California Wow Allegedly Siphoned Bt1.6 Billion Overseas

[HerbalEd]

And just why is the money laundering agency investigating this and reporting it in the media? Hardly an uncommon fact that companies move capital around to suit their needs. Nothing illegal in that. Just goes to show the power of governments these days. Private banking records scrutinized and the findings splashed in the news. Sounds like something that would happen in the US.

I think the company went into bankruptcy/receivership owing a lot of money which is now not available to pay off their debtors.

I am aware of that, still the courts need to determine whether a crime was actually committed or whether it was simply poor management is the question. The media is hardly the place to make your case.

It's not that complicated. He deliberately ripped off customers and shareholders by shipping the huge profits out of the country and then faked being bankrupt. Sounds like a crime to me.

[HerbalEd]

The Thai police could redeem themselves to some extent by tracing where the money went, taking it back with a court order, and refunding it to the people who lost money. Oh sorry, just woke up from a dream..

Would be curious to find out what the ownership structure was. Had to be some heavy hitter Thai people involved, I suspect the news stories will not be naming them... :-)

The founder and main guy is an American.

[TallGuyJohninBKK]

Wonder how BKK Bank is doing in terms of getting any of their loaned funds back, and/or if they have any collateral that they can legally attach here in Thailand that's of any value from Calif. WOW?

Perhaps, just perhaps, one of the reasons the company couldn't repay its creditors was because they had shipped 1.6 billion baht out of the country in recent years...

Of course, they also could have been buying VERY expensive exercise equipment....

[rbrooks]

I just cannot see many Thais going for paying for a gym membership, bet most were farlang with the memberships trying to keep themselves fit for their teelak.

[Johpa]

Absolutely shocking. Who has ever heard of such scandals?!? just imagine, a membership club folding leaving its members with nothing and, gasp, a Thai corporation sending its profits offshore. Gobsmacked I am!

[khaowong1]

They put themselves under by their stupid offering of lifetime membership for 10,000 baht. Of course, they knew by then they were going under and were screwing people as much as they could before running off.

I believe this is called "A Ponzi Scheme"..Thai's like the word scheme, and it would appear the ponzi is what runs their current government.

[khaowong1]

The Thai police could redeem themselves to some extent by tracing where the money went, taking it back with a court order, and refunding it to the people who lost money. Oh sorry, just woke up from a dream..

Would be curious to find out what the ownership structure was. Had to be some heavy hitter Thai people involved, I suspect the news stories will not be naming them... :-)

The founder and main guy is an American.

Those crazy American's, what they going to dream up next? Some kind of rice pledging scheme? That's it..(shining light bulb over head) let's blame it on some American..

[Espinete]

Did The Nation already publish now sth. about WOW corruption, fraude etc.......? Where is the moral coaching from this Thai newspaper?

[jbrain]

How many lifetime memberships to get a luxury 900 million baht house on beach front near Phuket? And have a 100 million baht wedding in India and Thailand ? Just asking

WOW, that house is increasing fast in value. From 50 million to 900 million in just a few posts. Now I understand why it was called CaWOW.

[charmonman]

And just why is the money laundering agency investigating this and reporting it in the media? Hardly an uncommon fact that companies move capital around to suit their needs. Nothing illegal in that. Just goes to show the power of governments these days. Private banking records scrutinized and the findings splashed in the news. Sounds like something that would happen in the US.

So I guess you are against governments enforcing or even having laws that prevent private companies from defrauding customers and shareholders? That seems to be the issue here.

[tropo]

And just why is the money laundering agency investigating this and reporting it in the media? Hardly an uncommon fact that companies move capital around to suit their needs. Nothing illegal in that. Just goes to show the power of governments these days. Private banking records scrutinized and the findings splashed in the news. Sounds like something that would happen in the US.

So I guess you are against governments enforcing or even having laws that prevent private companies from defrauding customers and shareholders? That seems to be the issue here.

When the laws came into effect in the US and other countries the thieves had to look for other places to use these money making schemes. Thailand was an easy target.

Pattaya was an extremely easy target because due to the absence of decent gyms.

Edited June 8, 2013 by tropo

[lifeincnx]

The Thai police could redeem themselves to some extent by tracing where the money went, taking it back with a court order, and refunding it to the people who lost money. Oh sorry, just woke up from a dream..

Would be curious to find out what the ownership structure was. Had to be some heavy hitter Thai people involved, I suspect the news stories will not be naming them... :-)

The founder and main guy is an American.

Wrong - Eric Levine is Canadian.

