Duo sues ex-lawyer for $9 million in expected profits for failed medical marijuana project

The duo had invested US$750,000 (S$995,900) in a proposed medical marijuana project in Las Vegas.
The duo had invested US$750,000 (S$995,900) in a proposed medical marijuana project in Las Vegas.PHOTO: AFP

SINGAPORE - Two Singaporean businessmen invested US$750,000 in a proposed medical marijuana project in Las Vegas, but the plan went up in smoke and the facility was never built.

Mr Colin Chew, 44, and Mr Marcus Lim, 43, have sued former lawyer Then Feng, 39, who had approached them with the proposal, for misrepresentation and breach of contract.

The pair is seeking US$6.8 million (S$9 million) in profits they said they would have made from their investment if the proposed facility came to fruition and assuming that it operated for at least two years.

Mr Chew and Mr Lim are also seeking the outstanding balance of US$141,120.30 of their investment. Mr Then has repaid the rest of the money.

The case opened in the High Court on Tuesday (Feb 9) for a three-day hearing.

The duo's lawyer, Mr Alfred Lim, said in his opening statement that in April 2014, Mr Then presented them a proposal to set up a facility in Las Vegas, Nevada, to cultivate, produce and dispense marijuana, or cannabis, for medicinal use.

Mr Chew is a vice-president at a Nasdaq-listed communications equipment company while Mr Lim is an entrepreneur who used to work for a gambling company listed on the Australian Securities Exchange.

A British Virgin Islands company, Mary Jane Investments (MJI), was set up by Mr Then as the vehicle for the project. Mary Jane is slang for marijuana.

At the time, Mr Then, a Singaporean, was a foreign-registered lawyer practising in the Singapore office of international law firm Walkers.

Mr Chew and Mr Lim alleged that Mr Then had told them medical marijuana establishments are permitted in certain districts in the state of Nevada.

They said Mr Then told them that a 100,000 sq ft facility would be built and that the total start-up costs were estimated at about US$1.48 million.

They said Mr Then told them that the facility would be "highly profitable", as it was equipped to produce four harvests a year, amounting to a net profit of US$10 million a year.

The profit was to be paid to various investors based on their proportionate shareholding in MJI.

Mr Chew invested US$250,000 for 25 shares between June and November 2014, while Mr Lim put in US$500,000 between November 2014 and December 2017 for 50 shares.

They said Mr Then gave them periodic updates in relation to the construction progress.

Between November 2014 and January 2016, the duo made four trips to Las Vegas and met Mr Then's business associate Edward Han. On each visit, they did not see any construction work being done.

Mr Then, who is represented by Senior Counsel Siraj Omar, said Mr Han, a Nevada resident, brought the project to his attention and asked for his help to get funding.

The project involved 13 other investors including himself, he said.

Mr Then said he had provided background information on the industry in a PowerPoint presentation to investors, but this was not meant to reflect what the investment intended to achieve.

He said Mr Han kept him updated on construction developments but the project encountered several significant difficulties.

Mr Then argued that valid legal action for misrepresentation must involve a false statement of existing or past facts.

However, many misrepresentations alleged by the pair relate to future events and did not amount to "actionable misrepresentations".

The pair alleged that there was an oral agreement between them and Mr Then - that their money would be used to build the facility and yield the expected harvests. They claimed that there was a breach of contract because the facility never materialised.

Mr Then said these arguments are "legally and factually flawed" and there was no such agreement.

Separately, Mr Then faces unrelated criminal charges for cheating and forgery and two other civil suits, which are still pending.