SME Securities creates ‘fake customers’ in trading 7.4 million virtual shares

On the afternoon of May 9, the Hanoi People’s Court began questioning 10 defendants in the case 300 billion dong scam related to SME Securities Joint Stock Company.

Responding to the jury about the first scam that caused a loss of 107 billion VND at the Vietnam Oil and Gas Insurance Corporation (PVI), SME Chairman Phan Huy Chi opened by denying the Supreme People’s Procuracy’s accusations. The defendant testified that he did not propose, discuss or direct his subordinates, nor signed a securities investment contract with PVI.

Accordingly, SMEs need to borrow money from PVI, but PVI is an insurance company and does not have a lending function, so it must be legal by creating two listed securities contracts. The whole procedure is done by the intermediary FIT Company. SME only follow this advice. “In fact, this is a civil loan transaction, the defendant does not see himself as wrong,” Mr. Chi said.

Right after that, chairwoman Dang Thi Thanh Huyen asked: “If it’s a normal loan transaction, why not sign a loan contract but hide it by writing about two listed securities contracts?”.

Mr. Chi reiterated for the third time, “Because PVI does not have a lending function, both sides have to do it”. The chairman asked: “Doing what the law doesn’t allow, so it’s obviously cheating, it’s a violation, isn’t it?”. Chairman of SME said: “If there is a fraud, it is PVI, not the defendant”.

The Chairman reiterated the allegations against Mr. Chi in the fraud case at PVI, starting with the fact that the former general director of SME Pham Minh Tuan knew that PVI had investment money, so he reported it. Mr. Chi agreed and assigned Tuan to direct the specialized departments of SME to create two fake profiles of “an individual client” and the British Consulting Joint Stock Company – which is actually a “backyard” business run by Chi. as Chairman of the Board of Directors.

Neither of these customers owned stock ticker balances, but Mr. Tuan directed two subordinates to fake their stock codes on SME’s securities management system so that PVI could trust them and sign the first two contracts. securities investment on the same day, April 21, 2010. Accordingly, Tuan (Party C) will together with the representative of PVI (Party A) and the above “customers” (Party B) sign a securities investment cooperation contract listed on the basis of the securities balance in the trading account. Party B’s transaction. Party A will contribute money and Party B will contribute with the balance of securities codes, which are all common shares, without restriction on transfer. With a 2-year contract, PVI enjoys a profit of 13%. The SME company is obliged to provide information about Party B to Party A and is responsible for the truthfulness of the information and activities related to Party B’s securities (freeze, release, sale, deduction, etc.) income from the sale of securities to invest in Party A’s account…).

The next day, PVI disbursed and transferred more than 107 billion VND to SME to implement these two contracts. Specifically, PVI transferred 49 billion dong to the securities account of “individual customers” and more than 58 billion dong to the securities account of corporate customers, ie British Consulting Joint Stock Company.

The Procuratorate alleges that Mr. Chi and Tuan then created business cooperation contracts, entrusting capital with the above individuals and businesses to disburse money into the accounts of their mother, sister and cousin, then took for personal spending. In which, Mr. Tuan used 49 billion VND of PVI to transfer to individual customers, and Chi used more than 58 billion VND of PVI to transfer to British Consulting Joint Stock Company.

“The defendant said this is the first time doing business with PVI, and he did not discuss anything with Tuan, why the defendant and Tuan, each of them knew and used a customer’s money in a neat and unconventional manner. like that?”, asked the chairperson. In response, defendant Chi said “it must have been a coincidence”.

The investigation results determined that all more than 7.4 million shares, signed by the defendants Chi and Tuan, and sent to PVI by the above two customers, are “virtual securities”.

Working with “individual customers” in the case, the police agency determined that this person was just a university student in Hanoi, who had lost his identity card. “I don’t have money to invest in securities myself, nor have any relationship with the parties to the contract,” the signatures on the contracts were also not signed by this person, the police agency determined.

At the investigation agency, defendant Chi admitted the above allegations but later changed his testimony. At the trial on May 9, the former chairman of SME said that the creation of customers, the fraud of securities codes, etc., was not aimed at fraudulently appropriating PVI’s assets, but with the agreement of the two parties, legalizing the work. PVI lends money to SMEs.

“Therefore, the two contracts above are essentially civil transactions and are invalidated due to forgery”, Mr. Chi stated and said that before the trial, PVI had paid enough money, thus “not guilty of fraud”. appropriation of property”.

The jury asked PVI’s representative to confront about the timeline and payments SME paid to PVI, but this person has not prepared the necessary documents.

In the case, in addition to Mr. Chi and Mr. Tuan, were prosecuted for the crime of Fraudulent appropriation of assetsAccording to article 139, Penal Code 1999, there are 3 former SME officials including Nguyen Thanh Nam, former director of Ho Chi Minh City branch and Nguyen Huy Son and Nguyen Phuong Lan.

Four former PVFI leaders were indicted on charges of Lack of responsibility causes serious consequences, according to article 285, Penal Code 1999, including: Chu Xuan Lai, former General Director; Le Xuan Tan, former deputy general director; Vu Xuan Cong, former deputy head of the Financial Services Department, and Vu Thi Hong Lan, former head of the Financial Services Department.

According to the indictment from April 2010 to March 2011, due to the need for money for personal use and payment of old debts, Mr. Chi and some other people used many fraudulent tricks such as “create customers , confirm, and block short the balance of highly liquid securities in the securities trading account” of customers to create trust.

This behavior is accused of appropriating PVI and Oil and Gas Union Financial Investment Joint Stock Company (PVIF), Habubank Hanoi Commercial Joint Stock Bank with a total amount of nearly 300 billion VND.

Today, the court continues to question the defendants about the remaining 2 fraud cases, which occurred at Habubank and PVIF. The trial is expected to last 10 days.

Thanh Lam