Hanoi Developer Scams $190M with Fake Projects and Ponzi Scheme

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Vu Thi Thuy, the chairwoman of Hanoi-based property developer Nhat Nam, is accused of defrauding investors out of VND5 trillion (US$190 million) by promoting non-existent housing projects and operating a Ponzi scheme, as reported by prosecutors.

Thuy, 42, has been charged with fraudulent appropriation of assets and money laundering. She founded Nhat Nam in 2019 and lured buyers with promises of high returns, including "168% or 192% ... within two years," depending on the scheme, according to the recent indictment.

Over the next two years, she expanded her operations by establishing four additional companies and opening 32 offices across the country. The company managed to collect VND9.1 trillion from more than 43,000 investors.

Of this amount, 45% was used to pay earlier investors, while VND5 trillion was allocated for various purposes. A small portion, VND204 billion, was used to purchase land lots in Hanoi and other regions. However, most of these lands were agricultural land not approved for commercial residential development. Despite this, the company advertised them as major urban projects to attract further investment.

Vu Thi Thuy, chairwoman of Nhat Nam. Photo courtesy of the company

Investigators discovered that Nhat Nam spent less on buying land than on operating costs such as fuel, advertising, and office rents. A significant portion of the funds, VND2.3 trillion, was directed toward sales commissions and employee bonuses. Additionally, Thuy used VND1.47 trillion for personal expenses.

She is also facing charges of money laundering after allegedly instructing her driver and husband to purchase properties and company shares in their names using the illicitly obtained funds. However, these individuals are not being charged with money laundering because they were unaware of the source of the money, according to prosecutors.

In addition to Thuy, ten other executives from Nhat Nam have also been charged with fraudulent appropriation of assets. This case highlights the scale of the alleged fraud and the complex network of financial manipulation involved. The investigation continues to uncover more details about how the company operated and the extent of its impact on investors.

The case serves as a cautionary tale about the risks of investing in real estate projects without thorough due diligence. It also underscores the importance of regulatory oversight to prevent similar schemes from occurring in the future. As the legal proceedings unfold, more information is expected to emerge regarding the full scope of the fraud and the measures that can be taken to protect investors moving forward.

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