Malaysian police arrest 3 men over alleged 1 billion ringgit (about NZ$350m) Ponzi scheme with 70,000 victims that was run through a NZ company

Malaysian police arrest 3 men over alleged 1 billion ringgit (about NZ$350m) Ponzi scheme with 70,000 victims that was run through a NZ company

Malaysian police have arrested three men allegedly involved in a Ponzi scheme run through a New Zealand company that fleeced more than 70,000 investors out of more than 1 billion ringgit (about NZ$350 million).

The Sun Daily reports the trio were picked up in Kuala Lumpur by Malaysia's federal police commercial crimes investigations department. However, the suspected mastermind behind the FX United scheme, 56 year-old Pandeyan Maruthamuthu, is reportedly in hiding in Thailand with his wife, Gouri Faskuny aged 55.

FX United was the trading name of New Zealand registered company United Global Holdings Ltd, which was also registered on NZ's Financial Service Providers Register (FSPR). Interest.co.nz first wrote about FX United in May 2016. We reported that FX United appeared to be a large foreign exchange (forex) Ponzi scheme claiming falsely to be operating from the Wellington address of legitimate NZ forex company, Forex Ltd.

From a NZ perspective the United Global Holdings/FX United tale is yet another example of the exploitation of our soft touch company registration and oversight regime and flawed FSPR. (You can see much more on these issues in my open letter to Commerce and Consumer Affairs Minister Kris Faafoi here).

According to The Sun Daily, FX United was formed in 2013 and ran until August 2016 promoting a forex investment plan that promised investors returns of up to 12% a month. The article quotes Malaysian police saying investigations show there are more than 70,000 victims who suffered losses of more than 1 billion ringgit. The alleged schemers reportedly led a life of luxury, The Sun Daily reports.

The police seized 13 luxury cars from the suspects, three high powered motorcycles, gold, luxury watches and branded bags estimated to be worth 3.3 million ringgit. The Sun Daily reports police also froze 38 bank accounts in the names of 17 people and seized a 5.5 million ringgit house. All up the assets seized are valued at 10.5 million ringgit.

'FX United is legal, it's licensed and it's regulated...in New Zealand'

In 2016 interest.co.nz reported that a video promoting FX United claimed; "[We] have our registered office in New Zealand and expanded into Malaysia. They launched in Malaysia and from then on this programme has been very successful...FX United is legal, it's licensed and it's regulated under the financial services provider regulatory which is the regulation in New Zealand."

FX United was never licensed nor regulated in NZ. Rather United Global Holdings was merely registered here. The false claim that FX United/United Global Holdings was compliant with NZ's anti-money laundering laws was also made.

United Global Holdings was registered as a NZ company in May 2014 with Brian Walter Johnson, an American who lived in Auckland, presenting documents to the Companies Office on United Global Holdings' behalf.

By the time United Global Holdings was deregistered from the NZ Companies Register in 2016 by Registrar of Companies Mandy McDonald, Priscila Lamoste Lustre was listed as both its sole director and sole shareholder. Lustre is the wife of Geoffrey Taylor, the infamous shell company incorporator who burst to prominence through SP Trading Ltd, a client's NZ company that chartered a plane to carry North Korean weapons to Iran in contravention of United Nations sanctions in 2009.

United Global Holdings was registered on NZ's FSPR between August 22, 2014 and May 27, 2016, when it was deregistered at the behest of the FMA.

Are NZ authorities doing anything?

Interest.co.nz asked the NZ police, the FMA and the Ministry of Business, Innovation & Employment (MBIE), which includes the Companies Office, whether they were assisting the Malaysian police with their investigations, or undertaking any investigation of their own. A spokesman for the NZ police declined to comment.

An MBIE spokesman said the Registrar of Financial Service Providers deregistered United Global Holdings from the FSPR on May 27, 2016, after receiving an FMA direction to do so. The Registrar of Companies then removed United Global Holdings from the Companies Register on August 1, 2016 after the company failed to respond to a formal request made under the Companies Act to confirm that information provided to the Registrar was correct.

"In the absence of evidence of a breach of the Act the Registrar is unable to take any further action against United Global Holdings and those associated with the company. The Companies Office has not received any request for assistance from the Malaysian authorities in relation to United Global Holdings, nor has any assistance been offered," the MBIE spokesman said.

An FMA spokesman said the FMA's powers in connection with the FSPR are to direct the Registrar of the FSPR at the Companies Office to deregister and/or prevent businesses and individuals from registering on the FSPR, where there is potential harm to consumers or NZ’s financial markets. 

"The FMA does not comment on ongoing investigations or as to whether an entity is being investigated. The FMA works with fellow regulators and other enforcement agencies overseas, but again the FMA does not comment on this work."

The FMA issued a warning about United Global Holdings, trading as FX United, in May 2016.

*This article was first published in our email for paying subscribers early on Friday morning. See here for more details and how to subscribe.

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"Are NZ authorities doing anything?"

They will be busy soaking another wad of bus tickets in the bath as we speak.

Softly, Softly...