Hundreds of investors who reaped $119.7 million in so-called profits from fraudulent nickel investments with Envy Global Trading (EGT) may have to return the money to the firm, according to court documents seen by The Straits Times.

The 424 investors had invested in a dodgy $1.2 billion nickel trading scheme involving big-spending businessman Ng Yu Zhi, former managing director of trading companies EGT and Envy Asset Management (EAM).

The possibility that they may have to return their gains arose after KPMG, the High Court-appointed interim judicial manager for Ng's companies, found that "there was no purchase or sale of physical nickel for the purported nickel trading".

"Hence, there were no investment returns," it added.

KPMG noted that returns paid to investors could not have come from the sale and purchase of actual nickel. "The source of such payments could only be the funds paid in by investors," it said in a report.

The interim judicial manager, represented by Shook Lin & Bok partner David Chan, noted: "The investment scheme sold to investors was built on non-existent physical metals trades, fraudulently created documents and the promise of generous returns on investments."

The July 2 report prepared by a team led by KPMG partner Bob Yap stated: "It is our view that any amounts paid out to investors as referral fees or amounts withdrawn beyond the principal invested should be returned to the companies."

Mr Yap said some investors have agreed in principle to do so.

The KPMG team's bid to claw back funds is part of efforts to meet creditors' claims against Ng's companies. These creditors include 522 investors who had lost $841.5 million, of which more than half is alleged to have gone to Ng.

The tracing of fund flows is ongoing, but KPMG has estimated net outflows of about $475 million to Ng from his Envy group of companies, including transactions not recorded in company bank records.

Ng led a lavish lifestyle, with personal monthly expenses of around $2 million including for private jet flights, butler and chauffeur services, alcohol, expenditure at nightclubs and upmarket restaurants, and expenses associated with multiple luxury cars and "significant monetary gifts to his close associates".

A $5.4 million payment was also allegedly made to Ng's "family in China", according to court papers.

Some $100 million worth of his assets seized by the Commercial Affairs Department included a multi-million-dollar Pagan Huarache Italian super car - the only one in Singapore - and a Porsche 911 GT3, according to earlier ST reports.

Some of the $841.5 million of investor funds was also alleged to have gone to Ng's associates, including nearly $22 million to Ms Lee Si Ye, deputy managing director of the Envy companies.

Around $43.6 million in commissions and profit-sharing payments went to employees and $24 million in referral fees was allegedly paid to investors for bringing in other investors, the interim judicial manager found. About $64.5 million of outflows is yet to be verified.

The KPMG team said legal proceedings, including claims against Ng and Ms Lee for all liabilities incurred by the Envy companies in relation to the nickel trading scheme, will begin after the High Court rules on whether the firms should be put into liquidation. A hearing on the winding-up application is scheduled for Aug 16.

The interim judicial manager wants the firms to be wound up as "none of the purposes of a judicial management can be achieved".

This is because the Envy companies nickel trading is "non-existent; there is no other meaningful business undertaken by them and their assets are grossly insufficient to meet the potential claims of their creditors".

Further, it found that various papers such as contracts, trading statements and shipping documents contained a number of irregularities. "Documents presented in support of the purported nickel trading were forgeries," it said.

EAM is said to have borrowed money from investors to buy nickel, but it is accused of never having bought any metal. EGT is alleged to have deceived investors into buying a portion of receivables from its purported sale of nickel through forward contracts when there were no such contracts.

The investment contracts with EAM and EGT were for an investment period of three months.

Investors were promised varying returns that averaged 15 per cent. Many investors rolled over their contracts after the end of three months to reinvest their principal and returns, noted reports.

Ng, 34, who was removed as managing director of EGT, faces 31 charges, most of them alleging cheating that took place between September last year and February this year. Other charges include fraudulent trading, forgery and criminal breach of trust involving at least $201.2 million.

The alleged victims named in the charges include Temasek International general counsel Pek Siok Lan, criminal lawyer Sunil Sudheesan and former Law Society president Thio Shen Yi. Ms Pek was allegedly cheated of $5.5 million, Mr Sunil of $1 million and Mr Thio of $87,000.

Ng's bail on Monday was increased to $4 million from $1.5 million due to the seriousness of the additional charges. The police had separately uncovered a plot to help him flee the country by land or sea.

Correction note: In the earlier version, we said that Envy-ex director Ng Yu Zhi's bail amount was increased to $4 million from $1.5 million after police uncovered a plot to help him flee the country by land or sea.To clarify, the court raised Ng's bail amount due to the seriousness of the additional charges and did not find that there was an increase in flight risk.