CWMFX’s parent group linked to massive offshore Ponzi scheme, researcher says

From Finance Magnates

According to Offshore Alert, CWM World is linked to a $16 billion Ponzi scheme run by the Mauritius-based Belvedere Management Limited, as sources close to the firm have dismissed the report as inaccurate.

Offshore Alert, an investigative research publication, is claiming that CWM Group is part of a massive $16 billion Ponzi scheme, orchestrated by the Mauritius-regulated Belvedere Management Limited.

Belvedere Management Limited is licensed by the Mauritius Financial Services Commission, and operates mainly in Mauritius, Guernsey, Cayman & South Africa. The group is run by Irishman David Dawson Cosgrove, South African fund manager Cobus Kellermann, and 42-year-old Mauritian accountant Kenneth Maillard.

It claims to have $16 billion of assets under administration, management and advisory, including 125 hedge funds and dozens of other companies involved in fund administration, securities broking, life insurance and investment management.

According to the report, there have been numerous signs of Belvedere not being able to pay back investor claims as the company is on the brink of collapsing. In particular the report cites:

False Net Asset Values that deceive investors into believing their money is growing; Investors unable to make redemptions; Misappropriation of millions of dollars by insiders via a web of offshore companies; Related-party transactions that are used to strip out cash and artificially inflate assets; Conflicts of interest enabling insiders to conceal illegal activity; Material omissions and false statements in offering documents and marketing materials.

Several fraudulent operations, the Offshore Alert exposé continues, are linked to the group. One of them is a $130 million Cayman Islands Ponzi scheme, under the umbrella of Brighton SPC. The fund is purportedly linked to CWM World, under one of its many subsidiaries, CWM Securities.

The report also goes further to suggest that the City of London police are investigating a £100 million-plus Ponzi scheme connected to CWM World- parent group of the CySEC regulated CWM FX.

Update: a spokesperson for the company has officially responded to the allegations by Offshore Alert by issuing a statement to Forex Magnates.

Escalating Story?
heron tower cwmfxEarlier this month, the retail forex broker was linked by several reports with the police raid at the offices of a financial services firm. The police have made no comment about the investigation ever since it was published, but CWM FX, a tenant at the Heron Tower, was reported to be involved in the case.

Craig Droste, the firm’s managing director, told Forex Magnates at the time that “business is as usual” at the company, a message reiterated by him on a tweet shortly afterwards. However, the tweet was quickly removed and a lawyer representing the broker stated that the “offices were not raided by the police, and there is no investigation into CWM FX.”

While this might be the case, the statement does not deny a possibility that the raid is related to another brand of CWM, as several sources have suggested.

One way or another, the news about Leverate suspending its service to CWMFX came out to confirm that the “business as usual” statement has not been particularly accurate. In the aftermath of a sponsorship deal with one of the most prominent soccer teams in the U.K., Chelsea F.C., the broker has suspended its services due to Leverate pulling out.

Sources close to CWMFX, shared with Forex Magnates that the Offshore Alert report is a “very wild speculation full of allegations which are strongly denied and the connections which have been made in the material published by the online media have been plain wrong.”

According to information obtained by Forex Magnates, after the police raid couple of weeks ago, it was indeed “business as usual” for the company, until Leverate terminated its relationship with CWMFX a week or so after that.

Customers of the brokerage have been informed to take their funds out and have been given a deadline to do so as the U.K. Financial Conduct Authority (FCA) told CWMFX the firm can’t have a website soliciting people to trade. According to sources, CWMFX is actively looking for a new partner to provide its trading services.

Immediate Responses
As a response to the report by Offshore Alert, the Financial Services Commission of Mauritius stated that it has taken action against two companies which are under the administration of Belvedere Management Limited – Lancelot Global PCC and The Four Elements PCC.

Both companies were prohibited from accepting new business, as the regulator informed the public that an investigation was still on its way and that further clarification was to be expected down the line.

CNBC Africa has reported that MMI Holdings, a South African-based financial services group listed on the South African stock exchange, has cut ties with Clarus Asset Managers, an asset management firm which is run by Kellerman, one of people behind Belvedere Management Limited.

According to the report, Clarus has been managing the company’s investors eight South African unit trusts, worth around $115 million. In light of the exposé, MMI has since distanced itself from Clarus and Kellermann.

Offshore Alert is a subscription-based newsletter specializing in tax evasion and frauds in tax havens such as Mauritius. Its is run by David Marchant, who published this report as well. Now it remains to be seen what repercussions his report on Belvedere Management Limited will have for CWM group, and in particular for its FX brand, which is lately in the public’s eye for all the wrong reasons.

