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SINGAPORE: For more than seven years, a global insider trading scheme allegedly involving two men from Singapore generated tens of millions of dollars in illicit profit, US prosecutors said.

Using auto-deleting messages, code words, encrypted channels and burner phones, they purportedly sent and received non-public information in advance of more than a dozen corporate announcements.

According to court documents, some of these trades involved huge mergers or acquisitions: AstraZeneca’s plans to acquire Alexion for US$39 billion and LVMH’s offer to buy jeweller Tiffany, among others.

This scheme was allegedly led by three people: Samy Khouadja, a former investment banker in France; Eamma Safi, who co-owned a French restaurant with Khouadja; and Singaporean Ge Zhi.

Ge was arrested in Singapore in July 2024 following an extradition request from the US, a few days after an arrest warrant was issued against him for offences allegedly committed in the US, according to the Singapore Police Force (SPF) on Thursday (Nov 20).

"As the matter is before the courts, we are unable to comment further," said SPF in response to Â鶹's queries.

Another man from Singapore, Dev Ananth Durai, is also among the eight charged by the US. He is considered a fugitive, said the US Justice Department.

Court documents also listed 12 other unnamed co-conspirators, including eight who lived in Singapore and one in Malaysia.

On whether Durai has also been arrested as well as other individuals facing charges in the US, SPF said they are not investigating anyone else in relation to the alleged international insider trading network. 

"SPF is pending more information from the US authorities to assess whether any offences might have been committed under our laws," they added.

"In the spirit of international cooperation, SPF will continue to render necessary assistance to the US authorities, within the ambit of our laws."

Â鶹 has also contacted the Monetary Authority of Singapore for more information.

SECRET CODES

Ge is accused of recruiting investment bankers and corporate insiders who had access to non-public information about mergers and acquisitions of publicly traded companies.

It is alleged that the three leaders paid these insiders for the information, traded on this information and recruited a network of traders. Durai is accused of being part of this network.

Court documents showed that Ge – who was known by other monikers including Josh Ge, Josh Gez and Jay Gat – was “welcomed to our world of business” by Khouadja and Safi in November 2016. 

They started using coded messages, using the terms “socks” and “shoes” to refer to SIM cards and burner phones, respectively. They also used “greens” to refer to money and “running” for insider trading. 

One conversation between Ge and Safi went like this: 

Safi: Hi bro. Just arrived home. 

Ge: All good. 

Safi: Did you get the shoes with the socks? 

Ge: Yeah. 1 shoe. I didn't get my greens tho hahahahhaah? But its all cool our friend and I have an understanding. 

Safi: Is that shoe good for running? Can you run against 5-8 guys with it? The greens you will pick up next time you come before the Trop (Trip). But we have a [clapping hands emoji] on that.

Ge: Ok. Yea can run.

In that same month, Ge began recruiting other traders to the scheme, including a co-conspirator who lived in Singapore. 

Calling it a “serious business opportunity” that was “pretty sensitive” with a “huge upside”, he said he would be willing to fly back to discuss it.

He offered this co-conspirator non-public information about the planned acquisition of Banvit SA, a Turkish poultry processing company, by BRF SA, a Brazilian firm. That deal was not announced until about two months later.

Ge also messaged Safi that he needed to change SIM cards in order to keep the scheme secret, saying his “socks” do not work in Milan and that he would be throwing away his current SIM card.

Safi told him to get his “shoes clean” and to get “the other socks”, saying that new socks and shoes are “a must”.

He apparently told Ge to onboard more people to “give them appetite for the game”, and that the “race is on the way”.

"LET THE UNCLES KNOW"

Court documents showed that Ge also told one co-conspirator in Singapore that his messages about an illicit trade were “too explicit”.

This co-conspirator, CC-5, said other potential traders were “observing” the Banvit information “as a test” and were interested.

According to the indictment, CC-5 wrote: “Btw ... those 2 uncles they didn't buy the chicken .... they are observing how's the chicken being cooked ..... they don't like Turkish dish ... they like US dishes ..... and they are getting used to London and US dishes that's why .... They are now seeing the chicken as a test dish .... Let them seeing how tasty of the dish that the chief can cook."

After the acquisition of Banvit was announced, Ge purportedly told CC-5 to “let the uncles know and we can proceed to the next one”. Ge also warned him not to “talk so freely on Fcebook (sic)”.

This scheme carried on for years, with Ge regularly using coded messages. He referred to prospective corporate merger partners as “girls” or “models” with a co-conspirator.

He also told other co-conspirators to use encrypted apps such as Telegram and Signal. In one message, Khouadja sent one of the accused a Telegram message that he set to “self-destruct” after one hour.

The network also used codes for companies that were in their sights, such as "Patricia" for Pinnacle Foods, "Kelly" for Kindred Healthcare and "Maria" for Medidata Solutions, a tech company.

The eight defendants also allegedly leaked the information to journalists and news outlets to profit from securities trades after the publication of the information. 

Many of the illegal trades took place on an automated exchange operated in Massachusetts, said US prosecutors.

The network soon grew to involve more co-conspirators. Of the eight charged, five were purportedly traders, including Durai.

It is alleged that these five traded on the basis of the non-public information in exchange for their agreement to kick back a percentage of the illicit profits to the leaders.

These were done through payments designed to conceal the nature of the proceeds, including cash transfers, third-party payments and the use of shell companies and sham loans and invoices. 

MONEY LAUNDERING

The network allegedly held the illicit profits in brokerage accounts, including those in the US, the court heard.

They purportedly withdrew the funds in cash and met with co-conspirators in person to pass on the proceeds.

They are also accused of transferring money to bank accounts controlled by the co-conspirators and using bank and brokerage accounts in other individuals’ names.

These illicit profits were also known as “meat” and “chedder”, while bank accounts were referred to as “fridge” and "warehouse".

According to the indictment, Ge also met a co-conspirator at a hotel in Singapore to take a portion of the illegal profits in cash.

The defendants are also accused of lying and misleading banks about the sources and reasons for cash withdrawals and wire transfers.

US prosecutors said the scheme ran from November 2016 to February 2024.

Besides Khouadja, Safi, Ge and Durai, the other four charged are: Christophe Dong, 41, of France; Julien Liu, 35, of France and Hong Kong; Patrick Chou, 38, of France and Hong Kong; and Cheuk Yue Lee, 43, of Hong Kong.

All eight defendants named in the indictment have been charged with two counts of conspiracy to commit securities fraud, two counts of securities fraud and one count of money laundering.

Ted E Docks, special agent in charge of the Federal Bureau of Investigation’s (FBI) Boston field office, said: “These eight men are accused of engaging in a global con – trading on material, non-public information stolen from companies to score millions of dollars for themselves.

“We believe everything these men did, including their alleged attempts to conceal their crimes, shows a wilful disregard for the law.”

Anyone convicted of conspiracy to commit securities fraud may be sentenced to up to 25 years in prison, five years of supervised release, and a fine of US$250,000 or twice the gross gain or loss, whichever is greater.

The penalties for the offence of securities fraud are up to 25 years in prison, five years of supervised release and a fine of US$5 million.

For money laundering, the penalties include up to 20 years in prison, three years of supervised release and a fine of US$500,000 or twice the value of the property involved, whichever is greater.

US attorney Leah B Foley said: “No matter how secret you think encrypted messaging is and no matter how many steps you take to conceal your illegal activities, if you sell inside information or trade on non-public information be warned, my office will use every tool at our disposal to track you down and one day, you will find yourself in federal custody.”