A Vietnamese Tycoon Facing Death Penalty For Fraud, To Repay $25 Billion: The Largest Since Sam Bankman-Fried FTX Scam Scheme

Extensive publicity surrounding the case directed public outrage toward Truong My Lan, whose tired and unadorned appearance in court stood in stark contrast to the glamorous images previously circulated of her.

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In the grand colonial-era courthouse of Ho Chi Minh City, a 67-year-old Vietnamese property developer faced a rare sentence on Thursday. She was condemned to death for embezzling funds from one of Vietnam's largest banks over an 11-year span.

This verdict stands out due to its uncommon nature; few women in Vietnam have received the death penalty for white-collar crimes. The severity of the sentence underscores the immense magnitude of the fraud.

Truong My Lan was found guilty of obtaining $44 billion in loans from the Saigon Commercial Bank. While the court ordered her to repay $27 billion, prosecutors doubt the possibility of recovering such a vast sum. Some speculate that the death penalty serves as a coercive measure to prompt her to return a portion of the embezzled funds.

Despite the typically secretive nature of communist authorities, this case was an exception. Detailed information was provided to the media, revealing that 2,700 individuals were summoned for testimony, with the involvement of 10 state prosecutors and approximately 200 lawyers. The evidence, comprising 104 boxes weighing a combined six tonnes, was presented during the trial. Truong My Lan, along with 85 others, faced charges, which she denied and has the option to appeal.

Subsequently, all defendants were convicted. Four were sentenced to life imprisonment, while others received prison terms ranging from 20 years to three years with suspension. Additionally, Truong My Lan's husband and niece were handed jail terms of nine and 17 years, respectively.

Truong My Lan hails from a Sino-Vietnamese family residing in Ho Chi Minh City, previously known as Saigon. Initially, she embarked on her entrepreneurial journey as a market stall vendor, selling cosmetics alongside her mother. However, following the economic reforms introduced by the Communist Party in 1986, known as Doi Moi, she ventured into real estate investment, gradually accumulating land and properties. founding the company Van Thinh Phat Co., Ltd.. By the 1990s, she had amassed a substantial portfolio of hotels and restaurants.

According to Vietnam Media, Ms. Truong My Lan soon after established a network of subsidiaries under the umbrella of Van Thinh Phat, including entities such as Van Thinh Phat Joint Stock Company, An Dong Investment Joint Stock Company, Time Square Investment Joint Stock Company, and the Group Saigon Peninsula group.

Ms. Truong My Lan and the 'ecosystem' Van Thinh Phat(Source: Vietnam News Media)

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By 2011, Truong My Lan had gained significant prominence as a business personality in Ho Chi Minh City. During this time, she orchestrated the consolidation of three smaller, financially strained banks into a larger institution: Saigon Commercial Bank. Under Vietnamese law, no individual is permitted to hold more than a 5% stake in any bank.

However, according to prosecutors, Truong My Lan effectively controlled over 90% of Saigon Commercial Bank through a complex network of shell companies and individuals acting as her proxies. Allegations suggested that she utilized this control to appoint her own associates as managers, directing them to approve numerous loans to her network of shell companies. The loan amounts in question were substantial, constituting a staggering 93% of all lending activities conducted by the bank.

Furthermore, Ms. Truong My Lan operated a network of shell companies in jurisdictions known as "tax havens" and other countries.(In 2016, there was significant media attention on Lan due to her name being associated with certain individuals mentioned in the "Panama Papers," along with her husband.)

According to the findings of the Investigation Agency of the Ministry of Public Security, the Van Thinh Phat Group has established an extensive ecosystem comprising over 1,000 businesses, including subsidiaries and affiliated companies both domestically and internationally. This network involves the engagement of numerous individuals serving as legal representatives, relatives, officials, and employees.

Ms. Truong My Lan consistently maintained ownership of 80-90% of SCB Bank shares through proxies, granting her significant influence over the bank, which boasts assets exceeding half a million billion dong.

She and the Van Thinh Phat network have withdrawn funds from SCB through various channels including real estate ventures, restaurants, and hotels, as well as through the use of phantom companies and projects with assets that fail to meet legal standards or are artificially inflated.

According to prosecutors(BBC), spanning three years from February 2019, Truong My Lan allegedly instructed her driver to withdraw a staggering 108 trillion Vietnamese dong, exceeding $4 billion (£2.3 billion) in cash from the bank, storing it in her basement. Such a vast amount of cash, even if comprised entirely of Vietnam's largest denomination banknotes, would weigh approximately two tons.

Additionally, she faced accusations of generously bribing individuals to ensure her loans remained unquestioned. One such instance involved a former chief inspector at the central bank who received a life sentence for accepting a $5 million bribe.

Extensive publicity surrounding the case directed public outrage toward Truong My Lan, whose tired and unadorned appearance in court stood in stark contrast to the glamorous images previously circulated of her.

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Lan has been found guilty of embezzling $12.5 billion, but prosecutors disclosed last week that the overall damage caused by the scheme has now reached $27 billion — representing approximately six percent of the country's 2023 GDP. Lan and her associates were apprehended as part of a nationwide crackdown on corruption that has ensnared numerous officials and members of Vietnam's business elite in recent years.

In her final statements to the court last week, the Vietnamese property tycoon seemed to express thoughts of suicide. According to state media, she remarked, "In my despair, I contemplated death. I regret my foolish decision to involve myself in the cutthroat business environment of the banking sector, of which I had little understanding." The scandal has stunned the Southeast Asian nation, with around 42,000 individuals identified as victims of the fraud.

Lan, who is married to a wealthy businessman from Hong Kong, also on trial, stands accused of orchestrating fraudulent loan applications to siphon funds from SCB, of which she owned a 90% stake. Police allege that the scam's victims are SCB bondholders who have been unable to access their funds or receive interest or principal payments since Lan's arrest.

During the trial, prosecutors revealed that they had confiscated over 1,000 properties belonging to Lan. Authorities also stated that the purported $5.2 million given by Lan and certain SCB executives to government officials to conceal the bank's infractions and dire financial situation represents the largest recorded bribe in Vietnam.

The individual offered the bribe — Do Thi Nhan, the former head of the State Bank of Vietnam's inspection team — testified during the trial that the cash was presented to her in Styrofoam boxes by SCB's former CEO, Vo Tan Van. Upon realizing the contents, Nhan declined the boxes, but Van refused to take them back, as reported by state media. Since 2021, Vietnam's anti-corruption campaign has led to the indictment of over 4,400 individuals across more than 1,700 corruption cases.

Last month, a prominent Vietnamese luxury property magnate, Do Anh Dung, the leader of the Tan Hoang Minh group, was sentenced to eight years in prison after being found guilty of defrauding thousands of investors in a $355 million bond scam.

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