IMAGE: Generic_Forex cwmfx_square_logo

For more on this story go to: http://www.financemagnates.com/forex/analysis/cwmfxs-parent-group-linked-to-massive-offshore-ponzi-scheme-researcher-says/

Related stories:

Belvedere Management group

From Wilkipedia

Belvedere Management group is a large financial services group based in Mauritius that claims to have $16 billion of assets under administration. In March 2015, Offshore Alert accused the group of being a Ponzi scheme and it is currently under investigation by regulators in South Africa, Mauritius and Guernsey. The allegations are unproven.

ActivitiesEdit

Belvedere reportedly runs 125 hedge funds and has interests in fund administration, life insurance, stock broking, and investment management. It operates mainly from a number of offshore financial centre that include Mauritius, Guernsey, the Cayman Islands and South Africa, and claims to have $16 billion of assets under administration. The group is run by Irishman, David Cosgrove, Mauritian accountant Kenneth Maillard, and South African fund manager Cobus Kellermann.

Fund suspensionsEdit

In October 2014, The Mauritius Financial Services Commission placed two funds run by Belvedere as protected cell companies, Lancelot Global PCC and The Four Elements PCC, in administration meaning that they are prohibited from accepting new business. Among the companies affected by the suspension of the Four Elements fund has been Apollo Multi-Asset Management in the United Kingdom who have written to their investors to advise them that they are unable to withdraw money from its Mauritius domiciled £5.81 million Four Elements Apollo fund. The administration is being managed by PricewaterhouseCoopers.

Offshore Alert allegations

In March 2015 Offshore Alert accused the group of being a giant Ponzi scheme and it is currently under investigation by regulators in South Africa, Mauritius and Guernsey.

Group entities

Some of the entities in the group are:
GuernseyEdit
Lancelot Management Limited – A Guernsey regulated collective investment scheme manager.
JerseyEdit
Belvedere Management and Investment Limited
MauritiusEdit
Belvedere Fund Manager Limited – Fund manager to the Theseus Property Fund Limited.
Belvedere Life Limited, PCC – A life insurance company.
Belvedere Management Limited (licensed by the Mauritius Financial Services Commission)
E-portfolio Solutions Limited – Electronic trading of mutual funds and shares.
Generation Life Limited – A life insurance company.
RDL Management Limited – A collective investment manager.
Teleraka Investments Limited – An investment advisor to cells of the Universal Mutual Fund, a Guernsey regulated ICC.
Theseus Property Fund Limited – A property fund which invests in Mauritius real estate.
SOURCE: http://en.m.wikipedia.org/wiki/Belvedere_Management_group

EXPOSED: Belvedere Management’s massive criminal enterprise

By David Marchant

HIGHLIGHTS
$130 million Cayman Ponzi scheme under Brighton SPC umbrella fund
City of London police investigating £100 m-plus Ponzi scheme by ‘CWM’
Both schemes part of rampant fraud by Belvedere Management Group
Group headed by David Cosgrove, Cobus Kellermann and Kenneth Maillard
Belvedere operates in many countries, particularly Mauritius, Guernsey, Cayman & South Africa
Offshore fund group Belvedere Management, which claims to have $16 billion of assets under administration, management and advisory, appears to be one of the biggest criminal financial enterprises in history, headed by David Cosgrove, Cobus Kellermann and Kenneth Maillard, OffshoreAlert can reveal.
For more on this story go to: http://www.offshorealert.com/david-cosgrove-cobus-kellermann-kenneth-maillard-belvedere-management-fraud.aspx

Belvedere Management Scandal : Mauritius trapped in a Rs 580 billion mega Ponzi Scheme

By News On Sunday From LeDefimediaGroup

The Belvedere Scandal could be one of the biggest financial criminal enterprises in history. This is the assumption of Offshore Alert which has revealed this scandal involving Mauritius on 18th March. The sum of around USD 16 billion (Rs 580 billion) involve several jurisdictions, including Guernsey, British Virgin Islands, Cayman Islands, Gibraltar, Switzerland, Seychelles, South Africa, Panama, England and Mauritius.

According to Offshore Alert, it appears that Belvedere is ignoring the Mauritius FSC’s freeze on Belvedere Management Ltd. Offshore Alert reports that an undercover journalist called one of the funds and was sent a new investor application. Worse, a company representative offered to help the caller circumvent the restrictions. How did Belvedere Management react to Mauritius’ investigation? It appears that at least some of their funds simply packed their bags and moved to the Cayman Islands. Instead of disclosing that they were forbidden to take on new investors, one of the sub funds, Kijani Commodity Fund, bragged about the move and said it was moving because of a better regulatory environment.

