Tag: OMI

TOP 3 WORST LIFE OFFICES
For over a decade, life offices (more accurately known as “death” offices) have been the centre of millions of pounds’ worth of destroyed pensions. So here we are going to name the top 3 worst life offices…

These are just some of the things they’ve been up to:
- Collaborating with scammers: unregulated, rogue firms posing as “advisory” firms
- Giving terms of business to firms run by people with criminal records for embezzlement, fraud, theft and proceeds of crime (as well as murderers, drug dealers and prostitutes)
- Paying hidden commissions to unlicensed, unqualified advisers with a long track record of scamming
- Accepting obviously forged investment dealing instructions from the scammers
- Reporting on huge losses in pension portfolios without warning the victims not to use the scammers responsible any longer
- Continuing to charge disproportionate fees even after the loss of half or more of the pension. (There are, in fact, some victims whose entire portfolios have been destroyed – but the death offices keep on applying their charges long after there is nothing left)
- Offering high risk, toxic investments paying huge commissions to unqualified advisers and scammers on their investment platforms
- Failing to disclose the secret commissions paid to the scammers
- Failing to treat investors as “retail” or unsophisticated investors
- Failing to obtain confirmation from the victims that they understand the risks involved in both the insurance bonds and the toxic investments – which are only suitable for professional investors
In fact, much of what these death offices have been up to is outright fraud. The public needs to be warned. The existing victims are suffering terribly – dealing with poverty and extreme distress. Some of them are dying; some of them have died – killed by the death offices’ and the scammers they do business with.

The most important thing of all is to try to prevent further victims. But this is difficult because so many scammers are still aggressively selling their victims these toxic, unnecessary and expensive death bonds. Also known as “portfolio bonds”, “offshore bonds” and “wrappers”, these products pay the scammers huge commissions which are hidden from the victims.

So who are the three worst offenders:

David Kneeshaw

Number 3. Friends Provident International – based in the Isle of Man and run by David Kneeshaw – Executive Director and Group Chief Executive Officer. Kneeshaw also runs RL360 – another death office – which bought Friends Provident International a couple of years ago for a quarter of a billion pounds. Friends Provident International has a long history of investing its victims’ life savings and pensions in toxic, risky funds such as Axiom Legal Financing, LM Managed Performance, Premier New Earth, Premier Eco Resources, and Kijani . These investments were high risk and unregulated as well as only suitable for sophisticated or professional investors.

Paul Thompson

Number 2. Generali (now known as Utmost International) – based in Guernsey and with the head office in London. Utmost has terms of business with the worst of the scammers in the advisory community – paying the illegal, secret and abusive commissions and featuring the worst of the highest-risk investments (including structured notes with a risk to the investor of total loss). Run by Paul Thompson – who claims to have over 30 years of industry experience as an investment banker. Generali – or Utmost – has a track record even worse than Friends Provident International’s. The same secret commissions are paid to the same scammers – with the same result – crippling losses, poverty, misery – and even death for the victims.

Peter Kenny

Number 1. Old Mutual International (now known as Quilter International) – Based in the Isle of Man and the Republic of Ireland, this death office used to be run by Peter Kenny who was a former Isle of Man regulator. But being a former regulator didn’t stop Kenny from doing business with the worst of the unlicensed pension scammers and allowing them to forge signatures on investment dealing instructions. Being a former regulator didn’t stop Kenny from paying out millions in illegal commissions to the dross of the offshore financial services community – for illegally-sold death bonds and unregulated investments and structured notes. Quilter International was sold to Utmost International last year (2021) for nearly half a billion pounds. Because there’s money in misery; there are fortunes to be made out of trading with criminals; there are huge profits to be made out of contravening pretty much all of the EU regulations.

All of the worst three life/death offices are still doing a roaring trade. Business has returned to pre-pandemic levels. Europe is their biggest market – with many of their victims based in Spain, Italy, Germany and other expat countries.

International Adviser – the advertising and marketing rag for the death offices – reported last week that not only was business booming for the death offices, but was now exceeding pre-pandemic levels. In 2020 they wrote £58 billion worth of business. And in 2021 it was £68 billion.

But these huge numbers mean nothing to the victims who have lost their homes, their marriages, their retirement futures. Three quarters of a billion pounds may mean nothing to the likes of David Kneeshaw, Paul Thompson and Peter Kenny. Sometimes fifty grand can mean the difference between life and death for a victim of the death offices. With Friends Provident, Utmost and Quilter International likely to do £78 billion worth of business in 2023, there will be even more misery, destitution, and death for the victims. And the scammers will already be counting their future profits from the illegal commissions.
July 20, 2022
The Sound of Silence (and Deafening Disgrace)
This has been a week of scammers trying to silence the din of their sin.

No matter how hard they try – stealing newspapers, denying the truth on social media or taking me to court – hard evidence simply won’t go away. It is there to stay.

Costa Blanca Newspaper The Olive Press ran a story last week on Neil Hathaway of Continental Wealth Management. Hathaway – along with colleagues Anthony Downs and Dean Stogsdill – had been one of the three most senior players beneath Darren Kirby and Jody Smart in the £100 million fraud committed against 1,000 victims.

Masquerading as “financial advisers” from 2010 to 2017, Hathaway, Downs, Stogsdill and Kirby conned hundreds of pension savers into transferring their pensions offshore so that CWM could make £ millions out of concealed commissions on the insurance bonds and structured notes they used to destroy their victims’ life savings.

Operating illegally in Spain, Darren Kirby and his partner Jody Smart – sole director of the company (Continental Wealth Trust S.L. trading as Continental Wealth Management) – entrusted the dodgy trio with managing the fraudulent operation. Kirby, Smart, Hathaway, Downs and Stogsdill – along with their associates Stephen Ward of Premier Pension Solutions and Paul Clarke of Roebuck Wealth Management – are all now facing charges of fraud in the Denia court.

Neil Hathaway was caught stealing bundles of copies of The Olive Press in his black SUV. Now being investigated by the local police, he is claiming he committed the crime because he was “angry” at having been outed in a previous Olive Press article – along with Darren Kirby and Jody Smart.

Hathaway’s defence appears to be that he stole fewer copies of the Olive Press newspaper than the police say he did; that his wife had been “approached at work”; and that he was “protecting his name”.

And this is the bit that scammers never seem to understand: Neil Hathaway’s name is on thousands of documents which evidence what he did to hundreds of CWM victims. Stealing hundreds of copies of a free newspaper isn’t going to make that evidence go away.

The hundreds of emails written by Neil Hathaway conning his victims; the OMI, SEB and Generali statements and valuations reporting the huge losses suffered by his victims; the many testimonies of his distressed (and often suicidal) victims will still evidence what he did – no matter how many copies of The Olive Press he steals and destroys.

Hathaway’s former “boss” Jody Smart (aka Jody Bell, Jody Kirby or Jody Pearson) has also been exposing (and disgracing) herself this week. A collection of “artistic” photographs has been doing the rounds on social media – evidencing Jody’s talents in partnership with a somewhat bouncy buddy.

I wonder what they were promoting? It could easily have been blond hair dye or red stockings – or anything in between. But it is hoped they would both have been more transparent about what they charged for their services than the “advisers” at CWM were.

And this, of course, is a perfect illustration of why so many offshore “advisers” behave – and promote themselves – in a manner which is so misleading. They purport to be giving “advice” which will improve expats’ pension arrangements by transferring the funds offshore. But the reality is that even if their pensions should have been left where they were in the UK, their principal motivation was to earn hidden commissions out of selling insurance bonds and high-risk investments.

However hard anyone tries to remove this image of Jody Smart and her “Big’n Bouncy” associate (and other even more eye-watering images which I cannot publish because they might offend my gentle readers) from the internet, one can never un-see what has been seen. The memory of this photograph can never be extinguished – any more than the evidence of the destruction of so many of her clients’ pensions can ever be rubbed out.

