Soh’s big plan was to sell LionGold to ‘state-linked Malaysian fund’
The ultimate goal of accused John Soh Chee Wen was to sell LionGold Corp to a “state-linked Malaysian fund”, according to Leroy Lau Chee Heong, the latest prosecution witness to take the stand at Soh’s trial. In his conditioned statement, Lau, a former trader with DMG Securities, described how Soh had planned a series of “corporate moves” to acquire gold mining concessions to expand LionGold. First listed as a China-based paper shredder Asia Tiger, LionGold’s first gold mining concession came about via the contacts of Daim Zainuddin, a former finance minister of Malaysia. Wira Dani Abdul Daim, the latter’s son, was a former director of LionGold as well as chairman of ISR Capital, now known as Reenova Investment Holding, which was also controlled by Soh at that time.
“Once LionGold hit John’s target amount of 10 million ounces in gold resources, he said that he would get Malaysia’s state-linked fund to buy the LionGold shares which he controlled,” said Lau, who did not name the fund. “This would allow him to make a phenomenal profit since the share price of LionGold at the end of his plan would be greatly elevated from where it started out from (before his plan was set in motion),” Lau added.
Soh and co-accused Quah Su-Ling are standing trial for being the masterminds behind the alleged manipulation of three penny stocks — Blumont Group; Asiasons Capital which was later renamed Attilan Group; and LionGold (collectively known as BAL) — back in 2013.
Soh and his lover Quah are accused of allegedly controlling dozens of trading accounts that were used by a group of traders under them to create a false market for the three penny stocks and drive up their share prices.
Big limits
Lau was allowed by the brokerage to trade up to $300 million worth of shares a day. On days when he needed a higher limit, Lau said Nicholas Ng, the former CEO of DMG Securities, would “immediately” provide one. “DMG was willing to increase my trading limit for me, because of my track record as a successful and disciplined day trader, as well as the collateral I had with DMG,” added Lau.
Ng, who would later become LionGold’s CEO, was the one who introduced Lau to Soh and Quah. In their first meeting in 2009, Soh tried to convince Lau to help create liquidity and volume in the shares of Asia Tiger. But Lau declined, despite Soh’s profit guarantees.
“As a stock, Asia Tiger was not attractive to me because it was dealing with office equipment and shredding machines. As I mentioned, I also felt that the stock was a controlled stock. I did not see any benefit for me to get involved in illegally trading a controlled stock, when I can easily make more profits through my own legal trading activities,” said Lau. Furthermore, Lau did not want the hassle of receiving multiple trading instructions from either Soh or Quah.
Sometime in 2011, Asia Tiger was renamed The Think Environment, and Lau was asked by Ng to meet Soh again, who then told Lau the company’s new focus was on green and renewable energy in the UK. Soh repeated his offer of profit guarantee if Lau would agree to help trade but Lau said he still was not keen, although he had by then taken some interest and had noticed that the shares have gained steadily since he last met Soh.
Later in 2011, Lau met Soh and Quah for the third time, after Think Environment had changed its name to LionGold, which would be used to acquire stakes in a series of gold mines. This time round, Lau agreed. “I was genuinely interested in LionGold because I believed strongly in the long-term value of commodities like gold,” he added.
Furthermore, Lau said Soh offered him sweeteners to seal the deal. These included selling between 30 million and 50 million LionGold shares to Lau at half price as an incentive for Lau to stay vested in the long term.
According to Lau, Soh had wanted him to manage and coordinate all the trading activities of LionGold, creating artificial liquidity in conjunction with the other proxies using accounts allegedly controlled by Soh and Quah. “In my view, this sort of collusive trades are illegal because it involves buying/selling shares to a counterparty within the same group, thereby creating a false impression that there is real trading volume,” said Lau, who finally succumbed and started trading LionGold shares in March 2012.
According to Lau, Soh and Quah needed him for a couple of reasons. First, was his extremely large trading limits, which came in useful not only in boosting trading volume and liquidity. Lau could also help to “warehouse” the shares overnight instead of closing the positions at the end of every trading day when the proxies could not find sufficient buyers for the shares.