[Restinpeace]

I'm not sure if Eric Levine is solely responsible for this scheme. It's "unusual" that Major would have the wherewithal and advanced knowledge to dump their shares in the company before everything went south. That's very fishy. Sounds like you had multiple people in positions to loot the company and distanced themselves liability wise when the time was right. Mr. Levine was probably in on it too but he most likely wasn't the sole perpetrator.

[Thai at Heart]

I'm not sure if Eric Levine is solely responsible for this scheme. It's "unusual" that Major would have the wherewithal and advanced knowledge to dump their shares in the company before everything went south. That's very fishy. Sounds like you had multiple people in positions to loot the company and distanced themselves liability wise when the time was right. Mr. Levine was probably in on it too but he most likely wasn't the sole perpetrator.

Huh? Why would it be unusual? You think the Thai majority owner if a company allows him to just empty money out of a company.

Now that would be a first in the history of Thailand. If this is a scam it would have been known to all from the beginning. Why wouldn't major as a shareholders not be chasing Mr, Levine all over the world for fraud?

[friskodude]

I don't know if this help, but here's a list of people involved with California Wow.

George Saab No Relationships Chief Operating Officer, Chief of Staff, Executive Vice President, Director and Member of Remuneration Committee -- 65 Simon Howard No Relationships Vice President of Sales and Director -- 54 Surasak Kongpanya No Relationships Country Fitness Manager and Director -- 36 Other Board Members on Board* Name (Connections) Board Relationships Type of Board Member Primary Company Age Chaisak Santimaneerat No Relationships -- -- 55 Howard Levine No Relationships -- -- 60 Narumol Sakritchanan No Relationships -- -- 34 Theerathorn Yoongthong

[GeorgeO]

Most probably this is common practice for many Thai business enterprises. Get your money out of the country boys and build up a nice retirement fund or 'something for a rainy day' just in case it all goes arse upwards.

Totally agree, and puts me in mind that old saying: "people who live in glass houses shouldn't throw stones".

Is there any company here that doesn't lie about its earnings in order to avoid paying the correct amount of tax, and then simply syphon the residue offshore somewhere?

If there is one, then let that company be the one to complain, not a puppet entity of a government currently trying to get its hands on 2 trillion, for god knows what purposes...!!

[Restinpeace]

I'm not sure if Eric Levine is solely responsible for this scheme. It's "unusual" that Major would have the wherewithal and advanced knowledge to dump their shares in the company before everything went south. That's very fishy. Sounds like you had multiple people in positions to loot the company and distanced themselves liability wise when the time was right. Mr. Levine was probably in on it too but he most likely wasn't the sole perpetrator.

Huh? Why would it be unusual? You think the Thai majority owner if a company allows him to just empty money out of a company.

Now that would be a first in the history of Thailand. If this is a scam it would have been known to all from the beginning. Why wouldn't major as a shareholders not be chasing Mr, Levine all over the world for fraud?

I don't think you understand what i'm saying. Major was probably in on it as well. If a company has enough insider knowledge to sell their shares high before things go south it indicates advanced knowledge of what was going on. They may have found it convenient to pump and dump their stock while conveniently sidestepping criminal liability which they know would be coming in the future. Now the focus is solely on the farang owners which is pretty convenient wouldn't you say?

I see two crimes here:

Outright wire fraud/accounting manipulation of the books.

Insider trading

The insider trading activity by the Thai shareholders will probably be overlooked.

Edited June 9, 2013 by Restinpeace

[Thai at Heart]

I'm not sure if Eric Levine is solely responsible for this scheme. It's "unusual" that Major would have the wherewithal and advanced knowledge to dump their shares in the company before everything went south. That's very fishy. Sounds like you had multiple people in positions to loot the company and distanced themselves liability wise when the time was right. Mr. Levine was probably in on it too but he most likely wasn't the sole perpetrator.

Huh? Why would it be unusual? You think the Thai majority owner if a company allows him to just empty money out of a company.

Now that would be a first in the history of Thailand. If this is a scam it would have been known to all from the beginning. Why wouldn't major as a shareholders not be chasing Mr, Levine all over the world for fraud?

I don't think you understand what i'm saying. Major was probably in on it as well. If a company has enough insider knowledge to sell their shares high before things go south it indicates advanced knowledge of what was going on. They may have found it convenient to pump and dump their stock while conveniently sidestepping criminal liability which they know would be coming in the future. Now the focus is solely on the farang owners which is pretty convenient wouldn't you say?

I see two crimes here:

Outright wire fraud/accounting manipulation of the books.

Insider trading

The insider trading activity by the Thai shareholders will probably be overlooked.