The scammers at CWM are soon going to be joined by their counter parts at Spectrum IFA Group, Pennick Blackwell/AES International and Holborn Assets. This would already have happened had it not been for Covid 19 and the closure of the courts.

All these firms, and their so-called “advisers” (in reality just poorly-qualified salesmen) have several things in common:
- They all recommend pension transfers even if it is in the client’s interests to leave the pension where it is (in the UK)
- They all lie about the merits and advantages of QROPS
- They have all decided – before they know the first thing about the client – that he is going to be put into an insurance bond
- They all seek out investments which pay the highest (hidden) commissions – irrespective of whether these funds are any good (which they usually aren’t)
- They rarely have any relevant financial services qualifications
- Their firms are frequently unlicensed for insurance mediation or investment advice
- They are all committing a criminal offence every time they sell an insurance bond in Spain (and possibly other jurisdictions)
A few of the scammers are now facing criminal charges in Spain. Several scammers are under investigation by the Insolvency Service and/or the Serious Fraud Office. A couple of “life” offices are facing civil proceedings in the Isle of Man. A QROPS provider is facing civil proceedings in Gibraltar. Another QROPS provider is facing criminal proceedings in Hong Kong. A fund manager is about to face criminal proceedings in the Isle of Man. The tide is beginning to turn against the global trend of financial crime.

When all’s said and done:
- a worthless, bogus, unregulated Cayman Islands fund is a worthless, bogus, unregulated Cayman Islands fund
- a couple of tarts are a couple of tarts
- a trio of scammers are a trio of scammers.
Stealing newspapers or trying to prevent the publication of the crimes isn’t going to change any of that. The hard evidence of the crimes will remain – no matter how hard the scammers try to hide it.

It doesn’t look like Old Mutual International (or Skandia or Quilter or whatever they are calling themselves this summer) is going to be able to bottom out their “clean up” operation. Perhaps they ought to try changing their name again so people forget what they did in the past? Perhaps under CEO Peter Kenny’s watchful eye, this might be achieved?
July 12, 2020
CWM Criminal Trial 24th February 2020
The protagonists behind collapsed Spanish advisory firm CWM – Continental Wealth Management – will be on trial week commencing 24th February in the Denia Criminal Court of First Instruction.

This criminal matter will have enormous ramifications for similarly-affected victims, and for any advisory firms which have engaged in any of the same practices used by CWM. These illegal practices include the gratuitous selling of insurance bonds from bond providers such as OMI, SEB, RL360, Friends Provident and Generali; putting low-risk investors into commission-laden, high-risk investments; churning and concealment of backhanders; forged or copied client signatures on investment dealing instructions.

The routine “sale” of insurance bonds (whether the clients need them or not – which 99% of the time they don’t) is illegal in Spain. Undoubtedly this will be similar or identical in other jurisdictions. The Spanish Supreme Court has ruled that insurance bonds are invalid for the purpose of holding investments. But still the scammers continue to flog them indiscriminately – purely for the fat commissions.

Insurance bond salesmanship has become one of the biggest, most widespread and toxic crimes across all expat territories – and now it must be outlawed by the ethical sector of the financial services market. And there is an ethical sector which abhors the toxic and dishonest practices which will be the subject of the CWM trial. There is also a “semi-ethical” sector which is genuinely ashamed that it too has carried out such practices, but which is determined to clean up it’s act and “go straight” from now on.

Make no mistake – the Denia Criminal Court is determined to clean up this stretch of the Costa Blanca in particular and Spain in general – as well as make an example out of the CWM scammers. Some of the CWM victims, as well as Ark and Capita Oak victims – and those financially ruined by both Stephen Ward and Paul Clarke – will be at the court hearings the week of 24th February. There will be local and international press coverage to highlight the importance of this significant event.

The defendants in the CWM case were served in early January. They are now compelled to come to court to be cross-examined by our lawyer. Each defendant will have his or her own legal representative and also a court-appointed translator. The cross examinations will take place privately in front of the judge, but a transcript of each one will be published subsequently. I will translate these transcripts and make them publicly available on the Pension Life website as soon as they are made available by the court.

The dates of the now compulsory court hearings are:
- Monday 24th February from 10 a.m.: Darren Kirby; Patrick Kirby and Anthony Downs
- Tuesday 25th February from 10 a.m.: Jody Smart, Neil Hathaway and Dean Stogsdill
- Friday 28th February from 10 a.m.: Stephen Ward and Paul Clarke
Darren Kirby did not show up for the last criminal trial – when he was accused of defrauding three victims out of their life savings in order to give him money to prop up the rapidly failing CWM and to pay money to his partner – Jody Smart – to invest in her fashion business: Jody Bell. One of the complainants in this previous case has since died.

Stephen Ward of Premier Pension Solutions has fled to Florida where he owns a portfolio of at least ten mortgage-free properties near Disneyland. However, he will not succeed in avoiding prosecution.

Sole director and shareholder of CWM, Jody Smart did turn up for the last criminal trial, so it is expected that she will probably attend this one. Smart will be keen to deflect blame from herself and claim that she was only a “nominee” director. However, in the last two years of operation, she paid herself 991,035.86 Eur (on top of her already more than generous director’s salary) – 670,035 Eur into her property company Mercurio Conpro and 321,000 Eur into her Jody Bell fashion business.

The remaining CWM defendants: Anthony Downs, Neil Hathaway, Dean Stogsdill and Paul Clarke are likely to turn up since they are all based in Spain and have families, property and businesses here.

CWM earned 3,391,876 Eur in commissions on sales of insurance bonds and structured notes in the last two years of operation. Scammers like CWM generally made at least 16% commission out of victims’ pensions and investments. This would mean that in this period, CWM scammed victims out of approximately 17,000,000 Eur. On top of his, the firm earned many hundreds of thousands from victims they cleaned out promising them shares in the company (which Darren Kirby had claimed was worth 10 million), properties and cars. But when the firm closed, the CWM bank account was virtually empty. This video will illustrate some of the appalling misery the CWM victims endured – and the extent to which Jody Smart benefited from the money stolen from the victims: https://www.youtube.com/watch?v=lYlxu8YOaAM&t=3s

The following related entities have been asked to provide documentary evidence to support the complainants cases:

Inter Alliance, Globalnet, Trafalgar, Old Mutual International, SEB and Generali

This evidence will include copies of risk profiles and investment dealing instructions – bearing the forged investor signatures.

This criminal case has been brought by using 17 “lead” cases – victims of the CWM scam who have all lost considerable amounts of their life savings. These victims are now the lead complainants who also represent the interests of the further hundreds of victims who have suffered similar fates. The lead complainants have put an enormous amount of time, work and self-sacrifice towards this matter. Each complainant has had to re-live the horror of their suffering at the hands of CWM – telling their painful stories to our lawyer Antonio Bertomeu. Most of the lead complainants are based in the vicinity of Denia – where CWM committed the majority of the crimes. However, one complainant came all the way from Portugal.

I will be with Antonio Bertomeu the week before the trial as we prepare for the cross examination of the defendants in court during the week of 24th February. This is a crucial point in the proceedings as there has been a substantial amount of further evidence which has emerged since this complaint was originally filed in court in June 2019. There are also further defendants who will now need to be included in the proceedings.

The Denia court has stressed that this is an issue which is of great importance as it involves three serious criminal offences which are likely to involve substantial financial penalties and custodial sentences:
- Falsification of commercial documents
- Disloyal administration
- Continuous fraud
The outcome of this case will inevitably have far-reaching consequences for the industry globally – especially since the practices which are the subject of these criminal proceedings have been widely practised for a number of years. These crimes have not been exclusive to Continental Wealth Management and their associates. There are many victims beyond the clients of CWM who have suffered similar crippling investment losses. The scope of these criminal proceedings will now inevitably reach into other firms and jurisdictions.
January 29, 2020
Victims of Investment Fraud need Justice

As the decade comes to a close, it is clearer than ever that victims of investment fraud need justice. The dirtiest stain on society is that of pension and investment fraud. Scammers have made fortunes out of pension and investment scams in the UK and across the globe – in all leading expat jurisdictions. With little sign of this international crime abating, scammers continue making fortunes out of relieving people of their life savings.