OffshoreAlert indicates that evidence has been uncovered showing the Belvedere Management Group has also been involved in a US$130m Ponzi scheme in Cayman. It adds that the City of London Police are investigating a Ponzi scheme operated by the company in the UK involving over £100m.

According to BizNews.com, when OffshoreAlert broke its story alleging a South African was at the centre of the Belvedere scandal, potentially the Southern Hemisphere’s biggest ever Ponzi scheme, it was mostly ignored. Capetonian, Cobus Kellermann seemed to shrug it off. His Mauritius-based partner David Cosgrove, Irish by birth but domiciled in South Africa for most of his life, responded by issuing a letter to Belvedere clients calling the report “sensationalist and unfounded.” Cosgrove’s letter says: “We take these allegations very seriously and are in the process of communicating directly with the publication. In the interim, and in the interests of transparency, we debunk the core of the allegations in the table below.” The table he refers to contains a list of denials that only the naive would swallow.

BizNews.com recalls that the now exposed Belvedere Ponzi kingpin David Cosgrove is no stranger to the South African financial authorities. Just over a decade back, he single handedly collapsed JSE-listed financial services company mCubed after the Reserve Bank and SARS discovered he was helping clients to illegally ship money offshore. When the scheme was discovered, the authorities levelled a R140m fine on mCubed, which in effect killed the business, a piece of which was later picked up by the equally corrupted Fidentia.

According to TaxPro Info, Belvedere Management, which is based in Mauritius, operates approximately 125 hedge funds and dozens of other businesses including wealth management and securities broker dealers. This company is run by Irishman David Cosgrove, South African fund manager Cobus Kellermann, and Mauritian accountant Kenneth Maillard. TaxPro Info believes that investors that purchased directly through Belvedere Management may have to wait years to get back any losses. Those that purchased Belvedere related assets through stockbrokers might be able to recover from the brokerage firm directly. “If Belvedere Management is a Ponzi scheme, we suspect that Belvedere was only too happy to allow stockbrokers and others to sell their products’, writes TaxPro Info.

Ponzi in Parliament
The Private Notice Question of the Leader of the Opposition of this week was focused on allegations against the Mauritius-based Belvedère Management Ltd of an International Giant Ponzi Scheme scam and whether it was linked to the London based Capital World Markets where several persons were arrested by the London Police; to which Minister Badhain answered that ‘there are no confirmed links between Belvedère Management Ltd and the London-based Capital World Markets.

Since October 2012 the Financial Services Commission has conducted three on-site inspections on Belvedère Management Ltd in accordance with Section 43 of the Financial Services Act. These inspections were in respect of the management company business, fund administration business, and to assess whether Belvedère is complying with the provisions of the relevant legislations, regulations and rules of the FSC.

After each inspection, the FSC issued inspection reports to Belvedère making recommendations for remedial actions in respect of several deficiencies, namely, non-compliance with Section 24 of the Financial Services Act 2007 (Appointment of officers without the prior approval of FSC), the FSC AML/CFT Code, including incomplete Customer Due Diligence (CDD) documents on the beneficial owners of its client companies and also failure to conduct verifications on the source of funds. With regard to the sums allegedly involved, ‘around USD 16 billion are involved in several jurisdictions, including Guernsey, British Virgin Islands, Cayman Islands, Gibraltar, Switzerland, Seychelles, South Africa, Panama, England and Mauritius.

The CWM is not licenced by the FSC and the FSC has sought information from the UK Financial Conduct Authority on 20 March 2015 on Capital World Markets. The FSC issued a reminder to FCA UK on 30 March 2015 and a reply is still awaited. Roshi Bhadain further informed that the ICAC was also investigating into the matter. On 19 March 2015, ICAC requested the Mauritius Police Force to lodge an arrest on departure against the directors of Belvedère Management Ltd, namely David Dawson Cosgrove, Jean Georgy Kenneth Maillard and Laval Low How Hung. Unfortunately, Cosgrove, who is a non-resident director, left Mauritius in the early morning of 20 March 2015 by flight no. MK 851 to Johannesburg prior to the Immigration Authorities being able to act.

Roshi Bhadain further informed that the ICAC’s investigation has progressed to the stage of further enquiry and that two main directors of Belvedère have since last week been convened for investigation in relation to the enquiry and their lawyers have confirmed that they will attend ICAC on Thursday 30 April 2015.

South African connection
Cobus Kellermann, Stellenbosch University graduate now in his late 30s who runs Cape-based money manager Clarus Capital, has been fingered as a mastermind behind a massive global Ponzi scheme run out of Mauritius. Kellermann’s company also manages eight South African unit trusts under the Met Collective Investments banner. They have been entrusted with R1.35bn in savings from unit trust investors.

