This article first appeared in The Edge Financial Daily on July 26, 2018

PUTRAJAYA: MonSpace (M) Sdn Bhd, a multinational corporation that uses a direct-selling model led by Datuk Seri Jessy Lai Chai Suang, has landed itself in hot water yet again after 16 of its premises across Ipoh and the Klang Valley were raided on Tuesday during a joint enforcement operation. This follows a month-long investigation by the authorities.

Dubbed “Ops Coin”, the joint operation involved 130 officers of the domestic trade and consumer affairs ministry, the Attorney-General Chambers’ National Revenue Recovery Enforcement Team, Bank Negara Malaysia (BNM), CyberSecurity Malaysia, the Companies Commission of Malaysia (SSM) and the Royal Malaysia Police.

The raids were conducted simultaneously across one business premise in Ipoh, and 15 premises in the Klang Valley comprising four business premises, eight residential units and three MonSpace Group server centres.

Domestic Trade and Consumer Affairs Ministry enforcement director Datuk Mohd Roslan Mahayudin said the raids also resulted in the freezing of 25 of MonSpace’s bank accounts and 47 individual accounts across nine banks totalling RM5.87 million.

Also seized were computers and company products worth RM980,352 and cash in four currency denominations amounting to RM93,879. The authorities have also frozen the rights to transfer ownership of 26 vehicles worth RM6.24 million in relation to the raids.

“No arrest was made during the raids. The founder (Lai) has been very cooperative,” Mohd Roslan told a press conference yesterday.

“We feel there is no need for the founder to be arrested as we were promised cooperation, including coming to the ministry’s office as and when we require more information,” he added.

However, MonSpace’s personnel are prohibited from travelling abroad until further notice.

Mohd Roslan said the number of victims who are affected and the value of assets seized in the raids will be revealed later, pending further investigation into the seized documents and data servers.

He added that the investigation is being conducted under Section 27B of the Direct Sales and Anti-Pyramid Scheme Act 1993 and the Anti-Money Laundering, Anti-Terrorism Financing and Proceeds of Unlawful Activities Act 2001 (AMLA).

If found guilty under Section 27B of the Direct Sales and Anti-Pyramid Scheme Act 1993, an organisation can be fined between RM1 million and RM10 million for the first offence. Individuals, meanwhile, can be fined RM500,000 to RM5 million or sentenced to a maximum of five years’ prison or both for the first offence.

Offenders under AMLA can be prisoned for a maximum of 15 years, and fined a minimum of RM5 million or no less than five times the amount acquired from the illegal activities, whichever is higher.

“Other agencies may also take further action using laws under their purview,” said Mohd Roslan.

He noted that the joint operation was conducted following a decision in the meeting of the Sub-Committee on Offences related to Financial Fraud and Scams (SCOFFS) and probes done by SCOFFS together with the police for a month.

Mohd Roslan said since last year, his ministry has received six complaints in relation to MonSpace, five of which claimed that the company had failed to generate returns as promised, while another complaint was about the use of BNM’s logo by the company.

A domestic trade and consumer affairs ministry officer explained that the alleged pyramid scheme operated by MonSpace involves an investment of between RM500 and RM5,000 per member, with each member required to rope in two downlines — each providing a similar amount of investment value as the upline — in order for a member to obtain returns.

Victims reportedly include as many as 60 investors from China, who lodged police reports against the group and Lai in June last year to demand refunds for their investments.

MonSpace and Lai attracted headlines in 2016, when MonSpace Sky Airlines was found operating a commercial flight from Kuala Lumpur to Langkawi on July 22 without a valid air service permit (ASP), which is required to perform a commercial air service operation. The airline was said to be owned by MonSpace Group under Lai, and is reportedly operated by Suasa Airlines Sdn Bhd.

Following the incident, the Malaysian Aviation Commission lodged a police report against MonSpace Sky Airlines for misleading the public. On Jan 9, 2017, Suasa Airlines pleaded guilty to operating without a valid ASP and was fined RM380,000.

It was reported that MonSpace Group owns five companies, namely MonSpace (M) Sdn Bhd, Mon Space City Sdn Bhd, Mon Space Media Entertainment Sdn Bhd, Mon Space F&B Sdn Bhd and Mon Space Synergy Power Sdn Bhd.

Meanwhile, Mohd Roslan reminded the public to avoid falling prey to get-rich-quick schemes, and to cross-check with the domestic trade and consumer affairs ministry, BNM, SSM and other authorities before investing in any such schemes.