By CHRISTIAN GYSIN FOR THE DAILY MAIL

James Matthews’ firm admits losing thousands after backers were shut down while also facing lawsuit in the US
Eden Rock Capital Management was launched in 2001 by James Matthews
Hedge fund manager is newly engaged to Pippa Middleton, Kate’s sister
Mayfair-based business has been linked to a string of financial scandals

The Mayfair-based hedge fund run by Pippa Middleton’s fiance has been linked to a string of financial scandals, it has emerged.
Eden Rock Capital Management was launched in 2001 by James Matthews – who is newly engaged to the Duchess of Cambridge’s sister – with Edward Horner and Santo Volpe.
Mr Horner admitted more than ten years ago that one of the greatest risks associated with hedge fund investing was simple ‘fraud’.
And through its links with some big money schemes, the business has not always been entirely successful in avoiding such pitfalls.
Last year the firm admitted losing tens of thousands of pounds after its Cayman Islands bankers were shut down by the US government. And six years ago, Eden Rock found itself named as a defendant in a lawsuit brought against Gary Marks. The Hawaii-based rock singer had become a fund manager, and was accused of investing in the £49billion Ponzi scheme run by convicted fraudster Bernie Madoff.
US court documents showed that the Eden Rock Finance Fund had close links to a firm called Sky Bell Investment Management run by Marks – who was accused of misrepresentations in recommending his hedge funds and paid more than £300,000 in penalties.

While neither Mr Matthews nor Eden Rock had been accused of any wrongdoing, there was said to be embarrassment to have been linked to Marks in any way.
There were further problems for the firm in its recent accounts, which showed it had been a customer of a Cayman Islands bank accused by the US authorities of running an illegal ‘pump and dump’ share scheme.
The Caledonian Bank was forced into liquidation in February 2015 over the scandal. In a so-called ‘pump and dump’, the value of stock is exaggerated to increase the initial share price, for example by issuing false press releases.
The shares are then ‘dumped’ on the public at inflated prices – before it is discovered that the company is not worth what was stated.
The share price subsequently collapses as investors realise they have no chance of big profits. When Caledonian Bank closed last year, Solid Rock Management – which is owned by Eden Rock – had almost £800,000 on deposit with the lender. Around a tenth of that figure was not recoverable.
In 2014, Eden Rock Management LLP – which remains its largest British company – made a profit of £1,581,257 but paid just £3,143 in tax at a rate of 0.2 per cent. The previous year it paid £11,684 tax on £1,539,259 of profit, or 0.75 per cent.
Such clever accounting is not illegal, and has been lucrative for vastly wealthy Mr Matthews, 40.
Two years ago, he paid £17million for a four-storey, five-bedroom home in Chelsea with its own lift.
Accounts show the highest earning member of the Eden Rock partnership – likely to be Mr Matthews – took home a £559,310 slice of the profits last year.
Eden Rock is named after a hotel on the island of St Barths in the West Indies that Mr Matthews’ father David restored. The firm operates a network of overseas offices, and interested investors need a password simply to visit its website. The Times reported that it was looking after £1.1billion worth of investments by 2007.
The company did not respond to requests for comment.

IMAGES:
Eden Rock Capital Management was launched in 2001 by James Matthews (pictured)– who is newly engaged to the Duchess of Cambridge’s sister, Pippa (pictured) – with Edward Horner and Santo Volpe
Vast wealth: James Matthews, pictured with Pippa at Wimbledon, owns a £17million home in Chelsea
Screenshot Pippa Middleton attends BHF event

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