Offshore Alert, a US-based company which specialises in uncovering fraud in offshore financial centres, describes Kellermann’s Belvedere Management as “a massive criminal enterprise”. Belvedere, which controls assets worth an eye-popping R200bn ($16.5bn) is jointly owned by Kellermann and his Irish business partner David Cosgrove.

Given his domicile and standing in the financial services community, it is feared that South Africans who trusted Kellermann with their money stand to lose billions of rand invested offshore. The size of Belvedere’s alleged Ponzi scheme dwarves anything to have hit South Africans before. It is ten times the scale of the well publicised Barry Tannenbaum scam.

In October, Kellermann’s business was instructed by the Mauritian Financial Services Commission (FSC) to stop accepting deposits. A public notice issued by the FSC last week in response to the OffshoreAlerts article reminded stakeholders of an investigation conducted at Belvedere’s offices “and in accordance with its functions to protect consumers of financial services, the FSC Mauritius has initiated enforcement actions against the company.” Kellermann’s Mauritian company is also under investigation by the UK authorities.

Two of Belvedere’s major operating businesses, Lancelot Global and The Four Elements, were licenced to accept investments by the Financial Services Commission of Mauritius in 2009 and 2008 respectively. Both have close connections to South Africa – Lancelot is the investment manager of the Armstrong Global Diversified Fund into which 95% of the assets of the local MET CI Global Diversified Feeder Fund have been invested. The Four Elements is the controlling shareholder of JSE-listed investment firm BK One. According to OffshoreAlert, evidence has been uncovered showing the Belvedere Management Group has also been involved in a US$130m Ponzi scheme in Cayman.

It adds that the City of London Police are investigating a Ponzi scheme operated by the company in the UK involving over £100m. It reports that investors have been duped by tweaked net asset values illustrating fictitious capital growth. This is common practice among fraudsters. Among the best known local examples was the Jack Milne/Tigon scheme operated in South Africa a decade back.

For more on this story go to: http://www.defimedia.info/news-sunday/nos-news/item/72054-belvedere-management-scandal-mauritius-trapped-in-a-rs-580-billion-mega-ponzi-scheme.html

Belvedere Management and its $16Bn: Now looking more like a huge collapsing scam

By Richard Smith from Naked Capitalism

Back in March, Offshore Alert made some very aggressive but plausible-looking claims:

Offshore fund group Belvedere Management, which claims to have $16 billion of assets under administration, management and advisory, appears to be one of the biggest criminal financial enterprises in history, headed by David Cosgrove, Cobus Kellermann and Kenneth Maillard, OffshoreAlert can reveal.

$130 million Cayman Ponzi scheme under Brighton SPC umbrella fund

City of London police investigating £100 m-plus Ponzi scheme by ‘CWM’

Both schemes part of rampant fraud by Belvedere Management Group

Group headed by David Cosgrove, Cobus Kellermann and Kenneth Maillard

Belvedere operates in many countries, particularly Mauritius, Guernsey, Cayman & South Africa

In early April, we wrote up the madly impudent CWM scam here, filled in as much as we could of the Belvedere back story here, and sat back to await developments. On the 18th, the story flickered briefly in The Economist:

IT IS not certain if or to what extent investors have been bilked, or who has done the bilking. Indeed, it is hard to establish very much at all, given the complexity of the case: authorities in the Cayman Islands, Guernsey and Mauritius are all looking into it and a South African financial regulator is following it closely.

Since then, there has been just one piece of relatively good news for Belvedere and CWM investors: CWM seems to have been downgraded from a £100Mn scam to a £20Mn scam.

All the rest of the news is bad. First up, there’s an affidavit from the Guernsey FSC (the financial services regulator), dated 22nd April 2014, applying to the Guernsey courts for administrators to be appointed to five Belvedere funds, on the grounds of investor protection. Its conclusions, which could have done with a spot of proofreading, are on p25:

a. There appears to be systemic failings in corporate governance and the application of law, regulation, code and principle to the management and function of GMF and the Managed Funds by Lancelot and the respective boards. This is evidenced by the matters relating to the failures relating to the management of the conflicts of interest.

b. Significant and systemic conflicts of interest exist in relation to certain cells of the GMF and their underlying assets. These conflicts of interest do not appear to have been dealt with appropriately by Lancelot. The failure to manage the conflicts of interest appropriately appears to have given rise to circumstances which have negatively impacted the value of the assets of certain cells of GMF. Such reduction in the value of the assets of certain cells has led to issues relating to the liquidity of these cells.