The FCA managed to get out of bed (briefly) to bring to justice the scammer behind the Dynamic £600k investment scam. But completely overlooked over £1 billion worth of other investment scams.

Meanwhile, the very authorities which should be preventing financial crime – regulators; law enforcement agencies; HMRC; Insolvency Service; government; courts – stand around clueless and helpless. Their inaction is embarrassing and disgusting – especially in the wake of the appalling announcement that Andrew Bailey has been appointed governor of the Bank of England.

The saddest thing – for our society in general and existing victims in particular – is that it can be done. But we must ask ourselves why the criminals are brought to justice so seldom. On 20th December 2019, FT Adviser published an article reporting how one fraudster was brought to justice and ordered to pay redress to his victims.

Manraj Singh Virdee of Dynamic UK Trades Ltd conned 24 victims out of more than £600,000. His method was to promise returns of 100% for investing in his forex trading and spread betting “expertise”. The FCA brought a case against this criminal who was convicted by Southwark Crown Court. The sentence was only a suspended prison sentence for running an unauthorised investment scheme. However, the court made a confiscation order against Singh Virdee of £171,913 – to be used to compensate the victims. If he doesn’t pay, he will be sentenced to two years in prison.

It is indeed good to know that during a prolonged period of being asleep at the wheel, the FCA can do a wee bit of regulating. But why does Manraj Singh Virdee deserve to be sentenced for defrauding 24 victims out of £600,000 when so many other scammers have got away with defrauding many thousands of victims out of many £ millions?

Victims of Investment Fraud need Justice: In 2020, pressure must be brought to bear on the inattentive, lazy and negligent authorities who have done nothing. It is simply not acceptable to turn a blind eye to so much financial crime. This is especially true when cases like the Singh Virdee one clearly demonstrate that if only they could be bothered, they could actually clean up the scamming industry. But, first, they have to want to do it. And as things stand, there is no evidence that they really do want to.

While this would-be forex trader and spread better faces a couple of years behind bars, the rest of the scammers are still out there scamming away merrily and profitably. Shouldn’t 2020 be the year to make pension and investment scamming illegal? Because as things stand, the scammers know they can get away with it easily.

Singh Virdee’s scam was pretty obvious, and I do not mean to trivialise the £600k he scammed out of his victims. But this is dwarfed by Stephen Ward‘s £3 million London Quantum pension scam; David Vilka‘s £7 million GFS QROPS scam; Stephen Ward and XXXX XXXX’s £10 million Capita Oak pension scam; XXXX XXXX’s £21 million Trafalgar Multi Asset QROPS investment scam; Phillip Nunn and Patrick McCreesh‘s £25 million Blackmore Bond investment scam; Stephen Ward’s £27 million Ark pension scam; Phillip Nunn and Patrick McCreesh‘s £41 million Blackmore Global investment scam; Old Mutual International and Leonteq‘s £94 million investment/life bond scam; London Capital & Finance‘s £230 million mini bond scam; Dolphin Trust‘s £600 million derelict property loan scam.

So, come on FCA: £600,000 down – only £1,158,000,000 to go!

December 23, 2019
Pension Life – Pension File November 2019

FCA and FOS continue to dismay and disgust; CWM criminal case set to change offshore financial services; Forged dealing instructions epidemic; Offshore advisory firms without an investment license.

It now emerges that on top of a failed “City Watchdog” (the Federated Consolidation of Apathy) we also have not just one, but two failed ombudsmen.

The FCA has had a light bulb moment as it announces a “temporary ban” on the promotion of unregulated mini bonds. This so-called “nuclear” option is due to start in January 2020 and is scheduled to last for just one year. Presumably, the FCA will have lost interest by then. Or perhaps the huge effort required to teach FCA staff how to use a toilet will have exhausted them anyway. Maybe the new parliament will close the whole thing down and set up a proper regulator – ideally run by a mixture of proper professionals and also some victims (who are the real experts on regulatory failures).

In an “FFS!” moment, the FCA is now rivaled by the FOS as it too is exposed as a failure by the Glassdoor employees review site. One FOS employee reviewer stated: “Management has been hauled up in front of the Treasury on more than one occasion; it has received and continues to receive negative comments on Glassdoor; it has been subject of investigation by Dispatches but nothing has changed.” Sounds just like the FCA – at least the two organisations are consistent in a unified manner. Perhaps Amerdeep Somal (Head of the FOS) and Andrew Bailey (would-be Head of the Bank of England) consider this to be a good achievement?

Sadly, the Pensions Ombudsman is no better either. Complaints where negligent, lazy, apathetic ceding providers – such as Standard Life, Aviva, Prudential and Scottish Widows – have handed over £ millions to pension scams, are not upheld. The Ombudsman’s excuse is that the “Scorpion” campaign which warned the public and the industry about the dangers of pension liberation fraud was not published until February 14th 2013. The Ombudsman conveniently forgets to mention that there had been a very clear and loud warning back in 2010 – by OPRA (the forerunner of the Pensions Ombudsman). But it would seem that no British regulators or ombudsmen ever let the truth get in the way of defending big, toxic institutions which are “too big to fail”.

In Spain, the Criminal Justice System has, at long last, decided that the CWM (Continental Wealth Management) scam run by Jody Smart, Darren Kirby and an assortment of silver-tongued scammers must be brought to justice. This follows a year-long initiative to document the £100 million scam operated by the Costa Blanca based firm and facilitated by life (death) offices Old Mutual International, SEB and Generali. It is hoped that Smart, Kirby and the rest of the motley crew of advisers such as Dean Stogsdill, Anthony Downs, Neil Hathaway, Richard Peasley, Phill Pennick and Dennis Radford will serve long prison sentences.

The Spanish criminal court has made an order that the life offices (OMI, SEB, Generali) and all those connected to Continental Wealth Management – and who facilitated their crimes in the years up to 2017 when the firm collapsed – will be called to give evidence. In particular, the risk profiles and forged signatures on dealing instructions will be brought into evidence. https://www.youtube.com/watch?v=lYlxu8YOaAM&t=12s

Part of the Continental Wealth Management scam was the repeated use of forged signatures on dealing instructions. This practice became accepted by life offices such as OMI from 2010 onwards as the volume of business coming in from scammers became extremely lucrative. Scammers such as Darren Kirby and his team of bogus “advisers” (who went on to work for firms such as Spectrum IFA Group and Pennick Blackwell) would use a blank dealing instruction bearing the victim’s signature to “churn” the fund and maximise the commissions earned. The favourite investments were structured notes from rogue providers such as Commerzbank, Royal Bank of Canada, Nomura and Leonteq.

Old Mutual International, SEB and Generali accepted thousands of dealing instructions from scammers such as Continental Wealth Management. On top of knowing full well that such firms had no investment license (in fact, CWM had no license of any kind) and no qualifications to give investment advice, OMI and the other rogue death offices repeatedly accepted these dealing instructions with obviously forged signatures.

CWM and a number of other firms would trick victims into signing a blank dealing instruction. Then they would countersign it with an illegible signature. These blank investment forms would then be photocopied repeatedly – sometimes for many years – as the victims’ funds were churned and repeatedly invested in high-risk investments such as toxic structured notes.

Old Mutual International actively encouraged this financial crime by paying unlicensed scammers like CWM 8% commissions to flog expensive, unnecessary life bonds – and then flog the risky, toxic investments offered on the life office platform.

One of the structured note providers – Leonteq – is now being sued by OMI for the £94 million worth of especially toxic notes sold to hundreds of victims to destroy their funds and pay the scammers an extra 2% commission “under the table”. However, OMI put these structured notes on their platform in the first place, and accepted the forged dealing instructions in the second place. Difficult to see how this was anyone’s fault other than Old Mutual’s.

