The collapse of the SVG Classic Car Fund debacle continues
The Bernie Madoff crisis shook the financial world when a reputable New York financier was exposed as a scammer. His close-knit team essentially made up valuations for their investments for years, which attracted pension funds and worldwide investors eager to join in the month-to-month profits.
When a fund manager collaborates with the fund administrator to establish monthly values of a fund, or NAV (net asset value), investors utilise these valuations to monitor their investment performance and to purchase or sell additional shares. Continual rises in the NAV price attract investors, and as a result of their consistent success, funds can grow to enormous sizes. As Charles Ponzi demonstrated, however, a smoke-and-mirrors technique may be used to entice and then deceive several investors, who find their money suddenly gone when the Ponzi scheme is discovered.
Does SVG contain any potential Ponzi schemes? Consider Fortuna Administration Limited, which is already entangled in the crisis surrounding the demise of St. Vincent and Grenadines-based The Classic Car Fund (“TCCF“), and its refusal to hand over its valuation documents. This fund was drawing investors as recently as the beginning of 2019, but by the beginning of 2021, the investment manager, Filippo Pignatti, liquidated the fund, and investors stand to lose the majority of their capital. Intel Suisse is conducting an investigation on behalf of TCCF investors and has found numerous issues including missing assets.
In attempting to obtain financial information from Fortuna, a greater problem has surfaced. Fortuna does not exist in Saint Vincent and the Grenadines; it is merely a name registration with a fictitious address and with no employees performing fund administration and valuation duties. Yet while visiting their website, www.fortuna.vc, one is immediately sent to Scarabaeus Wealth Management, a Liechtenstein-based investment management firm. Not only was Fortuna the fund administrator of TCCF throughout its existence, but former CEO Patrick Demi served as co-director alongside Pignatti for three years prior to his replacement at the start of 2016. Indeed, Fortuna’s name doesn’t even appear as a listed tenant in the building supposedly being its address at Trust House, Bonadie Street, Kingstown!! Maybe DisTrust House is more appropriate..
Stefan Huber, CEO of Scarabaeus, declined to provide contact information for Demi or TCCF Tax Advisor Michael Zither, also a former Scarabaeus employee, and categorically denied any connection between Scarabaeus in Liechtenstein and Fortuna in St. Vincent and the Grenadines. However, Fortuna’s website indicates otherwise.
Together with Demi and Zuther, Scarabeus manages a family of funds, including the Scarabaeus Master Fund Limited (“SMFL”). Fortuna is the administrator of the fund. Mr Huber is the previous Head of Credit at Bank Alpinum, the custodian bank of SMFL. Alpinum narrowly escaped having its license yanked in 2020 as a result of a fraud scandal.
The auditor, AAC Financial Services in Liechtenstein, was also the auditor for TCCF and refused to provide audited financial accounts to TCCF shareholders upon request. SMFL is apparently offered to investors in Liechtenstein, Switzerland, Germany and Austria.
Prospective investors are not informed in SMFL’s offering memorandum that Fortuna does not exist. It fails to disclose to investors that Scarabaeus’s Fortuna does all NAV computations in Liechtenstein and is a subsidiary of Scarabaeus. Michael Zuther was or is a Fortuna director in Germany, the United Kingdom, and Bulgaria. He resides in either Switzerland or Ukraine, depending on who is asking. This significant conflict of interest is not disclosed in SMFL’s offering memorandum and is concealed from investors.
There is no clarity, only murkiness. More TCCFs in development?
Ernesto is a senior journalist with the St. Vincent Times. Having worked in the media for 16 years, he focuses on local and international issues. He has written for the New York Times and reported for the BBC during the La Soufriere eruptions of 2021.