SINGAPORE (Jan 10): He returned to the stand for the third tranche of the trial of the alleged 2013 penny stock crash masterminds John Soh Chee Wen and Quah Su-Ling.
And again, prosecution witness Ken Tai Chee Ming admitted to cheating the duo and making millions of dollars for himself.
Once part of Soh’s “inner circle” of brokers and remisiers, Tai had confessed to manipulating the stock market for his own gain in the second tranche of the trial last October.
However, he later claimed he only said so to make Soh’s lawyer “happy”. This happened during a protracted questioning session, he adds.
Soh and Quah are facing trial for allegedly manipulating shares in three penny stocks Blumont, LionGold and Asiasons Capital (which has been renamed Attilan Group) in 2013. Some $8 billion in market value was lost when those three counters crashed in early October that year.
Tai’s cross-examination was then put on hold until this third tranche so the defence lawyer could review the data. But at his cross-examination on Jan 2, Soh’s defence counsel N Sreenivasan accused the witness of lying. “You are guilty of market manipulation, misappropriation and cheating your account holders,” Sreenivasan argues. Tai – who was a commissioned dealer at AmFraser Securities (now known as KGI Securities Singapore) – did not dispute these assertions.
Tai then went on to admit to having cheated Soh and Quah through the rolling over of shares. While the practice, which started in January 2012, was initially “not to [his] benefit”, Tai continued the con as he was after the interest earnings.
The court then heard that Tai had earned some $3 million in commissions from trade volumes, interest on outstanding loans and proxies. It was also revealed that he engaged in “stock stacking”, by purchasing stocks through several transactions, using his personal accounts.
‘Perfect’ prosecution witness
During the cross examination, Sreenivasan said Tai had not disclosed these earnings when he was investigated by the Commercial Affairs Department (CAD). “You are a perfect witness who will make up a story for [the] CAD,” the lawyer charged. “The truth of the matter is you picked up bits and pieces of facts here and there, and you tied up a story for CAD so that CAD could go after John Soh.” Tai however disagreed.
Earlier in the day, the court also heard that Soh impersonated Neo Kim Hock – the former chairman of Blumont Group – in phone calls with the staff of Interactive Brokers, after the crash. Accounts at Interactive Brokers opened in Neo’s name were used to trade shares.
The calls came in the aftermath of the crash. “My instructions are that Soh did assume the role of Neo in… two conversations with Mary Ng,” Sreenivasan said. He then asked Tai if this was done on Neo’s authorisation.
“I can’t answer that question because what transpired between Neo and Soh, I don’t know,” replied the witness.
Later on, Tai was also questioned on incidences of error or “butterfinger” trades. Tai claimed he had entered some trades in Asiasons into an account that he owned by accident, instead of into an account under the control of Soh and Quah. Sreenivasan questioned him on one of these instances, and asked him to explain why, if it was truly an error trade, he had waited for some time before unwinding the trade. Tai explained that he was waiting for Soh to finish his own rollover before unwinding the trade as he could not “dump it straight to him”.
This was an illogical explanation, the lawyer said, as Tai would not have known which were Soh’s trades. Tai explained that he knew that Soh was the one trading the shares because “he has been giving instructions for months, so that’s why it gives me the impression that he’s the operator”.
The court later heard that some of these trades include those Tai pre-arranged with other members of the “lower inner circle”, which Soh and Quah did not know about. Tai explained that the “inner circle” comprised two layers: Soh, Quah and Dick Gwee were the “bosses” while Henry Tjoa, Gabriel Gan and Tai formed the “lower hierarchy”. Tjoa and Gan – both former brokers – are also expected to take the stand as witnesses for the prosecution soon.
“You were running a scam,” Sreenivasan charged, adding that there was a “conspiracy” between Tai, Tjoa and Gan to manipulate the market for their own benefit. While Tai admitted that he intended to “make some money” off Soh and Quah, he denied those charges.
The lawyer had made clear he did not trust Tai. On Jan 3 – at the start of the trial’s third tranche – Sreenivasan told the judge Hoo Sheau Ping in exasperation: “This is not a witness whom I trust one iota.” “Your Honour, I'm going to apply to impeach this witness, and I want to make it very, very clear that he has no credibility whatsoever,” Sreenivasan said, pointing out that Tai had “six different versions” of events.
Impeaching Tai
The defence counsels have now put forth a submission to impeach Tai on the basis on a lack of full disclosure and frequent inaccuracies in his statements. Touching on Tai’s earlier admission to coordinating trades behind Soh’s back with Tjoa, Sreenivasan said this was “a material omission” that should have been highlighted to either the CAD or the Deputy Public Prosecutors (DPPs).
“In fact that material omission is probably what got him his free pass in the witness stand,” he argued. “He has admitted he’s a crook, he has admitted [to] market manipulation, and he has not been charged.”
Not only that, Tai’s statements are also riddled with inaccuracies, Sreenivasan argued.
Quah’s defence counsel Sui Yi Siong of Eversheds Harry Elias agreed, dismissing Tai’s credibility because of frequent inconsistencies.
Specifically, Sui found Tai to “tell the truth (only) when he is caught telling a lie… because he didn’t want to incriminate himself. This is the very definition of someone unworthy of credit.”
Drawing reference to Tai’s comments in court last October, Sui said Tai changed his statement because he wanted to cooperate fully. “The reason he is giving is incredible and he cannot be believed,” argued Sui, adding that this showed that Tai’s credibility is impeached.
DPP Teo Guan Siew however rebuffed these assertions, arguing that Tai’s changes cannot be treated does not mean that he is inconsistent. “The reason why [Tai] made certain changes and amendments or clarifications to his statement when he was on the stand, precisely because it forms part and parcel of what he is testifying in court,” said the DPP, adding that the issue of credit should be assessed holistically.
Justice Hoo then asked for submissions from the three parties, and indicated that for the time being, she was “not inclined to agree with the defence that a previous statement can be the basis for impeachment.”
Tai could be the second prosecution witness in this trial to be impeached. Last October, the prosecution sought to impeach former Phillips Securities remisier Joe Tiong Sing Fatt. He was seen as a hostile and uncooperative witness who deviated from prior statements. Now, Tai faces the possibility of facing impeachment – this time round, from the defence.
The trial will continue over the week. Tai is expected to be cross examined by Quah’s defence counsel Philip Fong.