Part of the syndrome of offshore financial crime being routinely accepted by life offices, is the proliferation of “advisory” firms operating without being fully licensed. There is a cheesy urban myth that a firm can give investment advice if it flogs victims an insurance bond and then picks from the selection of toxic, high-risk investments being offered by the bond provider. This isn’t deemed to be “investment advice” as the so-called adviser is merely assisting the investor to make his own decisions (i.e. give himself advice). This practice has gone on for years – and is still going on with firms such as Spectrum IFA Group which openly advertises the fact that it gives investment advice, even though it has no investment license.

While the FCA wouldn’t have the slightest interest in what goes on offshore (after all, it doesn’t give a toss what happens in the UK either), the Malta FSA has at least made sure that only licensed advisers give investment advice on Malta’s watch. An advisory firm with an insurance license can still flog insurance bonds that few people need and even fewer can afford, but Malta will no longer accept investment advice from such “Chiringuitos” (Spanish for financial scammer). This has, of course, resulted in an exodus to Gibraltar where the scammers can pretty much do what they like. The Gibraltar Financial Services Commission actively encourages scams. STM Fidecs – bogus QROPS trustees for the Trafalgar Multi Asset Fund scam (under investigation by the Serious Fraud Office) – and the Blackmore Global investment scam perpetrated by serial scammers Phillip Nunn and Patrick McCreesh – are still flourishing happily on the Gib rock. The Gib FSC stands idly by and does nothing. Obviously, the Gib lot are trying to emulate the FCA – and succeeding happily.

It will take more than a few fireworks to clean up the financial services mess in the UK, in expat jurisdictions across the globe, and in the FCA’s toilets.

December 2, 2019
How risky are structured products – and fireworks?
Normally a great fan of FT Adviser – and their excellent, independent journalists – I was horrified at the recent “Guide to Structured Products” (particularly the section on how risky they are by Craig Rickman).

Noting that this article can be used towards CPD credits, I was astonished that so little attention was paid to the toxic legacy of so many structured notes since 2008. And how Rickman has failed to mention the many thousands of lives which have been ruined – as well as how many people have died or taken their own lives because of being sold these products by unscrupulous con men masquerading as advisers.

It is not just the rogue advisers who are at fault for flogging structured notes to their unsuspecting victims – it is the life offices such as Old Mutual International who offer them on their platforms of toxic investment rubbish (including such snorters as LM, Axiom, Premier New Earth, Kijani and Quadris Forestry).

Rickman refers to “lessons learned” and quotes how a high street bank was fined £1.5m in 2012 for flogging so-called capital-guaranteed structured products in the UK. Of course, the reality was (and is) that there is no such thing as a fool-proof capital guarantee. It is all just a question of relative risks. But the scammers just love the phrase “capital guarantee” because it virtually guarantees their victims won’t question the investments in such products. And when the losses start to appear, the advisers will fob the victims off with the well-worn phrase “don’t worry – it’s just a paper loss”. By the time the structured notes mature and the losses are crystalised, the adviser is long gone.

It is a great shame that Rickman omits any mention of the huge offshore scandal which has been going on since around 2008. This consists of a cartel of rotten-to-the core life offices including OMI (IoM and Ireland), SEB, Generali and various other members of AILO (Association of International Life Offenders). These AILO members have been promoting and facilitating international financial crime for almost a decade and have made vast fortunes out of their evil trade.

Of course, high-risk structured notes have played a major part in this worldwide crime. These products – particularly those flogged by Commerzbank, Royal Bank of Canada, Nomura, Leonteq and BNP Paribas – were routinely sold through armies of unlicensed, unqualified “chiringuitos financieros” (financial scammers) so that thousands of unsuspecting victims could be relieved of their life savings. The ultimate goal was, naturally, the huge commissions paid to line the scammers’ pockets.

I once tried to get my head round exactly how structured notes work and I asked a senior manager from one of the providers to give me a couple of hours to get me up to speed. The only thing I knew for sure about structured notes was that they were routinely abused by scammers such as Continental Wealth Management. And that victims would typically lose half their life savings – and sometimes more (much more).

The structured note expert was doing well with me as his pupil for about five minutes as he gave me a broad introduction. Then, sadly, he switched from English to Japanese, then Serbo Croatian, Icelandic and Māori . By the time he changed to Xhosa, I am afraid I was a lost cause. But I had a nice time checking out my Facebook while he gabbled on. I am no expert by a long way – but I think I know a wee bit more than the average man on the street. And I think my conclusion that structured notes should never be used for retail, unsophisticated investors is correct. In fact, that is what it almost always says on the tin:
- Not for retail distribution
- For professional investors only
- Due to the complex nature of these products, investors should be made aware of the risk of loss of part or all of the capital
And then there is what isn’t on the tin:
- Offered by bent life offices such as Old Mutual International who do no due diligence or “asset reviews” on such products
- Routinely used by scammers because they love the concealed high commissions
- Have caused hundreds of millions of pounds’ worth of losses in the past ten years
Old Mutual International – lover of all unlicensed, unqualified scammers across the globe – is now suing Leonteq for £94 million worth of toxic structured notes. The widespread use of these products has resulted in devastating losses – and victims have died as a result.

Ironically, OMI aboss Peter Kenny is quoted as saying: “I would encourage all industry participants to work together to eradicate poor practices once and for all.” And for once I agree with him – shutting down OMI altogether would be a great start.

Any investment is only ever as good as the quality of the advice given to the investor. Whether it is a structured note (e.g. Leonteq); a fund (e.g. Woodford Equity Income fund); a bond (e.g. London Capital & Finance); property (e.g. Dolphin Trust); an EIS (e.g. Guy Myles‘ Octopus) or the local bookmaker.

How risky are structured products – and fireworks? And how good, safe and suitable are they?

When I say “good” I mean “suitable“. And there’s the rub: what is claimed to be suitable by so many so-called advisers is actually suitable for their own pockets but totally unsuitable for their clients. Of course, another problem is that there are armies of firms which call themselves advisers but don’t have an investment license. They claim that they can give investment advice with an insurance license so long as they con their victims into using an expensive, pointless insurance bond (such as OMI, SEB, Generali, RL360, Friends Provident etc) and then pick from the many toxic investments offered on the bond provider’s platform.

I like comparing structured notes to fireworks. They both need to be handled with great care and should only be used by those qualified and authorised to deploy them. With fireworks in the UK, every year thousands of people are injured and end up in hospital with scars which will last a lifetime. With structured notes, thousands people are suffering from the loss of their life savings. There have been deaths and suicide attempts – and there will inevitably be more.

Journalists – especially financial reporters – have a duty to inform and warn the public. It is a great pity that Craig Rickman of FT Adviser has missed such an excellent opportunity to expose this rotten sector of the financial services industry. If this article qualified for CPD credits, then he also missed a golden opportunity to help financial services professionals learn to protect consumers from the dangers of structured products – and the scammers who peddle them.
November 12, 2019

Continental Wealth Management – “Plunder in paradise”

Victims of the Continental Wealth Management scam met Mail on Sunday's Laura Shannon in Denia in July 2019 — Victims of the Continental Wealth Management scam met Mail on Sunday’s Laura Shannon

Mail on Sunday’s Laura Shannon met a group of victims of the Continental Wealth Management scam in Denia in July 2019.

Here is a link to her excellent article Continental Wealth Management – “Plunder in paradise”: MAIL ON SUNDAY ARTICLE

All power to her, this young lady put all other would-be investigative journalists to shame. Laura jumped on a plane on 24th July 2019 when she and her editor heard about the Continental Wealth Management scandal. After a long, hot bus journey from Alicante airport, she got straight down to business. She spent all afternoon interviewing a large group of distressed investors. She then attended the memorial service for one victim who had been killed by the stress he suffered when he lost his pension – thanks to Continental Wealth Management’s Darren Kirby.

Laura Shannon – putting all other “investigative” journalists to shame

No other British journalist has bothered to do this. No other national newspaper has taken such an interest in this important story – about how British people have been scammed by British advisers in Europe’s leading expat destination.

