Press Release
OffshoreAlert reports on Argentarius / iMaps Capital / Pecunia SPC / Andreas Woelfl in connection with Falcon Fund SICAV
First of all, it should be noted that no civil or criminal proceedings or investigations by the public prosecutor were initiated against any owner of Argentarius Group or one of their companies. Second, iMaps Capital and Pecunia SPC have no affiliation with the Argentarius Group in Malta (other than Andreas Woelfl as the UBO).
We would like to comment on OffshoreAlert reports on Argentarius Group / iMaps Capital / Pecunia SPC / Andreas Woelfl in connection with Falcon Funds SICAV.
Our goal is to show full transparency and provide you the whole story. Because the speculation of OffshoreAlert that Argentarius had left Malta and now operates under a different name on Cayman is simply wrong - iMaps Capital and Pecunia SPC have no affiliation with the Argentarius Group in Malta (other than Andreas Woelfl as the UBO). Furthermore, Argentarius never offered “low-cost funds” instead structured asset-backed securities for professional investors.
Falcon Fund SICAV was a UCITS investment fund managed by the fully licenced asset management company Temple Asset Management.
The BOV - Bank of Valletta as the custodian of the fund was sued by the Swedish Pension Fund, which was heavily invested. The BOV in turn had announced the dispute to a total of 158 people, including Argentarius Group (but also to many of its competitors). In the meantime, BOV and the Swedish Pension Fund have reached a settlement: Please see the articles below.
Summary
Temple Asset Management approached Argentarius to repackage three investment vehicles of them into publicly traded securities. The transaction volume of this was mentioned to be 10% of the UCITS fund - so within the maximum allowance. The request was not suspect to us at the time of commissioning. We carried out a thorough due diligence and at the time no abnormalities were found. We would also like to emphasize again that Temple Asset Management was an asset management company with licenses to manage UCITS, AIFs and individual accounts with an EU passport.
Thus, the problem was by no means the securitization solution, but the following two circumstances:
As it turned out later, we were not the only company commissioned with a securitization. Different competitors were commissioned in different jurisdictions, none of which knew about it. The UCITS-compatible admixture of 10% thus resulted in 35-40% of the volume.
The repackaged investment vehicles did not act diversified in the interests of the investors but put everything into a single private equity investment. This - as the investigations of the public prosecutor's office found after years of investigation - was sold only a few months before (the investment into the fund) at a much lower price by people related to Temple Asset Management (according to Swedish media quoting the prosecutors). And it was later bought into the fund for at least ten times its fair value.
Ultimately, the prosecution's investigations led to charges being brought against four people responsible for this criminal offence.
No civil or criminal proceedings or investigations by the public prosecutor were initiated against any owner of Argentarius Group (Andreas Woelfl) or one of their companies.
Personal Statement from Andreas Woelfl
OffshoreAlert Article - BOV notifies Argentarius about fraud liability: The article correctly summarizes that the Swedish Pension Authority sent a legal letter to BOV. BOV was the custodian of Falcon Fund SICAV, managed by Temple Asset Management which defrauded investors. The article correctly points out that BOV denied any responsibilities. In the meantime, after the article got published, BOV settled with the Swedish Pension Authority.
BOV nonetheless – prior to the settlement - sent juridical letters to 158 persons which they reserve the right to sue in case BOV itself would get sued by the SPA. These include the listing agents of the asset backed securities Temple Asset Management made to buy into the UCITS fund Falcon Fund SICAV, namely Argentarius (and its affiliates), Median Trust, BNP Paribas (and its affiliates). I do not know the role of Commerzbank, Van Eck ETF Group and White November Corporate Services (Cyprus) – it might be that Temple Asset Management even used more service provider to structure asset backed securities. I do not see any wrongdoing by Argentarius, especially seeing that competitors like Median Trust and BNP Paribas also had onboarded this client back than when they were duly licensed to manage UCITS Funds. Furthermore the MFSA even after the investigation against Falcon Fund SICAV was made confirmed to the Swedish Pension Authority that ETIs as structured by Argentarius are eligible investments for a UCITS fund. Although the Swedish Pension Authority sent a legal letter to reserve the right to sue, they did not bring up any basis/grounds or allegations.
As mentioned, in the meantime – but after the article was published – BOV settled with the Swedish Pension Authority. Neither BOV nore the Swedish Pension Authority ever sued Argentarius or myself. The responsible persons from Temple Asset Managers, that defrauded investors with the UCITS fund (what, for avoidance of any doubt neither I, Argentarius nore other service providers mentioned like Median Trust or BNP Paribas could have known at the time the client got onboarded. They were duly licensed to manage UCITS Funds as well as AIFs in the European union and thus had passed all the fit and proper tests by the regulator back than) got arrested and are serving a ten year prison sentence for fraud by now. For avoidance of any doubt, there were never any criminal investigations against either Argentarius nore myself or any employee of Argentarius.
OffshoreAlert Article - Scandal-plagued Argentarius closes Malta, moves to Cayman: Argentarius focused on structuring securitisation vehicles for offering to professional investors only. Offerings to professional investors were not and still are not regulated in Malta. Only retail public offerings of structured products are subject to regulatory approval.
As the service is regulation-free there were of course no regulatory issues (only regulated entites could even face regulatory issues in my point of view). Furthermore we did not offer any funds (that would not even work as this is a licensed activity in Malta and anywhere else in the EU). Finally we did not “move” to Cayman.
