The Smoking Gun? GFSC explains how Kellermann manipulated Belvedere funds’ NAVs

By Alec Hogg

Policemen often talk about finding a “smoking gun”, that piece of evidence which proves a suspect’s guilt. In the complex financial services sector, smoking guns can take years to uncover. If the perp has the cunning of a Bernie Madoff, it only happens once the criminal scheme unravels.

It is in this context that we should read the affidavit of Paul David Yabsley, senior analyst in the Enforcement Division of the Guernsey Financial Services Commission.

Yabsley has spent months investigating the alleged Belvedere Ponzi kingpins, South African Cobus Kellermann and his Irish partner David Cosgrove. Yabsley’s 28-page affidavit is backed up by more than 1 000 pages of supporting documentation.

It appears to prove, rather comprehensively, that as accused, Cobus Kellermann did indeed commit the greatest of all money management sins – manipulating the net asset value of their underlying fund’s portfolio.

The affidavit also links Belvedere to the CWM FX scam uncovered in March by the City of London police. A high profile bust of the UK’s Wolf of Wall Street lookalike which scammed investors for over R365m (£20m).

The “foreign enterprise” behind CWM hasn’t been publicly named. But Yabsley’s affidavit touches on some rather uncomfortable links between CWM and Belvedere. We gave Kellermann and Cosgrove almost a week to give us their side of the story. To no avail. Then again, the Guernsey Regulator has been waiting for months with the same (non) response.

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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.