Clearly shaken by the extent of the Continental Wealth Management scam, and the plight of the victims, Laura was deeply moved by the memorial service for victim Mark Davison who had died two weeks earlier. After a very long and tiring day, Laura retired to her hotel to write up her notes – ahead of another full day of meeting more victims.

So where had all the other so-called newspapers been all this time? Where were The Sun, The Times, The Telegraph, The Mirror, The Guardian, The Express? Too lazy – and clearly not concerned with this very British problem. These newspapers do indeed have some very fine journalists – but this widespread financial crime was too low on their priority list.

The financial press – such as International Adviser – is too conflicted with its promotion of the very company behind this scam: Old Mutual International.

On the second day of her visit, Laura Shannon met another group of Continental Wealth’s victims and also spoke to a couple in France by Skype. Her final interview with an elderly lady (who had tried to commit suicide when she lost most of her life savings to the Continental Wealth Management scammers) left her in tears.

At lunch time, Laura headed back to Alicante airport. Four and a half months pregnant, this energetic and passionate young woman returned to her office in Birmingham to write and file her story. She left little out and covered most of the basic points. Her article left the reader in no doubt: financial crime has flourished in Spain for years.

There are both criminal and civil actions ongoing now – on the Costa Blanca and the Costa del Sol. The days of unqualified “chiringuitos” and unlicensed firms are hopefully over. While Britain’s feeble excuse for a regulator – the FCA run by lazy loser Andrew Bailey – fails to take any meaningful action, the Spanish regulator has at least ruled that failing to comply with Spanish regulations is a criminal offence.

The Malta regulator has tightened up rules to help stop firms operating similar scams from abusing QROPS, and deploying inappropriate investment policies. Multiple class actions in various jurisdictions are taking legal action against rogue insurance companies – such as Old Mutual International – who have encouraged and profited from widespread financial crime.

Ward’s luxury development at 64 Calle Haya, Moraira, Alicante

And this is the problem: crime pays. Stephen Ward of Premier Pension Solutions in Moraira is now adding to his ten mortgage-free luxury villa property portfolio in Florida by building a huge luxury villa next to his former office in Calle Haya in Moraira.

Paul Clarke – Darren Kirby’s former business partner (when Continental Wealth Management was first set up) has for years been seen zooming around the Costa Blanca in his Aston Martin. And Jody Smart (or Bell or Kirby) – Darren Kirby’s former girlfriend has boasted of the £13 million she earned as director of Continental Wealth Management.

Sipping champagne while publicising her fashion empire on Youtube

Jody now runs a swish ocean-front restaurant in Calpe with fiance Franco Pearson – seemingly untroubled by the appalling trail of devastation left behind her in the wake of the Continental Wealth Management tragedy.

But the millions made by the scammers at Continental Wealth Management pale into insignificance when compared to the fortunes made by life offices Old Mutual International, SEB and Generali.

Not a hint of regret for OMI’s actions – or shame at his broken promises.

Peter Kenny did promise to pay compensation to OMI’s victims. But this was just a ruse to get me to take down my blogs about OMI so that the IPO would earn him and his accomplices more £ millions.

The Spanish regulator has made it clear it is a criminal offence to sell insurance “bonds”.

No firm with a conscience or any professional ethics should ever use OMI, SEB or Generali. Anyone caught mis-selling such insurance bonds in Spain is committing a criminal offence and can face jail. As most advisory firms in Spain are still doing so vigorously and unashamedly (with the same old lame excuse that such bonds are “tax efficient”), the Spanish jails are likely to get pretty crowded in the not-too-distant future.

Spain is highly motivated to protect British expats who retire on Spanish soil – and is now learning how deeply dishonest and disloyal British “chiringuitos financieros” (the Spanish regulator’s term for financial scammers) are.

But how do people avoid getting scammed from now on?

Part of the problem is knowing what questions to ask – and then being able to understand the answers. Unfortunately, Stephen Ward was the exception to the rule – since he was highly qualified and his firm – Premier Pension Solutions – was authorised to provide investment advice.

1. Check that the firm is authorised (regulated; licensed). If investment advice is given, make sure the firm has an investment license: don’t be fooled into believing that an insurance license is enough. It isn’t.

2. Check that the adviser is qualified to give financial advice. He or she must provide evidence of any qualifications claimed. If the relevant institute does not show the qualification, then the adviser is not qualified – no matter what exams may have been passed previously.

3. Don’t get talked into an insurance bond (aka “life bond” or portfolio bond). They are expensive and unnecessary – and only serve to pay the adviser a fat commission.

4. Don’t let an adviser invest your funds into expensive, risky assets which are only there to pay fat, undisclosed commissions FROM YOUR MONEY.

Lastly, make sure you get everything – all costs, fees, charges and commissions – in writing. DON’T GET SCAMMED LIKE THE CONTINENTAL WEALTH MANAGEMENT VICTIMS. They will all give you exactly the same advice.

August 5, 2019

Fighting pension scams: Regulation
Fighting pension scams: Regulation

If it was easy to stop pension scams, everyone would be doing it. Clearing up the mess left behind a pension scam is a huge challenge. This is why clear international standards need to be recognised and adopted. The scammers are like flocks of vultures. If people only used regulated firms, they could avoid a lot of scams.

Here is our list of standards
1. Firm must be fully regulated – with licenses for insurance and investment advice
2. Advisers must be qualified to the right standard
3. Firm must have Professional Indemnity Insurance
4. Clients must have comprehensive fact finds and risk profiles
5. Firm must operate adequate compliance procedures
6. Advisers must not abuse insurance bonds
7. Clients must understand the investment policy
8. All fees, charges and commissions must be disclosed
9. Investors must know how their investments are performing
10. Firm must keep a log of all customer complaints
Why is regulation so important?:
- If a firm sells insurance, it must have an insurance license.
- If a firm gives investment advice, it must have an investment license.
Many advisers will claim that if they only have an insurance license, they can advise on investments if an insurance bond is used. This practice must be outlawed, because this is how so many scams happen.

Most countries have an insurance and an investment regulator. They provide licenses to firms. Some regulators are better than others. Most regulators do some research and only give licenses to decent firms.

History tells us that most pension scams start with unlicensed firms. Here are some examples:

LCF Bond, Blackmore Bond, Blackmore Global Fund, LM, Axiom and Premier New Earth – all high risk failures. The investors have lost some or all of their money in these bonds and funds. They were mostly sold by advisers without an investment license. Investors lost well over £1 billion. Advisers (introducers) earned £millions in commissions.

Continental Wealth Management invested 1,000 clients’ funds in high-risk structured notes. Investors started with £100 million. Most have lost at least half. Some have lost everything. Continental Wealth Management had no license from any regulator in any country.

Serial scammers such as Peter Moat, Stephen Ward, Phillip Nunn, and XXXX XXXX all ran unlicensed firms. Peter Moat operated the Fast Pensions scam which cost victims over £21 million. Stephen Ward operated the Ark, Evergreen, Capita Oak, Westminster and London Quantum pension scams which cost victims over £50 million. XXXX XXXX operated the Trafalgar pension scam which cost victims over £21 million.

Phillip Nunn operates the Blackmore Global Fund which has cost victims over £40 million. Serial scammer David Vilka has been promoting this fund. Over 1,000 people may have lost their pensions.

Firms that give unlicensed advice are breaking the law. Unlicensed advisers often use insurance bonds. These bonds pay high commissions. The funds these advisers use also pay high commissions. The advisers get rich. The clients get fleeced. The funds get destroyed. Insurance bonds such as OMI, FPI, SEB and Generali are full of worthless unregulated funds, bonds and structured notes.

Unlicensed firms hide charges from their clients. Most victims say they would never have invested had they known how expensive it was going to be.

Hidden charges can destroy a fund – even without investment losses. Licensed advisers normally disclose all fees and commissions up front. This way, the client knows exactly how much the advice is going to cost.