I would doubt very much that the Thais would let the foreigners have sole signatory rights on anything. If this much money was siphoned off illegally, the auditors should have seen it easily.

This will turn out to be franchise fees or something similar.

[Arkady]

Surprise, surprise. It turned out to be a Ponzi scheme and the Levine dirtbag was busily transferring the members' hard earned cash and the shareholders' savings overseas as fast as he could before the implosion he knew was coming as sure as God made little green apples. Now of course Levine can't be found and is enjoying the proceeds of his theft somewhere surrounded by hookers and other testosterone injected males like him. Meanwhile, the Thai idiots who aided and abetted his crime are left behind to face the music, as they deserve.

It was pretty obviously an unsustainable pyramid scheme from the beginning. What was amazing was that he sucked in the SET, the SEC and the MAJOR group. Now, like the Russian scamster behind the Eden garments group years ago, Adam Livoski (?), who failed to convince the SET and the SEC but scammed Siam Commercial Bank for over a billion baht, he makes it harder for other legitimate farang enterpreneurs to get bank financing and a SET listing.

Edited June 9, 2013 by Arkady

[Arkady]

I'm not sure if Eric Levine is solely responsible for this scheme. It's "unusual" that Major would have the wherewithal and advanced knowledge to dump their shares in the company before everything went south. That's very fishy. Sounds like you had multiple people in positions to loot the company and distanced themselves liability wise when the time was right. Mr. Levine was probably in on it too but he most likely wasn't the sole perpetrator.

I agree that MAJOR got some insight into what was going on, although I wouldn't go so far as to suggest they were accomplices from the beginning. However, in a less Micky Mouse jurisdiction where the SEC has real teeth, I would think some type of criminal prosecution against MAJOR or their representatives on WOW's board might be on the cards. Whoever they had on the board of WOW had a fiduciary responsibility to all shareholders, not just to MAJOR. It looks as if they might have learned about the business prospects through their board positions and used that information to save losses for their own shareholders, rather than draw attention to the problems and tried to fix them for the benefit of all shareholders. This could possibly be construed as selling based on material non-public information, a criminal offence for the sellers, while going along with any type of fraud would be a criminal offence for the individuals on the board, unless they could show evidence that they voted against bad board decisions, ensured their dissent was minuted and circulated memos to the board explaining their reasons for doing so.

[Arkady]

I would doubt very much that the Thais would let the foreigners have sole signatory rights on anything. If this much money was siphoned off illegally, the auditors should have seen it easily.

This will turn out to be franchise fees or something similar.

We will have to find out what the remittances were. Franchise fees probably account for a lot of it. In that case the board had a fiduciary responsibility to ensure that WOW was receiving adequate value for these fees, and, if not, renegotiate them, rather that watch the company driven to bankruptcy but still paying franchise fees that did nothing to help them a profitable business. Since these were clearly in essence related party transactions, Levine and anyone else involved in the overseas companies should have recused themselves from voting on such issues. I suspect that he would have concealed his personal interest in the company that received franchise fees to avoid this. Thais tend not to bother to look below the surface of offshore companies to look for conflicted interests. Loans and investment in offshore affiliates are another strong possibility with the same related party ramifications.

Levine at some point illegally owned some gin palace type resort property and obtained permanent residence in Thailand. He allegedly applied for Thai citizenship but got the bum's rush from the interview panel at the Interior Ministry for being hugely arrogant, thinking his money could buy him everything, despite not being able to speak a word of Thai. Naturally he sold the gin palace long before the balloon went up.

[Phronesis]

And just why is the money laundering agency investigating this and reporting it in the media? Hardly an uncommon fact that companies move capital around to suit their needs. Nothing illegal in that. Just goes to show the power of governments these days. Private banking records scrutinized and the findings splashed in the news. Sounds like something that would happen in the US.

Exactly...The presumption here is that the "mere fact" of transferring money out of Thailand is untoward...

[Thai at Heart]

And just why is the money laundering agency investigating this and reporting it in the media? Hardly an uncommon fact that companies move capital around to suit their needs. Nothing illegal in that. Just goes to show the power of governments these days. Private banking records scrutinized and the findings splashed in the news. Sounds like something that would happen in the US.

Exactly...The presumption here is that the "mere fact" of transferring money out of Thailand is untoward...

Exactly. It was a Thai company under thai law. How on earth could you just transfer 1.6bn from Thai bank accounts if the sec, auditors and banks didn't see the transfers as being legal?

It's not like you do it with travelers cheques.

