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  • Apax Leaders English School Chief Faces Charges for $291M Investment Fraud Scheme: Over 10,000 Investors Duped

    Apax Leaders English School Chief Faces Charges for $291M Investment Fraud Scheme: Over 10,000 Investors Duped

    Nguyen Ngoc Thuy, owner of the English language school Apax Leaders, is facing allegations of defrauding 10,123 investors out of VND7.68 trillion (US$291 million) by selling fraudulent shares in his company, Egroup.

    The Investigation

    The Ministry of Public Security has finalised its probe into the activities of Egroup’s chairman, Mr. Thuy. It has recommended charges of bribery and wrongful misappropriation of assets against him and 29 of his associates.

    The Accusations

    Authorities claim that Thuy and his accomplices misrepresented the financial status of Egroup. They allegedly claimed the company had a charter capital of VND963 billion ($36 million) to appeal to potential investors.

    The reputation of the Apax English school, which Mr. Thuy owned, was also utilised to lure victims. At one point, the school boasted 120 centres scattered across the country, adding to its credibility. Some investors even traded real estate for the supposed shares.

    The 10,123 individuals who invested in Egroup were promised that the company would repurchase the shares after one year at a higher price.

    The Aftermath

    However, the police have discovered that 8,926 of these investors never received any return on their investment, essentially losing their money.

    Questions & Answers

    Who is Nguyen Ngoc Thuy?
    Nguyen Ngoc Thuy is the owner of the English language school, Apax Leaders. He is also the chairman of Egroup, a company involved in this alleged fraudulent case.

    What activities of Egroup is Nguyen Ngoc Thuy being investigated for?
    Thuy is being investigated for allegedly selling fraudulent shares of Egroup to over 10,000 investors, defrauding them of a total of VND7.68 trillion ($291 million).

    What was the false promise made to the investors?
    Investors were assured by Thuy and his associates that the company would repurchase the shares sold to them after one year at a higher price. However, the majority of these investors never received any return on their investments.

  • HelloFresh fined after criminal charges laid over subscription trap

    HelloFresh fined after criminal charges laid over subscription trap

    HelloFresh New Zealand, a subsidiary of global meal-kit supplier HelloFresh SE, has been hit with an NZ$845,000 ($748,294) penalty for deceiving customers into renewing their subscriptions. The imposition of this fine is the result of legal action undertaken by the Commerce Commission, New Zealand’s regulatory authority, in response to the company’s violation of the Fair Trading Act. HelloFresh New Zealand confessed to its true intentions of luring customers into renewing their food delivery service subscriptions without explicit awareness or agreement, a practice commonly known as a subscription trap.

    Deceptive Marketing Strategy

    Deputy Chair of the Commerce Commission, Anne Callinan, revealed the core of HelloFresh’s modus operandi. The company would cold call former customers under the guise of seeking customer feedback. However, the actual aim of these calls was to entice customers into reactivating their subscriptions by presenting them with discount vouchers. The company failed to clearly communicate that accepting these vouchers could result in the reactivation of the customers’ paid subscription.

    Over an 18-month period, HelloFresh made over a million calls to ex-customers and succeeded in reviving nearly 80,000 subscriptions. This action resulted in a surge of complaints to the Commerce Commission from disgruntled customers.

    Callinan provided further insight into the company’s misleading practices. “Upon reviewing a selection of call recordings, it became evident that agents downplayed or disregarded customers’ wishes, who on many occasions unequivocally stated their unwillingness to renew their subscription,” she stated. Callinan said that the deceptive behavior was a fundamental aspect of HelloFresh’s business operations and not an isolated incident.

    Lessons for Subscription-Based Services

    Callinan conveyed a stern warning to other subscription-based businesses in light of this case. The need for transparency regarding their terms and conditions and ensuring customers fully understand what they are signing up for is paramount.

    The Commerce Commission plans to maintain its focus on rectifying any misleading online sales behavior, including subscription traps. These practices remain a key focus area for the regulator.

    HelloFresh New Zealand operates under the umbrella of its Berlin-based parent company, HelloFresh SE, which is one of the largest meal-kit providers in the world with operations across 18 countries.

    Questions & Answers

    What was HelloFresh New Zealand fined for?
    HelloFresh New Zealand was fined NZ$845,000 ($748,294) for deceiving customers into renewing their subscriptions without clear communication or consent.