From just one stock, Lau soon started trading Asiasons and Blumont as well. The prices and trading volumes of the three stocks started to surge before crashing spectacularly in October 2013, wiping off some $8 billion in the combined market value.
How Soh made Lau feel ‘special’
While the alleged share manipulation operation was going on, Soh asked Lau to accumulate shares of Innopac Holdings. “He told me it would be the fourth stock.” To give Lau a start, Soh, via other proxy accounts, assigned 40 million Innopac shares, free of charge, to an account opened under Lau’s brother. At one point, Lau had more than 300 million Innopac shares. However, the price collapsed in June 2013 and Lau, mired in losses, asked Soh for help.
According to Lau, Soh readily agreed to take over Lau’s outstanding Innopac positions in a married deal. Soh then transferred three million Blumont shares, which were still appreciating in value, from one of his nominees, Peter Chen, to the CDP account of Lau’s brother.
Lau explained that this would help him because he could either put the shares into the margin account for his brother and draw down cash from the margin account or sell the shares into the market and take the sales proceeds to pay for the losses. He would then use his own line to pick up the shares from the market and roll them each week.
By doing this, Soh managed to build deeper trust with Lau. In one message from Soh to Lau which was shown to the court on Oct 5, Soh said, “Our secret ya. I didn’t know you doing ya.” In reply, Lau said, “K ha ha.” When asked what this meant, Lau speculated that Soh probably didn’t want Quah and Dick Gwee, his close and longtime associate, to find out that Soh was doing Lau a special favour by taking care of Lau’s personal losses. “I think it’s one of the ways he makes people feel special. An idiot like me thought I was special, so we kept our individual secret,” said Lau.
Lau’s testimony and conditioned statement also showed there were disagreements within the group. There were instances when Quah complained to Soh that Lau had made a “fair amount of profits” in his trades at the expense of her proxies.
Quah herself also complained to Lau that Ken Tai, another broker involved, was “overtrading unnecessarily” and had caused prices to fall. However Soh was not keen to address the complaints after hearing them, said Lau. Soh’s reply was, “Everybody needs to make a living, so if he churns a bit, overtrade a bit, part of the course of maintaining all this operation.” Explaining this, Lau said Soh was a “big-picture man”.
Do one more time
When the share prices of the penny stocks were in imminent danger of collapse, Soh asked Lau and the brokers involved to help “defend” the counters from short sellers. However, the attempt failed and Lau and the other brokers, suffered huge losses although Soh promised he would make good for them.
Lau said when he repeatedly reminded Soh to keep his word, the latter would try to find more shares to manipulate. “When we met up to discuss how he could repay my losses, John told me that even if he were to obtain some money, he would not be able to repay all the losses for his numerous proxies, and the only way to obtain sufficient money to repay these losses was to zo ge ji bai (Hokkien for “do one more time”),” said Lau.
To be sure, Lau did receive a token compensation from Soh. “There was only one occasion, just before Chinese New Year in 2014, when Dick handed me a $10,000 red packet from John which I assumed was to help me repay my losses, but that was all.”
Soh ‘a sociopath’
In May 2015, Lau was hauled up for investigations. As he was still hoping that Soh and Quah would help make good the trading losses, he did not tell the truth to the investigators. Instead, he maintained that he was trading according to his usual trading pattern.
In late 2016, Lau finally chose to cooperate fully when he was interviewed again. “I felt that John is a sociopath with no conscience, who repeatedly takes advantage of others and destroys families as a result. I saw this with my own eyes, how Gabriel and his family i.e. his parents, his wife (who happened to be my secondary school classmate) and himself suffered financially,” said Lau, referring to Gabriel Gan, another former broker who had similarly helped Soh and Quah trade, using not just his own accounts but that of his family. Similar to Lau, Gan also became a prosecution witness.
“This happened not just once with BAL, but John still proceeded to rope Gabriel into trading Sino Construction for him, and yet once again with ISR. I felt that what John was doing was not morally right, and that he is a very dangerous person who would continue to destroy others by making use of them, and also through his manipulative trading activities — such a person must be taken to task,” said Lau.
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