Tag: Paul Careless

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
20% Black Hole in Blackmore Global

Much like a black hole in Space, the Blackmore Global Fund and Blackmore Bond will swallow up victims’ savings – and never spit them out again.

20% Black Hole in Blackmore Global

It is no secret that we have little confidence in the Blackmore Global Group run by Phillip Nunn and Patrick McCreesh – two of the scammers who promoted Capita Oak and earned nearly £1 million from providing “leads” for the cold callers. Capita Oak is now under investigation by the Serious Fraud Office, and Nunn McCreesh’s nefarious activities were investigated and reported on by the Insolvency Service.

To confirm our suspicions that Nunn and McCreesh’s Blackmore Global Fund and Bond are not just high-risk and illiquid crap (and – of course – totally unsuitable for pensions or anyone with less money than sense), they have announced that 20% of your money could go towards paying for the “costs of the investment”. To put that into plain English, any of the unregulated scammers who promote and distribute the Blackmore investments are earning 20% in commission.

This new-found “transparency” by Blackmore is neither a courtesy to their customers, nor evidence of voluntary honesty. Rather, it is a reaction to the FCA´s new rules for being “clear, fair and not misleading” .

Bond review reported on this and noted that prior to this forced change, Blackmore Global´s website could be read as:

“Capital Protection” and “Income Certainty”. Immediately below these phrases, in letters half the size, were the words:

“Capital at risk | Please read our risk section. Illiquid and non-transferable. Not FSCS”

This change is in connection with Nunn and McCreesh’s Blackmore Global Bond. Their Blackmore Global Fund has already featured heavily in the press with criticisms about its costs and unsuitability for pensions. BBC 4 You and Yours did a feature on the fund back in January 2018, finding that an unregulated adviser – David Vilka of Square Mile International Financial Services – invested many of his QROPS clients into this unsuitable fund – which undoubtedly will have paid him fat commissions.

THE BLACKMORE GLOBAL FUND IS A UCIS (UNREGULATED, COLLECTIVE, INVESTMENT SCHEME) WHICH IS ILLEGAL TO PROMOTE TO UK RESIDENTS. Yet, David Vilka – who had no investment license – promoted it and Nunn and McCreesh accepted the many investments into it from him.

What is similar in both the Blackmore Global Fund and Bond, is the lack of transparency from the start. With the fund, there was also a ten-year lock-in, which was in the small print and not mentioned to the pension investors at the time of signing over their pensions to the scammers. Some of the members were nearly 60, meaning that they were unable to access their money when they retired.

The Bond, up until now, has had no transparency on its charges – and the risk factors were most definitely hidden.

The confirmation of a 20% commission charge (to the scammers who promote and distribute this risky, expensive, opaque investment) comes as a welcome dribble of transparency. However, it is still unclear as to how – after this huge payment – Blackmore investors will ever be able to recoup the initial costs and then start to make some headway on their investment.

Bond Review explains this well:

“In slightly simplified terms, if Blackmore raises £10,000 from an investor in its 3 year bonds paying 7.9% per year, and pays out 20% in commission, it now needs to turn £8,000 into £12,370 to repay the investor in full, representing a 55% return over 3 years – or 15.6% per year.

For its 5 year bonds paying 9.9%, the return required to turn £8,000 into £14,950 is 87% over 5 years, or 13.3% a year.

Any investment targeting a return of 15.6% or 13.3% a year will inevitably be extremely high risk – and while Blackmore can diversify over many such projects, some of its projects will fail, which will lower the overall return.”

This is not an investment to enter into lightly (or at all). Blackmore Global showed net liabilities of £7 million on assets of £18 million in its last accounts – December 2017. Finances and accounts can dramatically shift in the short space of one year: a well-run, professional and ethical company could turn things around. But with Blackmore Global failing for three years to even produce audited accounts on their fund, and lying about who their Investment Manager is, this hardly inspires any confidence at all.

Another worrying thing about Blackmore Global is that they use Surge Financial to promote their toxic wares – and has paid this firm £5.1 million in one year for “marketing services”. Surge Financial is run by Paul Careless, and was promoting the failed London Capital & Finance fund, which paid out an eye-watering 25% to the scammers who promoted and distributed their toxic wares. Having conned thousands of victims into investing £236,000,000 into London Capital and Finance, the whole lot is now probably lost as the company has gone into liquidation. But Surge Financial pocketed £60,000,000 in marketing this toxic fund – and is still promoting Blackmore Global. The FCA declared that the marketing blurb was misleading, unfair and unclear – and it is obvious that the lies told in the glossy brochures duped thousands of people into losing their life savings.

