Envy liquidators take trio to court with S$850 million claim in nickel Ponzi scheme

THE nickel trades that were part of a purported Ponzi scheme allegedly perpetrated by Ng Yu Zhi attracted about S$1.5 billion in funds from investors that included financiers and lawyers. About S$854 million is still owed to them.

In the trial that opened on Tuesday (Jul 30), the High Court heard the claims of the group of Envy companies at the heart of the alleged fraudulent nickel trading against two directors and an ex-employee.

The trio and Ng have been sued by Envy Global Trading, Envy Asset Management and Envy Management Holdings, as well as their three liquidators.

The plaintiffs accused Ng of masterminding a brazen Ponzi scheme between February 2016 and April 2020 – said to be the largest in Singapore’s history – with the assistance, complicity or wilful blindness of directors Lee Si Ye and Ju Xiao, and ex-employee Cheong Ming Feng.

Ng was the majority owner and a director of each of the Envy companies.

The plaintiffs had received a partial summary judgment – a judgment in their favour without having gone through a trial – against 37-year-old Ng in 2022.

He was declared bankrupt upon the application by the liquidators, who were acting on the summary judgment to recover about S$440.4 million that had been wrongfully transferred into his personal accounts from investors’ money.

But the suit against the other three defendants continues, and is now before Judicial Commissioner Mohamed Faizal Mohamed Abdul Kadir.

Ng, who is in remand with more than 100 criminal charges stemming from the Ponzi scheme, has been asked by Cheong to testify as a witness in the 13-day hearing.

The plaintiffs, represented by a Shook Lin & Bok legal team, are claiming as much as the outstanding sum owed to the investors against each of these three defendants.

They urge the court to find Lee, Ju and Cheong jointly and severally liable, meaning that if any of them are unable to share in a responsibility, the others become responsible for that person’s share.

Lee also faces a S$3.5 million claim for permitting the Envy companies to pay out dividends from alleged fictitious profits.

As a director of the Envy companies, she allegedly helped Ng to cover up evidence that would have exposed the Ponzi scheme. The plaintiffs also accuse the 36-year-old of not sounding the alarm, despite being privy to Ng’s wrongful transfers to his personal accounts.

Lee claimed that she believed the purported transactions took place and that Ng’s transfers to his accounts were legitimate. She said that she and her family, as well as relatives, also took part in the purported nickel trades, to show that she did not suspect them to be fictitious. Some members of her family have since fallen out with her.

Ju, a former director and head of trading at Envy Global Trading, was said to have assisted Ng to procure a shipment of nickel to keep up the appearance of the trading being genuine and profitable. He was also accused of forging contracts as proof of transactions, as well as inflating Envy Global Trading’s paid-up capital to S$100 million in an official lodgement.

The plaintiffs’ counsel Lin Ruizi, in his opening arguments on Tuesday, said that Ju had expressed misgivings to the liquidators about the level of returns from nickel trading by the Envy companies, and therefore did not invest in it.

Insisting that Envy Global Trading had a legitimate business, Ju claimed he had planned to build it into an international commodity player like Trafigura and Glencore.

His team was awarded an electricity market-making contract by the Singapore Exchange, and traded the first Shanghai NIE copper contract, the litigant-in-person said.

Cheong, the only one among the trio who is legally represented, was employed by Envy Asset Management from mid-2017 to mid-2020; he then worked for Envy Management Holdings until February 2021.

He conveyed Ng’s instructions for the forgery of various documents and showed these to investors. The plaintiffs argued that even if he were not knowingly complicit, the 34-year-old former client support associate was negligent as an employee.

But Cheong denied knowing that the Envy companies were engaged in fraudulent trading. He claimed that he was merely a messenger conveying Ng’s instructions to amend the documents, and that he did not know they were being used to defraud investors.

His counsel from CTLC Law argued that he had only primary school education and no experience working in finance or any office job before he was hired by the Envy companies.

Cheong’s counsel Koh Kok Kwang, in his opening statement on Tuesday, said that Ng probably hired Cheong knowing that Cheong would ask no questions, given his lack of a financial background.

Also, Cheong himself was an investor in the nickel trades, with S$2.5 million in investment outstanding.

As Cheong did not know about the scheme, he would not have known that the sums he received entailed a breach of fiduciary duty. Similarly, any benefit he gained from the employment thus could not be said to be unjust enrichment for him, as alleged by the plaintiffs.

Apart from this hearing, there is another trial against six other former employees who are being sued for more than S$40 million in commissions that they earned while employed by the Envy companies. That hearing will commence in four weeks.