Pyramid scam made HK$138m, court told

PUBLISHED : Tuesday, 06 November, 2007, 12:00am
UPDATED : Tuesday, 06 November, 2007, 12:00am

Two pyramid schemes managed to reap more than HK$138 million for their organisers in just 12 months before police put a stop to them, the Court of First Instance has heard.

Four people have pleaded not guilty in relation to the schemes, which made money from more than 8,000 people.

Yip Tsang-ming, Lee How-kom, her daughter Chiu Wai-sum, and Lee Hin-hoe, formerly known as Lee Shing-lam, have pleaded not guilty to two counts each of conspiracy to defraud related to the alleged pyramid schemes and their proceeds.

Lee How-kom, the alleged ringleader, has also pleaded not guilty to four further counts of dealing with property known or believed to be the proceeds of an indictable offence.

Prosecutor Charlotte Draycott told the court the two schemes, named Turbo Rich I and II, had been run through Turbo Rich Development and had all the hallmarks of a pyramid scheme.

Victims were allegedly enticed to invest either HK$10,700 for Turbo Rich I or HK$3,450 for Turbo Rich II with the company. They were promised sky-high returns of about HK$103,000 and HK$21,390, respectively, if they recruited others to the scheme.

Ms Draycott told the court prospective victims were identified through contact lists maintained by Lee How-kom's apparently legitimate cosmetics business, Skin Club.

The indictment said victims were falsely told that the number of investors required had been determined by an actuary, and that Turbo Rich Development had deposited HK$10 million at HSBC to cover the scheme.

Part of the proceeds from the scheme, some HK$55.6 million, was allegedly directed to the purchase of Albion Place, a building on Hau Fook Street in Tsim Sha Tsui.

The schemes themselves were shut down and the accounts of Turbo Rich Development frozen on May 3, 2001. Albion Place was sold in January 2004 for HK$62.3 million.

The trial continues today before Mr Justice Alan Wright.