to speak to another director of the company, Mr Wong Yet Loong, we were told he was busy.
At press time, Mr Wong had yet to contact TNP.