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Reports by
Wong Wei Kong (Business Times 8 Mar 2004)
Salwant Singh used his company to charge customers for telephone calls they never made, inflated the usage and charges for calls they made, and billed their credit cards. The scam involved 765 transactions, 500 cardholders and over half a million dollars. Singh was sentenced initially to 12 years of preventive detention, which was later increased to 20 years.
IT was credit card fraud on an unprecedented scale, involving 765 transactions, 500 cardholders and over half a million dollars.
And the man behind it was, in the words of Chief Justice Yong Pung How, an exceptional criminal: 'This was an exceptional case. In no other case before me has an offender made such a conscious effort to upgrade his skills over the course of his criminal history.'
In October 1999, the Commercial Affairs Department (CAD) received a complaint from the vice-president of United Overseas Bank (UOB) Card Centre alleging that Infoseek Communications Pte Ltd, a call-back company, had generated a substantial number of fraudulent credit card transactions. The director of Infoseek, then located at International Plaza, was Salwant Singh.
Singh already had numerous previous convictions since 1983 and had spent time in prison and corrective training. Remarkably, he managed to obtain a bachelor's degree in economics from the University of London through distance-learning while in corrective training. After his release, he mastered the computer, teaching himself various applications such as C++ and Java.
And in investigating the UOB complaint, the CAD team led by Steven Yeo Lwee Siong found that Singh had made use of his newly acquired skills to graduate from simple cheating offences to an elaborate credit card scam.
What enabled Singh to carry out his scam is the fact that many cardholders fail to check their credit card bills carefully to ensure that everything is in order.
'The lack of checks by customers in credit card transactions is a major and common source of credit card fraud. Some credit cardholders do not even check their credit card statements at all,' said lead investigating officer Yeo. 'As exhibited by this case, such nonchalance will only increase their chances of being targets of credit card fraud.'
While merchants have a frontline responsibility to prevent and detect credit card fraud, there are instances - as in Singh's case - where the merchants are culpable. 'Cardholders should check their credit card statements carefully to detect fraudulent transactions and alert the card issuing banks immediately so that further losses to fraud can be prevented.'
UOB had entered into a merchant agreement on Aug 31, 1998, with Singh's company, Infoseek, which was providing international long-distance call-back services. Infoseek offered three modes of payment to its customers; pre-paid stored value cards which customer could purchase from either Infoseek or its agents; monthly credit provided by Infoseek; or post-paid credit card billing. For the post-paid credit card billing, Infoseek would charge the payment for its services to customers' credit cards, using electronic draft capture (EDC) terminals provided by UOB Card Centre.
Singh would key in the credit numbers of the customers who had used Infoseek's IDD services into the EDC and UOB would credit the amount due into Infoseek's UOB bank account on the next working day. But sometime in the first week of July 1999, UOB's Chargeback Department alerted UOB Card Centre that Infoseek had processed an unusually large amount of credit card transactions amounting to around $49,844. The card centre was further informed that the average credit card sales of Infoseek was about $6,300 per month.
Pursuant to the alert, the head of UOB's Chargeback Department contacted Singh to find out more about the unusual transactions. Singh told her that there were bugs in the billing system which caused errors. He also gave the assurance that he would correct the errors and reverse the charges in favour of UOB.
Unconvinced by the explanation, UOB Card Centre scrutinised Infoseek's account. It discovered that for the month of June 1999, Infoseek's total credit card sales were $690,327. That was rather unusual, taking into consideration Infoseek's usual level of business traffic. This prompted the bank to contact all cardholders who had purportedly engaged the services of Infoseek that month to confirm whether the transactions were genuine. Most disputed the transactions and denied having made them.
CAD's investigation also found that in April 1999, Infoseek started engaging the services of a US carrier, Sakon Inc, to provide a direct dial service to Infoseek. Prior to this, Infoseek had engaged the services of another US carrier, Access Authority Inc. Compared to Access Authority, Sakon offered a much lower rate for providing direct dial service to Infoseek.
As a result, Infoseek decided to make use of Sakon to service all its customers. However, Sakon did not offer any credit facilities to Infoseek: Singh had to make payments to Sakon on a weekly basis.
Due to the switching of carriers, Infoseek encountered problems billing and keeping track of the calls made by its customers. As a result, Infoseek ended up overcharging customers and occasionally, charging customers for calls that they never made. Although Singh corrected these problems, he also discovered a potential gold mine.
Due to the erroneous billing, large amounts of funds were being credited into Infoseek's account. Refunds were made only when the customer disputed the transaction. And not everyone did. Singh decided to take the opportunity to cheat his customers under the pretext of erroneous billings so that he could clear Infoseek's debts with the telecom carriers.
For the months of June and early July 1999, Singh generated fictitious credit card transactions with the EDC terminal at Infoseek. He either duplicated call records of the customer to inflate the total usage or charged the customer twice for the same incurred usage. As a result, Singh fraudulently processed a total of 765 fictitious credit card transactions amounting to $554,557 using the EDC terminal.
While the scam was exposed in the middle of 1999, it took more than two years to bring Singh to justice. He and his wife fled Singapore for India before the CAD could trace and arrest him. CAD informed its Indian counterparts while UOB also hired private investigators to hunt him down. Singh was arrested by the Indian police on Feb 27, 2001.
Extradition proceedings were initiated against him and on Dec 24, 2002, Singh was escorted back to Singapore by CAD officers. He was charged with 765 counts of cheating and was convicted on five counts, with the others taken into consideration. The 41-year-old tried to have his guilty plea retracted so he could get a new trial.
Singh was sentenced initially to 12 years of preventive detention, but prosecutors appealed to the High Court for a stiffer sentence. On Sept 19, 2003, the High Court increased his sentence to 20 years of preventive detention.
'The respondent displayed a breathtaking lack of any remorse whatsoever,' said Chief Justice Yong in increasing Singh's sentence.
'The gravity and scale of the respondent's crimes had intensified over the years. He had spent substantial periods of time in corrective training as well as prison, but those stints in custody apparently had little deterrent effect.'
'Instead of turning his new-found skills to good use for the benefit of society, the respondent chose instead to turn them to his own advantage, inflicting grave economic harm in a most insidious, sophisticated and large-scale manner. The net effect of all this was that he was, and remained, armed with the potential to offend again in that fashion.'
- The lacked of checks by customers in credit card transactions is a major and common source of credit card fraud. Some credit cardholders do not even check their credit card statements at all.
- While merchants have a frontline responsibility to prevent and detect credit card fraud, cardholders should check their credit card statements carefully to detect fraudulent transactions and alert the card issuing banks immediately so that further losses to fraud can be prevented.
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| Last updated on 17 May 2007 |
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