A former managing director of a company is the first person to be sent to jail for using crowdfunding to secure monies for small and medium-sized enterprises (SMEs) despite not having a licence to do so.
Nancy Tan Mee Khim of Noble Consulting Group was sentenced to eight months' jail yesterday.
Tan, who the prosecution described as the "directing mind" of the company, secured funding for four clients, raising a total of $15.4 million between July 2013 and December 2015.
In return, the company she was with received a commission of 15 per cent of the funds raised.
When two of the clients defaulted on interest and principal repayments in 2015, it led to around 100 investor-lenders losing a total of $9.5 million.
Tan was convicted on March 19 after a trial, making her the first person to be prosecuted under Section 82 of the Securities and Futures Act involving crowdfunding activity.
The court heard that the 41-year-old had set up the company under a different name, Angel Capital Consultancy, in 2013 with Mr Steven Ling Hoe Khing. The firm was renamed Noble Consulting Group in June the following year. Mr Ling resigned in July 2014.
Noble sourced for clients through a loan broker and newspaper advertisements, and conducted general checks to see if potential client companies were profitable.
Between 2013 and 2014, Noble entered into consultancy agreements with four clients: Krish Chartered Bus Services, Glen Iris (International), Soilwood, and a group of companies comprising Adydas Marine Services, T S Marine Engineering Services and Scantech Marine.
Noble then solicited investments from the public for its clients through seminars and created marketing materials to disseminate to potential investors.
Noble also appointed around 10 to 13 agents as portfolio consultants to solicit lenders, and took part in investment exhibitions and fairs.
Investments or loans of between $25,000 and $200,000 were offered at various interest rates promising investor-lenders up to 7 per cent per quarter.
As the managing director, Tan received at least $440,000 in income between 2013 and 2015.
In 2015, two of Noble's clients - Glen Iris and Soilwood - began to default on interest and principal repayments. Glen Iris was eventually wound up and its director was made a bankrupt, while Soilwood's director became uncontactable.
Police advised the public yesterday to not deal with unregulated entities or persons when they come across investment opportunities.
"The Monetary Authority of Singapore's regulatory framework was put in place to ensure that only competent and professional persons may provide such financial services. If you choose to deal with unregulated entities or persons, you will forgo the protection given under MAS' regulations," it added.