People can avoid being victims of pension scammers. Using properly regulated firms is one way. An advisory firm should have both an insurance license and an investment license. Don’t fall for the line: “we don’t need an investment license if we use an insurance bond”. Bond providers such as OMI, FPI, SEB and Generali still offer high-risk investments. The insurance bond provides zero protection. And the bond charges will make investment losses much worse.

YOU WOULDN’T USE AN UNLICENSED DOCTOR.

SO DON’T USE AN UNLICENSED FINANCIAL ADVISER.
April 27, 2019
Blackmore Bond – yet another failed investment?

Blackmore Bond – yet another reason why only regulated advisers should be used for investment advice.

The clear link between the recently-failed LCF Bond and Blackmore Bond through Surge Group remind us how important regulated investment advisers are.

In the news again is the troubled Blackmore Group. This time we read that they have ‘temporarily’ closed their bond – the Blackmore Bond – to new business. Just a few weeks ago, Blackmore Bond changed the wording of the sales material on this product.

This new transparency revealed costs of 20% and the high risks involved in the bond. Prior to this, these details were well hidden in the small print.

The Blackmore Bond transparency was not due to Blackmore Group having a yearning desire to be honest with their victims. It was all down to new FCA rules for being “clear, fair and not misleading” whenever an investment is promoted.

Recently, there has been a lot of media coverage on high-cost, high-risk bond investments failing. One of these is London Capital & Finance (LCF). This unregulated bond collapsed and went into administration earlier in 2019. £236 million had been invested into it. But investors had not been warned of the costs and risks involved. Of this £236 million, over £50 million was paid to Surge Group for promotional and marketing services.

1,200 victims duped into investing in the LCF bond

have lost at least 80% of their money

Fortunately for investors in the Blackmore Bond, it is still active. However, with such high promotional and marketing costs, the bond needs to be very successful indeed to overcome the initial 20% charges – most of which were paid to Surge.

In relation to the closure of their bond, Blackmore Group state on their website:

“We have achieved our fundraising goals for this tax year and are not currently taking in new investment. We will be introducing our next offering in the following tax year, so please watch this space for future announcements.“

Another questionable investment from the Blackmore Group is the Blackmore Global Fund.

The Blackmore Global Fund has been heavily criticised and also featured on BBC 4 You and Yours. The fund saw 1,000 victims conned into this expensive, illiquid and high-risk UCIS. It is illegal to promote UCIS funds to retail investors in the UK. They are certainly not suitable investments for a pension fund.

David Vilka of Square Mile International Financial Services was one of the promoters of the Blackmore Global Fund. Vilka invested many of his UK-resident clients into this unsuitable fund. Undoubtedly, he was paid fat commissions for these investments. Unregulated and unqualified, Vilka was no doubt lining his own pockets, instead of doing what was best for his clients.

Vilka lied to his clients, claiming to be fully regulated. He transferred his UK-based victims’ pensions into the Optimus Retirement Benefit Scheme No.1 QROPS. Much of this money was invested into the Blackmore Global fund.

The connection between Blackmore Group’s Bond and London Capital & Finance (LCF) is Surge – a marketing agent. The LCF bond was promoted by Surge until it collapsed in December 2018.

After LCF collapsed, Surge went on to promote the Blackmore Bond. This promotion was done using ISA-rating websites.

London Capital & Finance is not the only failed investment in recent years. Other failures include Axiom with £120m worth of investors’ funds (£30m of which was with life offices FPI and OMI); LM £456m (£90m with FPI and OMI); and Premier New Earth (NERR) £207m (£62m with FPI and OMI).

The new transparency demanded by the FCA is much needed.

Unfortunately, it won’t change the fact that well over one billion pounds have been lost between LCF, Axiom, LM and NERR. We are still left wondering why the regulators have not taken a tougher stance on restricting the promotion of such UCIS funds. The FCA’s limp stance is especially worrying when the promoters of these high-risk bonds and funds are targeting UK retail investors.

All these failures and losses should remind both regulators and consumers that only regulated firms should be used for investment advice.

April 25, 2019
Who killed the pension? Scammers; ceding providers; introducers; HMRC?

In every pension scam there is one beginning, lots of middles, and always a wretched ending for the victim and a profitable ending for the scammers. The beginning is always a negligent, lazy, box-ticking transfer by a ceding provider – the worst of which always tend to be the likes of Standard Life, Prudential, Scottish Widows, Aviva, Scottish Life, Aegon, Zurich etc.

Pension scams are rarely simple and there are many different culprits to blame for the losses. The one common theme though, is that not one of the parties involved is prepared to take the blame for the victims’ losses – EVER. It was always someone else’s fault.

The pension scam trail is rather like a game of Cluedo. The question is: “who murdered the pension fund?”. We travel around the board trying to decipher who is to blame: at which point was the pension fund truly put at risk? – and with what weapon was the pension fund murdered?

While the pension fund transfer always starts with the negligent ceding provider, there are financial crime facilitators long before this: our old friends HMRC and the Pensions Regulator. HMRC registers the scams – often to repeat, known scammers. HMRC does no basic due diligence and deliberately ignores obvious signs that the scheme is an out and out scam. Then HMRC does nothing to warn the public when they discover there are dastardly deeds afoot. In the case of an occupational scheme, the Pensions Regulator allows the scheme to be registered and is slow to take any action even when obvious signs of financial crime emerge.

In recent cases, we have seen complaints – by the victims of scams – upheld against the ceding provider’s negligence in releasing the pension funds to the scammers and financial crime facilitators. And yet neither HMRC nor the Pensions Regulator is ever brought to account. The biggest problem is that – in the case of pension liberation – HMRC will pursue the victims and not the perpetrators. This then compounds the appalling damage done to thousands of people’s life savings.

We have often seen serial scammers like Stephen Ward behind scams such as Ark, Capita Oak, Westminster, London Quantum etc., and yet neither HMRC nor tPR take any action (except to pursue the victims for unauthorised payment tax charges). This is neither just nor reasonable – and yet this practice continues unchallenged.

Any half-decent detective would then turn his attention to the “introducers” and cold callers. These people draw in the victims with unrealistic promises of fat returns and “free” pension reviews. In the case of the London Capital & Finance investment scam, we have seen hard evidence of how lucrative introducing and lead generation has become. Surge Group earned over £50 million promoting the scam which saw 12,000 victims lose £236 million worth of life savings. Surge boasts that it has over 100 staff and that they are treated very well: “We have our own in-house Barista who makes the best flat whites in Brighton. Every day you will find healthy breakfasts, fridges brimming with drinks and snacks, weekly massages and haircuts provided onsite.”

In the case of the Continental Wealth Management scam, there was a further trio of suspects: life assurance companies – Generali and SEB and OMI. These providers of expensive “life bonds” pay the scammers 7% commission and facilitate the crime of defrauding victims into investing into high-risk, expensive, unsuitable investments that earn the scammers further fat commissions. Even when the portfolios have been partially or even fully destroyed (murdered), the life offices still take the huge fees and blame the advisers such as CWM – or even the victims themselves.

We also have the so-called regulators – such as the FCA (Facilitating Crime Agency) and tPR (the Pension Rogues), who are supposed to help protect the public from becoming pension scam victims. But these limp and lazy organisations are so slow off the mark, that the scammers have long since vanished by the time they take any action. This is evident in the recent London Capital and Finance investment scam; the FCA was warned back in 2015 but – of course – did nothing.

Another suspect in the pension murder crime scene is the Insolvency Service. Back in May 2015, the Insolvency Service published their witness statement in the case of a large cluster of pension scams – including Capita Oak, Henley Retirement Benefits, Berkeley Burke and Careys SIPPS – all invested in Store First store pods. The total scammed out of 1,200 victims was £120 million – and yet the only action that the Insolvency Service has taken has been to try to wind up Store First. Four years later. And all this will do is punish the victims even further – on top of HMRC punishing the victims by issuing tax demands.

The burning question is:

How long can all the parties involved in these pension scams, go on letting this happen and say it has nothing to do with them? In some cases we have the ceding providers blaming the victims for their losses!

