Fintech founder Joe Cho jailed 10 years in South Korea for fraud; sentence under appeal
JOE CHO SEUNGHYUN, the founder of Marvelstone Group - a fintech firm once based in Singapore - has been sentenced to 10 years of jail time for among other things, fraud charges, in his home country of South Korea.
A lawyer representing a set of more than 70 investors who have claimed that more than 10 billion won (S$11.4 million) of investments are due to them, told The Business Times (BT) on Thursday that the damages have not been recovered. The judgement made on Aug 8 this year is under appeal, said lawyer Lee Juncheol via email.
BT was the first to report in May 2019 that Cho was embroiled in various legal disputes in South Korea over claims of fund redemptions contractually due to investors but not paid.
In May 2019, the fintech group Marvelstone said in response to BT queries that there were "disputes" being handled by solicitors of the "various parties" in Seoul. At that time, Cho was the chairman and founder of Marvelstone Group.
Cho, then recorded in 2019 as a Singapore permanent resident, had made the rounds in Singapore's fintech scene some years ago. He was picked up by the South Korean police at the airport on Aug 25 in 2019, having been sent back to South Korea from Indonesia following a request submitted by the South Korean police through Interpol. He was then detained by the authorities under a detention warrant issued by the South Korean court, BT reported.
The trial subsequently began in October 2019.
The allegations by investors that Marvelstone failed to pay promised investment returns came as it expanded into Singapore. In 2015, Cho sent an email to the Singapore media, listing plans that included acquisitions of global financial institutions. He said he wanted to "develop" pension funds in Singapore and aimed for "the world's first fintech-driven financial group".
Cho and his Singaporean wife Gina Heng would make frequent appearances at international tech conferences as representatives of Marvelstone.
The group previously said that it made fintech investments, and had built hubs in artificial intelligence and cryptocurrencies.
Marvelstone Group's unaudited financial documents as at end of 2017 showed trade payables totalling S$938,751 that include hundreds of thousands due to a few Singapore-based investors.
Its trade payables as at end-2017 were about double its trade receivables.
The loss-making group booked consultancy income of S$64,510 as its main revenue stream. It had a negative cashflow of S$71,828.
In 2015, it told the press that it planned to incubate 10,000 startups through its accelerator, 10K Asia, in about seven years. As at end-2017, its investment in 10K Asia was S$700. At end-2016, its investment in 10K Asia was S$100.
Those were reported off the most recent financial documents available when BT obtained them on Feb 1 in 2019.
Cho and Ms Heng signed off on these documents, and confirmed to the Accounting and Corporate Regulatory Authority that the records were accurate as at June 30, 2018.
BT's checks also showed that Marvelstone's fund company had reported no assets under management from investors over its two years of being a Registered Fund Management Company. It then ceased being a regulated entity.
BT had repeatedly asked Marvelstone Group to explain its financial standing and where the bulk of its funds went, with BT detailing the accounts that it had reviewed from publicly available records. Marvelstone Group declined comment then.
Despite the apparent lack of business activity and assets, Marvelstone had said Lattice80 was the world's largest fintech hub. It issued reports on fintech influencers.
In March 2018, Marvelstone's Lattice80 said it would move the Lattice80 global headquarters to London from Singapore.
But a check on the UK companies registry by BT showed that a Lattice 80 UK was dissolved on Jan 9, 2019, with the first notice of a compulsory strike-off made in October 2018.
The registered address on Google Maps points to a row of mail and courier shops that send out parcels.
BT asked Marvelstone if it could reasonably be regarded as a genuine fintech business, given the circumstances. It replied then: "Marvelstone Group is a private holding company which is structured to incubate Singaporean startups. It is not uncommon that resources for such companies are allocated to technology development, manpower and marketing which may not result in profit-making from the outset."
Amid repeated questions from BT, Marvelstone Group thereafter changed its website to a blank page with only its logo on it.
Cho later deleted photos from his Instagram account that used to have his full name as its handle. He replaced the Instagram username with @reaching.the.unreached.
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