c. Mr Cosgrove sits on the boards of Lancelot and the Funds, the he is very much the controlling mind of these investment schemes. Mr Cosgrove in his actions does not appeared to have displayed all of the attributes required of a director of a licensee to be fit and proper and has not even responded to the Commission’s letter relating to proposed dates for an interview. Further the Commissions concern that this conduct has or may extend to the Managed Funds.

d. The remaining board members of Lancelot and GMF have failed to recognise the issues that brought about the suspension of the Strategic Cells.

e. In addition, the significant nature of the investigations by MFSC, which includes investigation into the financial position of funds into which GMF and the Managed Funds have been invested, gives rise to further concerns that Four Elements and other funds, may not be correctly valued. This gives further rise to concerns that the value of the underlying assets of cells of the Funds may not be correctly reflected. Further to this, the commonality of persons between Lancelot, the GMF and the Managed Funds and the entities under investigation by the MFSC show the significant conflict of interests which exist in respect Lancelot, the GMF and the underlying assets and investments. This conflict extends to a number of other Managed Funds which have advisers with similar ownerships or investments into Four Elements and Two Seasons.

f. The serious nature of the issues set out above and the known impact which these have had on certain cells of GMF has led the Commission to the view that there is a high risk that the behaviour which has caused this, including the failure to manage conflicts of interest, also affects the Managed Funds. Due to the risk of contagion, there is a risk that the value of the underlying assets of such funds are not accurately known and that the net asset value attributed to the various cells is incorrect.

Accordingly, the Commission has concerns that the value for redemptions of shares in cells of GFM as well as shares in other Managed Funds are being made, and the value at which shares in the cells of GMF and other Managed Funds are being issued, may not reflect the actual net asset value of such cells or funds (as relevant).

g. Further, due to the conflicts of interest relating to Lancelot, GMF and their advisors, and a failure to manage and mitigate these conflicts appropriately, the unacceptable standard of corporate governance and questions over suitability and integrity pertaining to certain key individuals in the management and operation of the funds, the Commission feels that it is necessary to take such steps to as necessary to:

i. prevent further devaluation of the funds and assets therein; and

ii. to protect investor and their assets.

h. Further, Lancelot’s apparent failure to deal with the conflicts of interest appropriately in relation to GMF and its advisers has led the Commission to the view that there is a high risk that the behaviour which has caused this also affects other Managed Funds. This concern is particularly acute where funds and their advisers have persons in common.

In short: to the Guernsey regulator, Belvedere looks crooked.

Here’s another telling observation: Kellerman and Cosgrove don’t seem to be trying very hard to get the toothpaste back in the tube. Asked by the Guernsey FSC to provide dates at which they could attend the Commission and assist investigations, neither responded. Accordingly, the Guernsey FSC has now set its own date for their appearances. I wonder if they will show up.

There are other highlights: the Commission delves into the lurid and tangled BK One/Basileus murder/ suicide/ Ponzi story (affidavit, pp 12ff) and discovers Kellerman, at the helm of Global Mutual Fund PCC Limited (“GMF”), driving a coach and horses though the corporate governance mechanisms supposedly upheld by GMF’s Designated Manager Lumiere Fund Services, by GMF’s Principal Manager Lancelot Management Limited (which just happens to have David Cosgrove on its board) and by GMF’s oblivious Custodian, Deutsche Bank.

Accordingly, Lumiere, Lancelot and Deutsche all cop it in the affidavit too (pp. 15 and 23).

Making that part of the picture murkier, it turns out that there’s some information that Lumiere suddenly don’t want you to see any more. They recently freaked out and removed from their website a whole bunch of PDFs about the dubious Belvedere funds they were formerly in charge of, here.

There’s more Ombre than Lumiere there, then. Fear not, dear reader: in mid April, sensing that such a sanitisation of the record might be imminent, we downloaded a good sample of the now-vanished PDFs. Inter alia, they document a number of board-level associations between the nearly-disgraced Kellerman and Cosgrove, and the top man at Lumiere, Paul Everitt. With transparency in mind, it seems only right to put some of those hyperlinks back up again, here at Naked Capitalism.

For more on this story go to: http://www.nakedcapitalism.com/2015/05/belvedere-management-and-its-16bn-now-looking-more-like-a-huge-collapsing-scam.html

See also iNews Cayman story with links published March 23 2015 “Capetonian Kellermann accused as kingpin of R200bn Belvedere Ponzi [Cayman Islands named]” at: http://www.ieyenews.com/wordpress/capetonian-kellermann-accused-as-kingpin-of-r200bn-belvedere-ponzi-cayman-islands-named/