The defunct fitness company California WOW Plc cheated its customers and shareholders by reporting losses while transferring 1.7 billion baht out of the country over 10 years, officials say.
The Anti-Money Laundering Office (Amlo) made the revelation on Friday, saying it believed as many as 10 people were involved in siphoning money out of the business.
The fitness company is now going through bankruptcy reorganisation. More than 1,000 customers have been affected by the closures of its main branches at Ratchayothin, Silom, Sukhumvit 23 and Chaeng Watthana.
The company is currently suspended from trading on the Stock Exchange of Thailand. Its financial troubles date back to 2010 when it defaulted on a debt of 58 million owed to TMB Bank. It was also sued in August last year by Bangkok Bank for unpaid debts of 76 million baht.
California WOW last year proposed to the Central Bankruptcy Court a plan to develop smaller clubs requiring less capital investment which would serve members more effectively and help revive the business.
Even when it was at its peak, however, California WOW drew fire from consumer advocates for its aggressive recruitment and sales tactics, in which staff tried to lock members into long-term contracts and constantly "upsold" them on new programmes.
Investigations of the company's financial transactions showed a pattern of cheating in violation of the Anti-Money Laundering Act, according to Amlo secretary-general Seehanat Prayoonrat.
The Amlo examined the transactions between 2002 and 2013 and found regular transmission of money out of the country with a total value of 1.699 billion baht, he said.
"Since its listing on the Stock Exchange of Thailand in 2005, the company reported a profit only one year, and later reported only losses," he said.
Amlo found that the company transferred 495 million baht out of Thailand in 2010. The highest transactions occurred between 2009 and 2011.
Pol Col Seehanat said Almo found around 10 people involved in the case.
"The pattern of large amounts of money transfers out of the country while the company always reported losses shows that the company's executives had the intention to cheat customers since the beginning of its business operation," he said.
Amlo already knows the destinations of the money so it will cooperate with authorities in those jurisdictions to trace back the money, he said.
The office also found that the same group of people had set up similar companies in the Philippines and other countries.
Californai WOW was founded by Canadian entrepreneur Eric Levine and Waraluck Vanichkul.
Major Cineplex Group Plc was also a large investor in the company but pulled out when it began to sense financial troubles and losses.
Mr Levine owned a 5,900-square-metre luxury villa in Phuket, which was sold last year for US$24 million, according to local reports.
Eric Levine discusses his business plan in 2004. (Bangkok Post file photo)