    What was the company’s deceptive marketing strategy?
    HelloFresh would cold call former customers under the pretext of gathering customer feedback. The actual aim was to persuade customers to reactivate their subscriptions by offering discount vouchers, without clearly stating that this would result in the reinstatement of their paid subscription.

    What is the key takeaway for other subscription-based businesses?
    Subscription-based businesses must ensure transparency in their terms and conditions and confirm that customers are fully informed before agreeing to sign up for their service.

  • Uber Ex-Security Chief Accused Of Hacking Coverup Must Face Fraud Charges

    Uber Ex-Security Chief Accused Of Hacking Coverup Must Face Fraud Charges

    A federal judge on Tuesday said a former Uber Technologies Inc security chief must face wire fraud charges over his alleged role in trying to cover up a 2016 hacking that exposed personal information of 57 million passengers and drivers.

    The U.S. Department of Justice had in December added the three charges against Joseph Sullivan to an earlier indictment, saying he arranged to pay money to two hackers in exchange for their silence, while trying to conceal the hacking from passengers, drivers and the U.S. Federal Trade Commission.

    U.S. District Judge William Orrick in San Francisco rejected Sullivan’s claim that prosecutors did not adequately allege he concealed the hacking to ensure that Uber drivers would not flee and would continue paying service fees.

    Orrick also rejected Sullivan’s claim that the people allegedly deceived were Uber’s then-chief executive, Travis Kalanick, and its general counsel, not drivers.

    “Those purported misrepresentations, though not made directly to Uber drivers, were part of a larger scheme to defraud them” according to the indictment, Orrick wrote.

    Lawyers for Sullivan did not immediately respond to requests for comment. Sullivan also faces two obstruction charges.

    The defendant was originally indicted in September 2020, and is believed to be the first corporate information security officer criminally charged with concealing a hacking.

    Prosecutors said Sullivan arranged to pay the hackers $100,000 in bitcoin, and have them sign nondisclosure agreements that falsely stated they had not stolen data.

    Uber had a bounty program designed to reward security researchers who report flaws, not to cover up data thefts.

    Dara Khosrowshahi, Uber’s current chief executive, fired Sullivan after learning the extent of the breach.

    In September 2018, the San Francisco-based company paid $148 million to settle claims by all 50 U.S. states and Washington, D.C. that it was too slow to reveal the hacking.

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  • The EU comes after Apple with list of antitrust charges

    The EU comes after Apple with list of antitrust charges

    Apple is taking hit after hit in its continued struggle against antitrust accusations, as only last week Arizona passed a bill forcing the App Store to allow third-party payment systems within apps to circumvent the 30% commission fee.

    Reuters has revealed that EU antitrust regulators are currently finalizing a list of charges against Apple for violating antitrust laws. Apparently, Spotify, the Swedish music streaming service, had jumpstarted a set of four cases against Apple when it filed a report against the tech giant two years ago.

    Spotify had initially complained to the European Commission that Apple was giving an unfair advantage to Apple Music by restricting alternative platforms to keep them in its shadow. This has since galvanized further complaints against Apple’s 30% commission fee imposed on all apps without allowing alternative payment systems or other app stores onto the iOS.

    If Apple loses to these charges, it could spell the end of its App Store monopoly. In the US, Apple is waiting to go on trial in only two months to face Epic Games in a lawsuit for antitrust practices, which was launched last August. It looks like a freer mobile app publishing platform may loom on the horizon after all, which would be fortunate for smaller developers and businesses who have been impacted the most by this monopoly.

    Reuters states that the document listing the charges is set to be delivered to Apple sometime before this summer.

  • Prosecutors drop charges against Samsung chairman

    Prosecutors drop charges against Samsung chairman

    Prosecutors dropped tax evasion and embezzlement charges against Samsung Group Chairman Lee Kun-hee on Thursday. The decision was based on the judgment that further investigation into the case was impossible due to Lee’s health issues. The investigation may resume if Lee recovers, but the possibility is slim. Lee has been hospitalized for more than four years now since a fall in May 2014.

    Lee was accused of avoiding taxes worth 8.5 billion won ($7.6 million) that involved multiple bank accounts under the names of Samsung executives. More than 1,700 accounts were found to have been used for this purpose since 2008, when the investigation started.

    Another charge against the chairman was the embezzlement of 3.3 billion won from Samsung C&T, which was used to pay for the interior renovation of Lee’s private home.

    The Seoul Central District Prosecutors’ Office, however, did decide to indict four Samsung executives who played a role in the two cases – one for the tax evasion scheme and three for the embezzlement case.