Clients lose $41m over forex scam

PUBLISHED : Wednesday, 21 July, 1993, 12:00am
UPDATED : Wednesday, 21 July, 1993, 12:00am

TWO men are being sought by police after investors reported a foreign exchange scam which may have defrauded 170 clients of more than $41 million.

Investors claimed they had received statements from the company, EGI International, last Saturday informing them all their capital had been lost and that they owed money to the company.

Commercial Crime Bureau (CCB) officers yesterday visited the company's Two Exchange Square offices and took away piles of documents.

Staff said their bosses, only identified as K. K. Leung and K. T. Chan, had been missing for several days.

Investors said the company had been investing their money in deutschemarks and yen. The minimum investment required was $50,000 and they had to give seven days' notice to withdraw the cash.

Some said they were attracted by promises of a monthly profit of at least $1,400 for every $50,000 invested and were told losses would be limited to two per cent of the capital.

Most of the investors said they were friends or relatives of the brokers and staff and had never signed any contract stating the terms.

A Ms Chan said she had tried to withdraw her $100,000 late last month, but the company ''delayed my request with various excuses''.

Her latest statement showed that her capital had been lost and she owed another $6,800 to the company.

Her cousin, Ms Liang, said she was told her $300,000 capital - including $50,000 she invested only two months ago, encouraged to do so by the company - had been lost and she owed $70,000.

''I really feel sad and depressed,'' she said. ''It is all of my savings throughout the years, and I have still got three little children below 10.

''I would rather die. Maybe I will jump down from here,'' she said outside the 29th floor office of the company.

Some clients said K. K. Leung had told them that the company's headquarters were based in America.

Company staff also claimed to be victims, including one claiming to have invested more than $1 million.

Investors said that they would seek help from the Independent Commission Against Corruption and would set up a support group to organise further action.

They were pessimistic about getting their money back, but would like to see those responsible prosecuted.

A spokesman for the CCB said that the case was on a ''fairly large'' scale, and the bureau was searching for the people in charge of the company. It expected the amount of missing money to increase as more victims reported to the police.

The spokesman said the Financial Services Branch was drafting an ordinance to regulate leveraged trade and speculation.

Foreign exchange investment companies are now largely unregulated and the Government is taking a ''buyers beware'' attitude in the meantime.