[Straight8]

In my opinion CA WOW failed due to it being a very very badly run company and the activities that went on behind closed doors [money leaving the country etc].

As for those who think it was the "Lifetime Memberships", I totally disagree. The offer was only to good to be true for those who actually were committed and motivated to use it. I personally know 10 people who had a life time membership, and of those 10, guess how many used it at all let alone regularly? One, and that was about 5 times a month on average.

Statistically only a very small percentage of people who sign up for a fitness membership actually use it more than 3 times a week a given period of time, and eventually stop to go period.

I think the offer was a great move in the business sense, unfortunately they had bad people in charge and did nothing to expand & improve the business.

Edited June 9, 2013 by Straight8

[MaxLee]

A membership of 1million baht (<-xxxxxxx-egarated with dignity) just for keeping your body for and healthy...

,... just go to Lumpini Park, and run your a$$$$$ off... for (almost) free.

This fitness business is all overrated crap...

[MarkCyr]

I was a member down in Pattaya before they went teats-up; not a lifetime member, thank god. I hated it. The gym equipment was fine, but it was a constant hardsell from the front staff to the "personal trainers." Felt like a scam of sorts. Wooops! Turns out it was!

[bangkokstick]

I remind some retarded here trying to explain that the CEO Levine had done nothing wrong and had no reason to escape...

Keep teaching me life guys, you are always right !

[harrycallahan]

Silly me, there I was thinking their revenue would eventually stop because existing lifetime members don't renew.

See it's Thailand - the lifetime membership is only for this lifetime.

(they always get you with the fine print)

[yoshiwara]

In my opinion CA WOW failed due to it being a very very badly run company and the activities that went on behind closed doors [money leaving the country etc].

As for those who think it was the "Lifetime Memberships", I totally disagree. The offer was only to good to be true for those who actually were committed and motivated to use it. I personally know 10 people who had a life time membership, and of those 10, guess how many used it at all let alone regularly? One, and that was about 5 times a month on average.

Statistically only a very small percentage of people who sign up for a fitness membership actually use it more than 3 times a week a given period of time, and eventually stop to go period.

I think the offer was a great move in the business sense, unfortunately they had bad people in charge and did nothing to expand & improve the business.

You are mistaken. The great deal for members was a very attractive come on, the sole purpose of which was to get new members. While new members were being signed up the lifetime members could enjoy their good luck of apparent lifetime membership for free after the initial signup apart from peppercorn annual renewal. Existing members were totally reliant on new members coming in the door. An absolutely pure play ponzi scheme from the start and cash siphoned off while the going was good a part of the plan. The fact that members of gym clubs sign up and then don't attend a helpful part of the strategy, but attending or not attending dead meat all the same.

[Straight8]

In my opinion CA WOW failed due to it being a very very badly run company and the activities that went on behind closed doors [money leaving the country etc].

As for those who think it was the "Lifetime Memberships", I totally disagree. The offer was only to good to be true for those who actually were committed and motivated to use it. I personally know 10 people who had a life time membership, and of those 10, guess how many used it at all let alone regularly? One, and that was about 5 times a month on average.

Statistically only a very small percentage of people who sign up for a fitness membership actually use it more than 3 times a week a given period of time, and eventually stop to go period.

I think the offer was a great move in the business sense, unfortunately they had bad people in charge and did nothing to expand & improve the business.

You are mistaken. The great deal for members was a very attractive come on, the sole purpose of which was to get new members. While new members were being signed up the lifetime members could enjoy their good luck of apparent lifetime membership for free after the initial signup apart from peppercorn annual renewal. Existing members were totally reliant on new members coming in the door. An absolutely pure play ponzi scheme from the start and cash siphoned off while the going was good a part of the plan. The fact that members of gym clubs sign up and then don't attend a helpful part of the strategy, but attending or not attending dead meat all the same.

I think you are mistaken, I think you are only think in the "ponzi scheme" sense here only because the business went under and is now after the fact, but then again you would have concluded this the moment "lifetime membership" was offer right. All experts after the fact.

This was a seriously badly run business, both from within and on the floor, and the big boys up top were milking the company dry [ie. moving money out of the country, in my opinion for reasons other than what they were meant to be, draw your own conclusions], but again, in my opinion, the lifetime membership offer in the Fitness world is a good one if implemented correctly due to the reason I gave above.

If you have never had a membership or attend gym sessions or classes, then you would not be able to comprehend this.

As for a "ponzi" scheme, this or other type of shenanigans were always going to be on the cards. It was a case of get as much money in as fast as possible and get it out just as quick.

Edited June 10, 2013 by Straight8