Still, to this day, we see victims’ life savings invested in toxic and expensive assets. Nothing meaningful is being done to put a stop to it. The victims lose their money and the scammers escape with bulging pockets full of cash.

Other suspects include the advisory firms – some of which have no license to provide financial advice and few have sufficient professional indemnity insurance. Henry Tapper recently wrote an interesting blog recently about the FCA’s suggestion that financial advisory firms should have much higher PI cover.

In the offshore advisory space, regulation is still hit and miss – with some firms providing investment advice with only an insurance license. And many providing advice with no license at all. But still QROPS and SIPP trustees routinely accept business from these “chiringuitos”. But even the properly-regulated ones still routinely use expensive, unnecessary “life” bonds – and we now have hard evidence that this is a criminal matter in Spain after our recent DGS ruling against Continental Wealth Management and all associated parties.

The saddest footnote to this blog is that many so-called “experts” seem to think that the real culprit is the victim himself. They state that people who fall for scams were “stupid” or “greedy” or “should have known better. The well-worn trite phrase: “if it sounds too good to be true, it probably is” gets trotted out all too frequently. But when even regulated and qualified firms and individuals have convincing sales patters that effectively con people into expensive, high-risk arrangements with hidden commissions and fake promises of “healthy” returns, is it any wonder that so many pensions are murdered every day? And when large institutions like Old Mutual International and Friends Provident International facilitate such pension and investment scams, is it any wonder that so many highly-intelligent, well-educated people get scammed?

Ask the victims of not just the £236,000,000 London Capital & Finance fund (bond), but also:

Axiom Legal Financing Fund – £120,000,000 (most of which offered by OMI and Friends Provident International)

LM Group of Funds – £456,000,000 (most of which offered by OMI and Friends Provident International)

Premier Group of Funds – £207,000,000 (most of which offered by OMI and Friends Provident International) – including Premier New Earth and Premier Eco Resources

Leonteq structured notes – £94,000,000 (all of which offered by OMI)

April 1, 2019
London Capital & Finance collapses

Another high-risk investment fund goes belly up. London Capital & Finance (LCF) has gone into administration, not long after taking a whopping £236m of investments – much of which was from first-time investors. It is thought that 12,000 investors have been financially ruined.

This tragic news comes as plans are being drawn up to take recovery action for the victims of three other failed funds: Axiom with £120m worth of investors’ funds (£30m of which was with life offices FPI and OMI); LM £456m (£90m with FPI and OMI); and Premier New Earth £207m (£62m with FPI and OMI).

With so many millions having been lost between LCF, Axiom, LM and NERR – well over one billion pounds – this does beg the question as to when regulators are going to take some effective action to restrict the promotion of such funds to retail investors. Because, without the active and highly-efficient marketing machine which operates so successfully in so many jurisdictions, these no-hoper funds would never get off the ground. But, of course, they pay fat commissions to the introducers and brokers who peddle them. So, obviously, exposing naive-investor clients to high-risk funds was very profitable.

This also begs the question as to why the success of such dreadful funds continues to flourish – and why trustees and life offices continue to offer/accept them. Certainly, life offices have a great deal to answer for when it comes to doing due diligence on start-up funds with no decent provenance or evidence that they have even the tiniest chance of succeeding.

The London Capital & Finance investment bond was touted as a “Fixed-Rate ISA”, with promises of 8% returns over a fixed term of three years. BBC News reported on the collapse and stated that “Administrators said investors could get as little as 20% of their money back.” Read the full report.

What is interesting in this case, is that the promoters – a Brighton-based firm called Surge PLC – are the same marketing firm that Blackmore Global used to promote their very expensive Blackmore Global Bond. Another high-risk and expensive investment bond, that up until recently failed to be transparent about the costs involved in the investment.

It is thought that LCF paid Surge PLC some £60m to run their marketing campaign, which amounts to a commission of about 25%! Surge ran a series of marketing campaigns comparing the bonds from LCF to high-street bonds, promising consumers an 8% return. Comparison websites put LCF at the top of the retail market for bond investments and did not highlight the high risk of the bond.

These ads were pulled by the FCA, due to LCF being regulated and authorised to provide consumer financial advice ONLY. They were not regulated for the sale of bonds or ISAs. It has also been found that the comparison websites were not independent, but rather had a connection to Surge PLC and are also owned by Paul Careless – we have mentioned Paul Careless in other blogs: he is the Director of Surge PLC and seems to be one of the only parties involved in these high-risk investments to be making any profits!

As with so many high-risk unregulated investments like this, the age-old question is, “Where did the money invested into LCF´s bond go?”

We know that LCF paid Surge that huge commission fee, and this then meant returns of up to 44% would be required in order for LCF to make good on its promises. Even in a great investment, this is an unbelievably high return and totally unrealistic.

Once the investments had been completed, the money was then ‘loaned’ out to twelve other companies, and some of these companies then sub-loaned the money. There are concerns that the companies who received these ‘loans’ have a connection to the directors of London Capital & Finance. Many of the firms were very new and four of them have never filed any accounts!

Michael Andrew Thomson, known as Andy Thomson, took over as the boss of LCF in 2015 and is also director of horse riding company GT Eventing. He and Careless are under investigation over the mis-selling of this bond and their connection to the other companies invested in. However, Careless claims he has only carried out marketing practices that were requested of him and his 25% commission fee is in line with market averages.

BBC News spoke to Neil Liversidge – an IFA who came across the scheme back in 2015 and consequently wrote to the FCA to warn them about the connections and possible mis-selling of the investment.

Mr Liversidge said: “The way it was promoted, a great many people could have fallen for this. A client brought it to us, but when we looked into it there was a lot of interconnection between the people they were lending to and the management of LCF themselves. We warned our clients off and the same day we wrote to the regulator raising our concerns about the promotion.”

Mr Liversidge, of course, was proved to be absolutely right. But, unfortunately, it took the FCA a further three years to shut the bond down, which ended up with 11,605 victims investing £236m in LCF’s bond. Investigations show that recovery is likely to be as low as 20% of the initial investments made.

Whilst the investigation goes forward, there have been no promises of compensation from the Financial Services Compensation Scheme (FSCS).

BBC News reported:

“The FCA findings included that LCF’s bonds did not qualify to be held in an ISA account and therefore investors were being misled by being told the interest they earned would be tax free.

The FCA said it was “unlikely” investors of London City & Finance would be protected under the Financial Services Compensation Scheme (FSCS) but it was “for the FSCS to determine”.”

Yet again we see unregulated investments being mis-marketed, to innocent retail investors – and the high risks being masked by promises of high returns. With high commissions – also masked – lining the pockets of the introducers, these toxic investments only make those who receive the commissions any profit. The victims, again and again, lose their hard-earned savings and there is little that they can do to recover them without expensive litigation.

For more on this story listen to BBC Moneybox by clicking here.

March 21, 2019
Generali – jumping ship to avoid new regulations?

The mis-selling of life assurance policies and long-term savings plans has been a regular topic in our blogs. Many victims of pension scams see their funds mis-invested into life assurance policies. These life assurance policies do little more than drain the fund value with their expensive fees and costs.

Generali has for years been aggressively peddling these toxic products. Interestingly, they have just pulled their contractual savings plans – Vision and Choice – from the UAE market. Interesting and attractive names for profoundly ugly, expensive and destructive products.

We have to wonder if all the negative press surrounding Generali’s life assurance bonds has anything to do with it? Since 2016 there has been a huge rise in complaints surrounding the mis-selling of these products. With huge, concealed start-up costs, the funds rarely ever reach their original investment amount, let alone make a gain.

Furthermore, there has been a third push on regulations to improve how savings, investment and life insurance policies are sold. AND the Spanish insurance regulator (DGS) just confirmed that all such products sold in Spain have been done so illegally But Mr Vitiello of Generali claimed their decision to stop selling the Vision and Choice products in the Emirates was not linked to the new regulations. REALLY?!?!