So, with Blackmore Global also using Surge Financial to source victims, and succeeding at the rate of £1.5m a month, it is a serious worry that there will be thousands more victims when the Blackmore Global shit hits the fan.

Bond Review is quoted as saying:

“That Blackmore Bond paid out up to 20% in commission is already known from Blackmore’s December 2017 accounts, which disclosed that £25.4m had been raised in the period (July 2016 to December 2017) and that £5.1m had been paid to Surge Financial for “sourcing investors loans and front and back office operations” (almost exactly 20%).

Could Blackmore Global go the same way as London Capital Finance? We already know that the Blackmore Global fund has been used to scam hundreds of UK-resident victims out of their pensions using QROPS. We also know that few of these victims have had their money back – and that there is zero disclosure as to where the money has gone.

Just remember: there are perfectly-good, regulated funds out there – with extremely low charges, zero commissions to scammers, and excellent performance history (openly reported in the public domain). People don’t need to put their hard-earned savings in black holes such as Blackmore which don’t even disclose what the underlying assets are.

March 11, 2019
BLACKMORE BOND – SHAKEN OR STIRRED – CARELESS OR STUPID?

In the wake of hundreds of victims fearing heavy pension losses in the Blackmore Global fund, we now have another disaster waiting to happen: Blackmore Bond.

This new threat to unwary investors has been analysed by Bond Review. Just to be clear, many people were duped into investing their pensions in the Blackmore Global UCIS fund – which has never published an independent audit. We now have a second threat offered by Phillip Nunn and Patrick McCreesh. Blackmore Bond PLC is promoting these unregulated, capital-at-risk bonds which purport to pay up to 8.5% per annum – but with potential for total loss. How many more people will this high-risk bond ruin financially?

BLACKMORE BOND – SHAKEN OR STIRRED – CARELESS OR STUPID?

Bond Review raises an intriguing question: how come Paul Careless and Surge Group have got involved with Nunn and McCreesh? Unless he has been careless (pun intended), Careless looks to have an unblemished past and Surge (in Brighton) looks to be a bona fide company.

In 2017, Careless’ company Surge Group offered £3,000 in sponsorship to the Kent Police rugby team. This was accepted, but then he tried to change the sponsor from Surge Group to Blackmore Bond. And Blackmore Global started claiming on their website to be “Proud supporters of Kent Police Rugby Team”. So why would Careless – himself an ex-police officer – try to con the police and also get into bed with Nunn and McCreesh?

Let us just remind ourselves that Messrs Nunn and McCreesh were the cold callers/lead generators in the Capita Oak and Henley Retirement Benefits scams which are now under investigation by the Serious Fraud Office. Nunn and McCreesh scammed/attempted to scam up to 300 victims a month for more than two years. Unsurprisingly, Kent Police declined the toxic offer to have any association between a law-enforcement agency and known scammers.

But here’s another puzzle: a geezer called Kenneth “Buzz” West also appears at first glance to be relatively harmless. He is a director of numerous companies – including European Wealth. The only stain on his reputation that I can find is that his former company, Ashcourt Rowan, was fined £412k by the FSA in 2012 for dodgy investments in his other company: Savoy Group. But Ashcourt Rowan held its hands up and paid the fine.

So why on earth would “Buzz” risk getting tangled up with Nunn and McCreesh? Buzz is now Chairman of two of their companies: Blackmore Group and Blackmore Bond. Unless his brains are shaken as well as stirred, he is committing professional suicide – knowingly and deliberately.

Or perhaps I am being too harsh. Maybe he has taken on the role of Chairman so that he can ensure that Blackmore Bond does not sell any toxic, high-risk products to low-risk victims; and also so that he can get the long-overdue Blackmore Global fund audit done. Maybe he also has plans to get the Blackmore Global victims compensated for their losses and distress suffered in the past couple of years.

We need to be very clear about Blackmore Global: it is a UCIS fund that was illegally promoted to retail investors in the UK and which unregulated David Vilka of Square Mile International was flogging to UK victims in the Hong Kong QROPS scam. This accounted for 64 victims with a combined transfer value of £1.6 million – all introduced by cold-calling firm Aspinall Chase – run by Nunn and McCreesh.

According to Companies House, Kenneth Buzz West is a Cypriot and resides in Cyprus.

It just so happens that I am going to Cyprus in a couple of weeks – so hopefully he will invite me for a wee drop of Zivania and Halloumi on toast. And once our whistles are whetted, we can discuss the Blackmore Global audit and compensation.

March 31, 2018