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Unravelling financial scams is a bit like building a jigsaw puzzle. In the beginning you work hard to find the outline. Only in time do more pieces find their place. A small part that might originally seem to fit often doesn’t. On other occasions you realise that same piece is indeed part of that section, but just not exactly what your thought.
As I started unpacking the South African connection of the massive Belvedere Ponzi scandal exposed by OffshoreAlert’s David Marchant, among the early conclusions was that the high-pressure sales company deVere was an integral part of the scam. Former deVere employees contacted me to talk about the connection between its founder Nigel Green and Cobus Kellermann.
The Capetonian ran a Swiss fund called United Asset Management, or UAM – easily and often deliberately confused with the defunct company once owned in the USA by Old Mutual. The internet is full of references to how up until 2012 Nigel Green was the 100% owner (and Kellermann the investment manager) of UAM. And from inside deVere it was apparent the salesmen were encouraged to invest client monies into UAM’s Strategic Growth Range where they received 3% of the investment amount as an up-front commission compared with 2% on other deVere recommended products.UAM was an important source of the Belvedere Ponzi scheme’s funding. And deVere is a multinational financial product sales organisation with an army of commission-only salesmen who could deliver the kind of cash needed to get the Belvedere Ponzi to its massive scale. Add in the rather obvious anagram (deVere – last six letters of Belvedere, geddit?) and even Gerrie Nel might interpret this as an open and shut case.That was how I was leaning, anyway. Until speaking to OffshoreAlert’s Marchant about it.
He’s convinced: “DeVere isn’t the story here. Belvedere Management Group is the story and that is controlled by David Cosgrove and Cobus Kellermann.” As you’ll read from our interview, he reckons deVere is doing its best to get back clients funds. He also said deVere helped him uncover the scam, albeit “in a minor way.” Something the company is now making great play about.
Then again cynics might be thinking that as Kellermann and Cosgrove aren’t exactly talking right now – and provided they make it to Australia probably never will – this could be a pre-emptive strike from deVere to distance itself. Maybe. Maybe not. Only time might tell.What is fascinating, though, is the statement from deVere which I received in the early hours today and is republished in full below. Like MitonOptimal, MET CI and Anchor Capital, Nigel Green’s financial product sweatshop is doing everything it can to dissociate itself with Kellermann and Cosgrove’s scheme. That will erase any lingering doubts some may have about Belvedere being a Ponzi scheme.All of which is well and good. But if deVere’s involvement was small, where then did Belvedere’s billions come from? Kellermann’s Clarus Asset Management might have kicked in a couple billion. But that’s a far cry from the two hundred Belvedere claimed to have under administration in papers submitted to the Mauritian Financial Services Commission. And although its kingpins lied about most everything else, that’s not something they needed to exaggerate about.
From deVere:One of the world’s largest independent financial advisory organisations today revealed it helped a US based investigative financial news service expose what could be one of the world’s biggest-ever frauds in order to protect investors and try to recover assets.deVere Group confirmed it provided evidence of wrongdoing to Miami-based OffshoreAlert, run and managed by investigative journalist David Marchant, to highlight the alleged shady dealings of Mauritius-based Belvedere Management Group.OffshoreAlert describes Belvedere as “an essentially criminal enterprise” saying it has evidence of “funds that are blatantly fraudulent, including a current $130m Ponzi scheme in Cayman” and “Funds that simply disappear or fail in dubious circumstances, including the £400m Harlequin Property Fund that has been unraveling over the last few years.”
A deVere Group spokesperson says: “deVere Group welcomes the investigation into Belvedere Management Group. We’re pleased to support the work being carried out by OffshoreAlert, championing the progress being made by the authorities and agencies investigating this matter, and are happy to continue to provide evidence of wrongdoing when we find it.“We suspect that this case could turn out to be one of the largest financial scams in history and we will do whatever is necessary to recover value lost by investors worldwide.”He continues: “deVere, other brokerages, and clients across the world, have been badly let down by the custodians, namely the administrators and fund managers, of these funds.“We are deeply concerned that alarm bells were not rung before now by those who had an overview of the situation. It has come to light that there were seemingly clear warning flags and that these seem to have been ignored by professional service providers trusted by deVere and other brokerages.“We urge all those who have any information regarding this case to report it directly to the authorities.
“Additionally, we’re calling on all stakeholders in the financial services industry to work more closely together to ensure that this does not, and cannot, happen again.“This case must act as a catalyst to drive up client protection and wider industry standards.”The deVere spokesperson explains the reason for the organisation’s interest: “Like many other international brokerages, several years ago deVere was approached by the fund manager of a Belvedere-administered fund to invest in the Strategic Growth Fund.“At the time, Strategic Growth Fund (SGF) was described as ‘best of breed’.
It was outperforming the market in the early years at the time of any client introductions and all due diligence was carried out by deVere, other brokerages and life companies.“However, from 2011, the Strategic Growth Fund considerably underperformed and clients were advised to withdraw. In early 2013, the deVere CEO issued a memo to all his managers advising them to ask clients to withdraw from the Strategic Growth Fund. A few days later the fund administrator suspended the fund due to, it can be reasonably assumed, the many withdrawals from deVere clients.“Some of this fund has since been released and some of our clients, fortunately, withdrew before the fund was frozen.“We are hopeful that the reported police investigation will result in assets being recovered for the benefit of investors
.“From the in excess of a reported 120 or so funds, this is the only Belvedere-administered fund in which deVere clients were invested.“Although a relatively small number of our clients have been affected by this, even one would have been one too many. We will continue to use our resources and best endeavours to help bring this situation to a satisfactory close for our clients.”
Detailed information can be found in the original OffshoreAlert article.
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UPDATE:Since publication of the article above, several regulatory authorities have conducted investigations into the allegations of fraud and of a possible Ponzi scheme and have found as follows:
The Guernsey Financial Services Commission having reviewed their Enforcement Division’s report and accompanying evidence concluded that no further action will be taken and that their proceedings are at an end.
The US based Chartered Financial Analyst Institute stated, after reviewing the information available to them, that their Professional Conduct program decided to close its investigation and to take no disciplinary action, reserving the right to reopen the matter if new information comes to hand.
The Financial Sector Conduct Authority found no evidence of any breaches of the relevant South African financial sector laws.