Reported by The National. ae, Generali’s Marco Vitiello stated:

“We will not be accepting any new business applications for our current unit-linked saving products,” said Vitiello – General Manager of Generali’s Dubai branch. “There will be no impact at all to existing clients and contracts. They will continue to be serviced in the same manner as before.” In other words, they will just keep on losing money, being tied in for an unacceptable length of time and paying extortionate charges.

This is not the only big change Generali has made this month. The National.ae also reported that:

“Generali’s decision to stop distributing its contractual savings plans in the UAE came less than a week after the company sold its entire shareholding in its unit, Generali Worldwide Insurance, to the Guernsey-based Utmost Group”

We wrote about the proposed merger between Generali and Utmost Group back in August 2018.

The Utmost Group now has over £33bn in assets under administration and over 240,000 customers. We can only hope that customers of The Utmost Group will not become victims of mis-sold life assurance policies like the ones of Generali.

Generali was one of the culprits involved in the huge Continental Wealth Management pension scam, which saw as many as 1,000 victims, invested into high-risk, toxic, professional-investor-only structured notes.

Whilst the bulk of the victims were placed into OMI bonds, at least 25 (but probably nearer 100) of the victims were placed into Generali bonds by the scammers. The sum total of 25 pension funds invested into these toxic insurance bonds was a whopping £6,314,672. The losses on this amount are calculated to be approximately £3,604,528.

One victim invested £793,612 and has just £62,703 left! Losing a massive £730,909.

Another victim invested £142,626 and has lost £90,618! Leaving him with a fund of just £52,028.

Please note these figures are correct as at 2017/2018, so today’s value is now even lower. Despite the funds’ huge decrease in value, Generali continues to take their fees (based on the original amount deposited – not the current depleted value). Therefore, these amounts will continue to fall AND despite the massive loses be locked in for a fixed term.

It is, of course, a relief to know that they have decided to stop peddling these toxic, inappropriate bonds to victims. But we can’t help wondering why Generali have suddenly done this and really feel for those already caught up in these bogus “life” policies. Seems to us Generali are jumping ship to avoid the new regulations. With sudden revelations that maybe they should have checked all the details just a little bit more – and declined to take business from unregulated scammers.

As Generali are busy making changes and sales, we can only hope that compensating the victims of the CWM scam is on their to-do list. As they have sold their entire shareholdings, you might think that an honest firm would want to make right the wrongs they have done.

Not only did Generali allow these 25 victims to be put into wholly inappropriate funds and high-risk structured notes, but these investment instructions were also accepted from unregulated advisers. The scammers were paid high commissions by Generali and there is no sign of any remorse for the huge losses suffered by the victims.

What we do know is that victims are now preparing their complaints against Generali and CWM. The DGS has found that there is no doubt that the regulations of sale surrounding these products were breached by Generali.

Generali are not the only life office guilty of financial crimes: Old Mutual International and SEB were even worse – facilitating losses on a massive scale in the Continental Wealth Management case. OMI bought £94,000,000 worth of ultra-high-risk structured notes for retail investors – resulting in huge losses. Old Mutual was also heavily involved in more than £1,000,000,000 worth of losses in the Axiom, LM and Premier investment scams.

Seems it is no accident that “Generali” is an anagram of “Liar Gene”.

.

March 13, 2019

Tag: OMI

These are just some of the things they’ve been up to:

So who are the three worst offenders:

All of the worst three life/death offices are still doing a roaring trade. Business has returned to pre-pandemic levels. Europe is their biggest market – with many of their victims based in Spain, Italy, Germany and other expat countries.

This has been a week of scammers trying to silence the din of their sin.

I wonder what they were promoting? It could easily have been blond hair dye or red stockings – or anything in between. But it is hoped they would both have been more transparent about what they charged for their services than the “advisers” at CWM were.

Stealing newspapers or trying to prevent the publication of the crimes isn’t going to change any of that. The hard evidence of the crimes will remain – no matter how hard the scammers try to hide it.

The protagonists behind collapsed Spanish advisory firm CWM – Continental Wealth Management – will be on trial week commencing 24th February in the Denia Criminal Court of First Instruction.

Stephen Ward of Premier Pension Solutions has fled to Florida where he owns a portfolio of at least ten mortgage-free properties near Disneyland. However, he will not succeed in avoiding prosecution.

Inter Alliance, Globalnet, Trafalgar, Old Mutual International, SEB and Generali

So, come on FCA: £600,000 down – only £1,158,000,000 to go!

FCA and FOS continue to dismay and disgust; CWM criminal case set to change offshore financial services; Forged dealing instructions epidemic; Offshore advisory firms without an investment license.

It will take more than a few fireworks to clean up the financial services mess in the UK, in expat jurisdictions across the globe, and in the FCA’s toilets.

Normally a great fan of FT Adviser – and their excellent, independent journalists – I was horrified at the recent “Guide to Structured Products” (particularly the section on how risky they are by Craig Rickman).

Old Mutual International – lover of all unlicensed, unqualified scammers across the globe – is now suing Leonteq for £94 million worth of toxic structured notes. The widespread use of these products has resulted in devastating losses – and victims have died as a result.

How risky are structured products – and fireworks? And how good, safe and suitable are they?

Mail on Sunday’s Laura Shannon met a group of victims of the Continental Wealth Management scam in Denia in July 2019.

The Spanish regulator has made it clear it is a criminal offence to sell insurance “bonds”.

But how do people avoid getting scammed from now on?

Lastly, make sure you get everything – all costs, fees, charges and commissions – in writing. DON’T GET SCAMMED LIKE THE CONTINENTAL WEALTH MANAGEMENT VICTIMS. They will all give you exactly the same advice.

Fighting pension scams: Regulation

Continental Wealth Management invested 1,000 clients’ funds in high-risk structured notes. Investors started with £100 million. Most have lost at least half. Some have lost everything. Continental Wealth Management had no license from any regulator in any country.

Phillip Nunn operates the Blackmore Global Fund which has cost victims over £40 million. Serial scammer David Vilka has been promoting this fund. Over 1,000 people may have lost their pensions.

Unlicensed firms hide charges from their clients. Most victims say they would never have invested had they known how expensive it was going to be.

Hidden charges can destroy a fund – even without investment losses. Licensed advisers normally disclose all fees and commissions up front. This way, the client knows exactly how much the advice is going to cost.

YOU WOULDN’T USE AN UNLICENSED DOCTOR.

SO DON’T USE AN UNLICENSED FINANCIAL ADVISER.

Blackmore Bond – yet another reason why only regulated advisers should be used for investment advice.

The Blackmore Bond transparency was not due to Blackmore Group having a yearning desire to be honest with their victims. It was all down to new FCA rules for being “clear, fair and not misleading” whenever an investment is promoted.

1,200 victims duped into investing in the LCF bond

have lost at least 80% of their money

Another questionable investment from the Blackmore Group is the Blackmore Global Fund.

The connection between Blackmore Group’s Bond and London Capital & Finance (LCF) is Surge – a marketing agent. The LCF bond was promoted by Surge until it collapsed in December 2018.

The new transparency demanded by the FCA is much needed.

Ask the victims of not just the £236,000,000 London Capital & Finance fund (bond), but also:

Axiom Legal Financing Fund – £120,000,000 (most of which offered by OMI and Friends Provident International)

LM Group of Funds – £456,000,000 (most of which offered by OMI and Friends Provident International)

Premier Group of Funds – £207,000,000 (most of which offered by OMI and Friends Provident International) – including Premier New Earth and Premier Eco Resources

Leonteq structured notes – £94,000,000 (all of which offered by OMI)

As with so many high-risk unregulated investments like this, the age-old question is, “Where did the money invested into LCF´s bond go?”

The FCA said it was “unlikely” investors of London City & Finance would be protected under the Financial Services Compensation Scheme (FSCS) but it was “for the FSCS to determine”.”

One victim invested £793,612 and has just £62,703 left! Losing a massive £730,909.

Another victim invested £142,626 and has lost £90,618! Leaving him with a fund of just £52,028.

Seems it is no accident that “Generali” is an anagram of “Liar Gene”.