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Duo sues ex-lawyer for $9 million in expected profits for failed medical marijuana project

Duo sues ex-lawyer for $9 million in expected profits for failed medical marijuana project

Source: Straits Times
Article Date: 10 Feb 2021
Author: Selina Lum

Mr Colin Chew, 44, and Mr Marcus Lim, 43, have sued former lawyer Then Feng, 39, who had approached them with the proposal, for misrepresentation and breach of contract.

Two Singaporean businessmen invested US$750,000 (S$996,000) in a proposed medical marijuana project in Las Vegas, but the plan went up in smoke and the facility was never built.

Now, Mr Colin Chew, 44, and Mr Marcus Lim, 43, are suing a former lawyer, Mr Then Feng, 39, who had approached them with the proposal, for misrepresentation and breach of contract.

They are seeking US$6.8 million in profits they said they would have made if the proposed facility had come to fruition, and assuming it operated for at least two years. They are also seeking the balance of US$141,120.30 of their investment; Mr Then has repaid the rest of the money.

The case opened in the High Court yesterday for a three-day hearing. The duo's lawyer, Mr Alfred Lim, said in his opening statement that in April 2014, Mr Then presented them with a proposal to set up a facility in Las Vegas in the US state of Nevada to grow and dispense marijuana, or cannabis, for medicinal use.

Mr Chew is a vice-president at a Nasdaq-listed communications equipment company while Mr Lim is an entrepreneur who used to work for a gambling company listed on the Australian Securities Exchange.

A British Virgin Islands company, Mary Jane Investments (MJI), was set up by Mr Then as the vehicle for the project. Mary Jane is slang for marijuana. At the time, Mr Then, a Singaporean, was a foreign-registered lawyer practising in the Singapore office of international law firm Walkers.

Mr Chew and Mr Lim alleged that Mr Then told them medical marijuana establishments are permitted in certain districts in Nevada. They said Mr Then told them that a 100,000 sq ft facility would be built and that the start-up cost was about US$1.48 million.

They also said he told them that the facility would be "highly profitable" as it was equipped to produce four harvests a year, amounting to a net profit of US$10 million a year.

The profit was to be paid to various investors based on their proportionate shareholding in MJI.

Mr Chew invested US$250,000 for 25 shares, while Mr Lim put in US$500,000 for 50 shares.

Between November 2014 and January 2016, the duo made four trips to Las Vegas and met Mr Then's business associate Edward Han. They did not see any construction work being done.

Mr Then, who is represented by Senior Counsel Siraj Omar, said Mr Han, a Nevada resident, had brought the project to his attention and asked for his help to get funding. The project involved 13 other investors, including himself, he said.

Mr Then said he provided background information on the industry in a PowerPoint presentation to investors, but this was not meant to reflect what the investment intended to achieve. He said the project encountered several significant difficulties.

Mr Then argued that a valid legal action for misrepresentation must involve a false statement of existing or past facts. But many misrepresentations alleged by the pair relate to future events and did not amount to "actionable misrepresentations", he said.

The pair also alleged that there was an agreement between them and Mr Then - that their money would be used to build the facility and yield the expected harvests. They claimed that there was a breach of contract because the facility never materialised.

Mr Then said these arguments are "legally and factually flawed" and there was no agreement.

Separately, Mr Then faces unrelated criminal charges for cheating and forgery, as well as two other civil suits that are pending.

Source: Straits Times © Singapore Press Holdings Ltd. Permission required for reproduction.

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