KUALA LUMPUR: A Malaysian is suspected of masterminding an agarwood investment scam involving more than HK$14 million (RM7.2 million) that was uncovered by Hong Kong police on Wednesday.
The South China Morning Post reported that the man was among six people arrested in raids across Hong Kong. The other five suspects were Hong Kong residents.
The operation, codenamed "Shadow Net", was launched by the Hong Kong Police Commercial Crime Bureau after it received 21 reports from investors since September.
Commercial Crime Bureau Superintendent Allan Chu Ming-lun said most victims were aged between 52 and 82.
He said they had invested between HK$30,000 (RM15,565) and HK$1.9 million (RM985,800) in schemes offered by a Hong Kong-based company since 2017.
The company claimed to have offices in Malaysia, Singapore, New York and Hong Kong, as well as large agarwood plantations in Malaysia producing essential oils, tea and food.
"Key members of the syndicate took investors on visits to agarwood plantations in Malaysia to gain their confidence.
"The company also frequently organised investment seminars at its Hong Kong office, offering free tours and meals to encourage existing members to recruit new investors," he said as quoted by SCMP.
Investigations found that the company offered at least four investment schemes promising high returns.
Under one scheme, investors could buy an agarwood tree for HK$10,000 (RM5,194) in return for promised monthly payouts of HK$300 (RM156), equivalent to 36 per cent annually.
They were also promised a full refund after three years, while the monthly returns were recorded as reward points on the company's mobile application.
However, some investors began finding in 2024 that they could neither withdraw their returns nor recover their initial investments.
Chu said the company then used various excuses to delay payments and introduced new schemes to persuade investors to transfer their funds from earlier investments.
In 2025, it launched an intellectual property licensing scheme promising annual returns of up to 25 per cent. Investors unable to recover their money from earlier schemes eventually transferred their funds into the new investment.
Earlier this year, the company introduced a cryptocurrency called IBBB Coin, claiming its value would rise through the tokenisation of agarwood trees.
However, the cryptocurrency has since lost more than 99 per cent of its value, leaving buyers' holdings almost worthless, Chu said.
The company also offered an investment scheme involving automated car wash centres in mainland China, promising annual returns of 30 per cent.
During the operation, police searched the company's office and warehouse in Kwun Tong, as well as the homes of the suspects.
Lo said police seized about HK$540,000 in cash, 25 mobile phones, computers, investment contracts and products suspected to contain agarwood.
Police are examining the seized electronic devices and contacting other potential victims for further information.
On Oct 14, Hong Kong's Securities and Futures Commission placed the company on its alert list for suspicious investment products.
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