La Quoc Truong, 40, chairman of Capel Company's board of directors, and Vu Duc Tinh, 45, director of Thai Tuan Trading and Service Co., Ltd., face charges of fraudulent appropriation of property and money laundering. Their alleged misconduct is detailed in a recent indictment from the Ho Chi Minh City People's Procuracy.
Three other defendants are also indicted in connection with the case for fraudulent appropriation of property.
**"Phantom" Business Model Used to Attract Investments**
According to the indictment, Truong established Capel Group Joint Stock Company in 2019, registering it for investment consulting activities. However, the company had no actual production or business operations. Truong served as chairman of the board of directors, legal representative, and directly managed the company.
Around October 2021, Truong met Vu Duc Tinh in Hanoi. They agreed that Tinh would serve as Capel's "strategic advisor," receiving 15% of the total revenue generated. Tinh provided the strategy for capital mobilization and the operational script for the company.
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La Quoc Truong (left) at the investigative agency. Photo: Public security
The prosecution agency states that Truong subsequently operated Capel using an illegal multi-level marketing model, disguised as "business cooperation/stock purchase agreements." The defendant built an organizational structure, recruited personnel, issued commission policies, and organized activities to attract investors.
Capel organized numerous workshops at its headquarters and restaurants in various provinces and cities, often with over 300 attendees, holding two to six sessions each week. Truong and other company leaders appeared as speakers, general directors, deputy general directors, or team leaders.
During these workshops, Capel claimed to be involved in real estate, green energy, solar power, tourism, transportation, training, and technology transfer. They also stated having representative offices in multiple countries and operating effectively.
Investors were invited to sign business cooperation agreements to purchase Capel shares, with advertised profits of 0.625% daily, 3.125% weekly, and 12.5% monthly. For a two-year investment, they were promised to receive both principal and profit, equivalent to 300% of the invested amount.
However, investigators determined these claims were false. Capel had no production or business operations as announced, was not authorized to issue shares, and did not deliver shares to investors.
Truong expanded Capel's operations to six locations, including its headquarters in TP HCM and branches in Hanoi, Thanh Hoa, Bac Giang, Can Tho, and Nghe An. The personnel system was structured into multiple levels, from general directors, deputy general directors, and chief accountants to directors, department heads, and business collaborators, with commission and support policies to incentivize investor recruitment.
**VND702 Billion Raised from Nearly 8,000 Contracts**
Data extracted from computers and storage devices seized at Capel indicate that from 2021 to 2022, the company signed nearly 8,000 contracts with 4,837 investors, raising over VND702 billion.
Investigators determined the cash flow operated as a Ponzi scheme, using funds from new investors to pay earlier ones. Of the more than VND702 billion raised, Capel spent over VND52 billion on direct bonuses and more than VND229 billion on profit distribution to investors. The investigating agency concluded that Truong embezzled over VND420 billion.
Authorities believe Truong used multiple bank accounts to receive funds, pay commissions, support employees, give Tinh 15% of the revenue, and purchase real estate and other assets. Some assets were registered under other individuals' names.
During the investigation, Truong admitted to the acts, stating he used investor funds for real estate investments, projects, and personal expenses. He currently possesses no assets to compensate for the damages.
Tinh, however, denies his role as an accomplice, claiming he only provided business consulting to Truong. Tinh stated he lent Truong approximately VND5 billion in cash and transfers, and advised on real estate investment models, workshop organization, department structuring, and capital mobilization plans.
According to Tinh, after raising the money, Truong failed to implement business operations as planned, leading to capital loss and an inability to repay investors. Tinh claims the 15% received from Capel was a voluntary consulting fee paid by Truong, unrelated to any appropriation.
The investigating agency states that Tinh's testimony is inconsistent with the collected documents and evidence. Tinh was identified as regularly receiving money from Capel, while his consulting activities were linked to a fictitious business model and illegal capital mobilization methods.
The investigating agency concluded that Tinh actively assisted Truong in the alleged acts.
Hai Duyen
