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THE Commercial Affairs Department (CAD) has begun investigation into the affairs of Sunshine Empire following reports of its converversial business practices.
A police statement on Tuesday advised those who have placed money with the company to wait for further updates by the CAD.
"More information will be released in due course and persons who have placed money with the company may be requested to come forward to assist the CAD in the investigation," said the statement.
On Oct 24, The Straits Times reported that the multi-level marketing firm had come under scrutiny because it appeared to be operating like a pure investment scheme, something it did not have the licence to do.
The MAS placed Sunshine on its September's investor alert list, which means the company is not allowed to conduct regulated activities.
MAS has warned people against making investments with unregulated firms and individuals.
And a new consumer alert has been issued to inform consumers about get-rich schemes that sound too good to be true.
Based at Toa Payoh HDB Hub, Sunshine Empire has attracted 20,000 people here since it was set up last July.
The man behind Sunshine is Mr James Phang, 48, the founder,director and international president of Empire Group Alliance, a group spanning several Asian countries. Sunshine is part of the group, but Mr Phang does not own it.
MLM firms, which are legal here, typically invite people to pay cash for the right to market goods to other people. They also get cash for recruiting other MLM marketers.
Under Sunshine's scheme, people usually put down $12,000 to become a 'merchant', as it calls users of its online shopping platform offering thousands of goods, including health supplements, lingerie and electronics goods.
After signing up, they can buy Sunshine's online goods.
But they are also rewarded with potentially hefty cash rebates, though these are not guaranteed. Merchants can build their own sales force as well.
The scheme is structured in such a way that participants are not required to use the rebates to buy Sunshine's goods.
The cash rebates are based on Sunshine's global turnover. The option of converting the rebates into cash only makes Sunshine more attractive than other MLM firms where people must maintain sales quotas.
Sunshine also operates in Indonesia, Thailand, Hong Kong, Korea and Taiwan, and has 50,000 merchants. It plans to expand to the United States by next year.
According to its marketing brochure, Sunshine projects global monthly turnover of US$100 million ($146 million) for December.
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