In Envy Asset Management Pte Ltd (in liquidation) and others v. Lau Lee Sheng and others [2025] SGHC 144 (the “Envy Employee Suit”), the General Division of the Singapore High Court delivered another pivotal judgment in the ongoing saga surrounding Singapore’s largest Ponzi scheme to date.
The Envy Employee Suitis an important precedent in Singapore’s developing Ponzi scheme jurisprudence, as it provides greater clarity for insolvency practitioners on the scope of the clawback mechanisms under Singapore’s insolvency regime. Crucially, the Envy Employee Suit illustrates how the earlier landmark decisions in Envy Asset Management v. CH Biovest Pte Ltd [2024] SGHC 46 (“Biovest HC”)and CH Biovest Pte Ltd v. Envy Asset Management [2025] SGCA 3 (“Biovest CA”) may be extended to recover payments made in the course of a Ponzi scheme beyond fictitious profits, if such payments were predicated on the execution of the promised investment strategy.
Background
Certain companies in the Envy group of companies (Envy Asset Management, Envy Global Trading and Envy Management Holdings – “Envy Companies”) purported to operate physical nickel trading scheme, wherein LME grade physical nickel was purchased at a discount and later on-sold at market price (the “Purported Nickel Trading”). Investors were offered the opportunity to invest in and profit from such purported arbitrage by financing the alleged purchase of the discounted nickel, and receiving a portion of the receivables from the alleged sale of the same thereafter.
The Purported Nickel Trading attracted numerous investors. At its height, the scheme recorded more than S$1 billion in fresh investment funds. As it turns out, however, the Purported Nickel Trading was wholly fictitious, and the Envy Companies did not purchase / on-sell any discounted physical nickel. Instead, the funds injected by the investors were, amongst others, misappropriated by the companies’ managing director, Mr. Ng Yu Zhi, to finance a spree of purchases including, but not limited to, various good-class bungalows, high-end jewelleries and supercars.
Amongst other things, later investors’ funds were also paid out to earlier investors under the guise of returns from their investments in the Purported Nickel Trading. Investors’ funds were also used to incentivise employees and investors to introduce new investors to the scheme. Specifically, the Envy Companies offered:
- commission payments to employees and referral fees to investors for referring new investors to the Purported Nickel Trading (“Commission Payments” and “Referral Fees”, respectively); and
- senior employees the opportunity to earn profit sharing payments – namely, a cut of the Envy Companies’ aggregate earning from the Purported Nickel Trading (“Profit Sharing Payments”).
In the Envy Employee Suit, the liquidators of the Envy Companies commenced proceedings against 6 former employees to recover the various payments that they received from the Envy Companies: (a) the fictitious profits that they received in excess of their investment principal (“Overwithdrawn Sums”), (b) Commission Payments, (c) Referral Fees and (d) Profit Sharing Payments (collectively, the “Payments”). As the fact of the Payments were largely undisputed, the disputes were over the terms underlying such Payments, and whether they could be clawed back pursuant to various statutory clawback provisions.
The Court’s decision in the Envy Employee Suit
The Court held that the 6 Defendant employees were liable to repay their respective Payments pursuant to sections 224 and 438 Insolvency, Restructuring and Dissolution Act 2018 (“IRDA”) and section 73B Conveyancing and Law of Property Act 1886 (version in force before 30 July 2020) (“CLPA”). Consequently, each employee was ordered to repay between SGD 370,000 and SGD 17 million, with the employees being held liable to repay an aggregate of more than SGD 42 million (subject to further deductions for their excess income tax paid on such Payments).
The Court made the following key findings:
First, the Envy Companies were insolvent at the time the Payments were made to the Defendants. The Court of Appeal in Biovest CA had already observed that the Envy Companies were insolvent on the basis of agreed facts between the parties, and the Court largely adopted the Court of Appeal’s approach and reasoning when this issue was formally disputed by one of the Defendants.
Namely, it was patently clear that the Envy Companies were insolvent from their inception as they would never be in possession of sufficient realisable assets to pay their debts and liabilities as they fell due. All three companies did not undertake any legitimate revenue-generating businesses, whilst investors’ funds were being used to pay, amongst others, directors, employees, overhead costs and investors.
The Court roundly rejected the 3rd Defendant’s submission that it was necessary to demonstrate the companies’ cash flow insolvency at each and every instance of Payment. The Court emphasised that a commercial (rather than a technical) view of insolvency must be adopted when determining a company’s solvency. With Ponzi schemes, in particular, the Court recognised that the flow of funds is often deliberately obscured such that the precision required for comprehensive and continuous account of a company’s financial position would be impossible.
Second, the Court held that the Defendants did not provide any consideration for their respective Payments and that all of the Payments were merely undervalue transactions for the purposes of sections 224 and 438 IRDA. This was since all of the Payments were predicated on the existence and/or profitability of the Purported Nickel Trading in way or another. Given that the Purported Nickel Trading was a mere Ponzi scheme with no genuine underlying business, there was simply no basis for the Payments. This extended the applicability of the findings in Biovest CA to these categories of Payments.
Third, the Defendants were liable to return the Central Provident Fund (“CPF”)contributions that were credited to them in respect of the Payments. Whilst these contributions remained in the Defendants’ respective CPF accounts, the Defendants were, nevertheless, the beneficial owners of these contributions. Notably, the Court recognised that CPF contributions could be used in a variety of settings including investments, financing loans and purchase of properties.
Significance of the decision in the Envy Employee Suit
The Court of Appeal’s decision in Biovest CA last year established a critical precedent for the Ponzi scheme jurisprudence in Singapore. In particular, it illustrated how profits received by “net winners” (i.e. investors who received more than their invested principal) may be recovered under the CLPA and IRDA, where (a) such profits are contingent on a promised investment strategy and (b) the investment strategy is not duly executed.
The decision in the Envy Employee Suit illustrates how the Court’s reasoning in Biovest CA may be extended to provide insolvency practitioners with the means of recovering payments made in the course of a Ponzi scheme that are related to fictitious profits.
In particular, it is apparent that the Court’s reasoning in the Envy Employee Suit largely mirrors that of the Court of Appeal’s in Biovest CA – namely, where payments were contingent on an assumed state of affairs and the state of affairs was non-existent, the payment would be considered an undervalue transaction that no consideration was provided for.
Further, the decision in the Envy Employee Suit reaffirms the commercial and practical approach that the Singapore Courts adopt when applying the statutory clawback provisions. This is especially important for Ponzi schemes, where a complete account of the scheme’s lifecycle is an unduly onerous and often, an impossible task. Documents are often fabricated and co-mingled with genuine documents to maintain the scheme’s veneer of legitimacy, making post-mortem forensic investigation a complex exercise for insolvency practitioners. The Court’s reasoning on the Envy Companies’ insolvency is a clear step in the right direction, demonstrating the Court’s cognisance of the practical difficulties when dealing with Ponzi schemes
This decision also demonstrates that employees or brokers who bring in investors for similar investment schemes should also be cautious about the terms on which they receive their commission or referral fees, especially when the investment seems too good to be true. Even if there is no actual knowledge of any underlying fraud, payments tied to the existence of the underlying investment may be liable to be clawed back if the investment is later exposed as a Ponzi scheme. If necessary, legal advice should be taken on the terms and risks of such payments.
Should you have any queries on this case update or generally, please do not hesitate to contact the undersigned:
The Client Update was authored by David Chan (Partner), Daryl Fong (Partner) and Lin Ruizi (Partner).
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