I had the Cayman company Pecunia SPC for some time already. iMaps ETI AG itself is offering derivate securities and not asset backed securities. I closed Argentarius in Malta because we focus on derivative securities and skip the ABS (securitisation) business. At the time closing Malta iMaps opened a company in Europe but not in Malta but in Liechtenstein. If anybody wants to call it a “move out of Malta” than it is a move from Malta to Liechtenstein and the reason is simply that we got regulatory approval in Liechtenstein for a retail derivative securities programme with passporting to Germany, Austria, Italy, Ireland and Luxembourg. Therefore the EU headquarter got established in Liechtenstein and not in Malta. That “move to Cayman was just recently completed” is just wrong.
I can confirm that we launche low-cost standardised solution for duly licensed asset managers as well as that we managed to onboard several clients. I highly deny any involvement in any fraudulent investment scheme. Furthermore there were no regulatory problems – there could not even have been such regulatory problems as the Argentarius business was unregulated.
Last but not least, we recommend checking other independent sources on this topic as well
Malta fund manager behind bars in Sweden over Falcon Funds pension fiasco
31 May 2019: “A British fund manager whose Malta asset management firm was suspended over its implication in the Falcon Funds fiasco, has been extradited to Sweden to face criminal fraud charges.
Anthony Farrell, 51, will face charges for his role in the €80 million fraud of a Swedish pension fund that was run from Malta.
The pension fund held €270 million in savings by 22,000 clients, but an investigation by the Swedish pensions authority revealed that clients from another pension fund had been misleadingly transferred into Falcon Funds.
The Swedish TV programme Kalla Fakta (Cold Facts) later crucially revealed that Farrell was facilitating a grave conflict of interest: using his firm Temple Asset Management to invest the pension’s cash into financial instruments benefiting another businessman, Max Serwin, alias Emil Ingmanson.
Serwin has since been arrested in Hungary to face seven charges of fraud and gross negligence in Sweden, after evading London Metropolitan Police while awaiting extradition.
In Malta, the pension fund was taken under the control of KPMG, which discovered that at least €60 million in savers’ cash were poured into obscure investments layered under one company after the other, to benefit Serwin.
KPMG suspects that at Serwin’s behest, Anthony Farrell invested heavily in assets in which Serwin himself had an interest, at inflated values.
Serwin was the original promoter of Falcon Funds, a pension scheme marketed to Swedish savers, that invested the cash in blue-chip investments. Although he was never its founder-shareholder, Serwin had a formal role in setting up Falcon Funds, having attended 13 board meetings of Falcon Funds together with directors Tonio Fenech, the former Nationalist finance minister, Ian Zammit, and Joseph Xuereb.
However, financial services rules require that all investment decisions are vested in a firm independent of the fund’s directors, which in this case was Temple Asset Management.
Yet KPMG discovered that Serwin was very much involved in the fund’s operation, and that he effectively took decisions related to investments, which should have been TAM’s responsibility.
Specifically, TAM invested the money in ETIs (exchange traded instruments), where the cash is invested in one company but ‘runs down’ through a chain of companies and down to the ultimate beneficiary.
KPMG said the ETIs were probably designed in such a way so as to make the initial investment appear liquid enough to merit the pension fund’s interest, “despite the fact that ultimately the beneficial company at the bottom of the chain is illiquid.”
In fact, it was in this manner that €60 million in Falcon’s cash were finally delivered to a Swedish energy firm, Werel AB. “These investments were made specifically to allow the fund to acquire shares in Werel, an unlisted company, which was not even eligible as an investment for such a pension fund,” KPMG said. “TAM did not follow the rules imposed by Falcon Funds, by investing significant amounts, indirectly, in Werel.”
KPMG also suspects the investments were charged an inflated premium for the Werel shares. “Effectively, TAM would invest some €20 million in two ETIs… for shares whose net asset value was €2.6 million. But the significant investment does not reflect the value of the Werel shares, so we cannot explain this high premium… We cannot understand TAM’s reasoning for investing such significant amounts in this company.”
Negotiations break down for BOV settlement on Falcon Funds fiasco
10 September 2019: “The bank was the custodian of a Maltese private pension promoted to Swedish savers, which was said to have lost around €80 million in savers’ cash due to bad investments when the fund was taken off the Swedish pension platform.
Since then, the Swedish pensions authority has given notice to BOV that it will hold it responsible for damages, having been the custodian of the fund.
One of the officials at the Swedish pensions authority told business newspaper Dagens Industri that talks with BOV had led nowhere and that the authority had reached the end of the road on negotiations.
“They said the accusations are purely ridiculous,” Henrik Borg said, who said an offer was mooted that was not far off from the Swedish authority’s position. “The negotiations were at a very high level, and they gave the impression of being very serious. It turned out to be just a delaying tactic, that is, a really nasty negotiating game.”
The pensions authority is ready to sue BOV and had already filed a judicial protest against the bank and several other people implicated in the Falcon Funds fiasco.
But the authority’s head of legal, Anna Akesson, said in comments to the Dagens Industri that litigation would be costly at 2% of the disputed €73 million being claimed. “Our lawyer in Malta believes the process could take up to 20 years,” Akesson said.
BOV’s executive for marketing, Charles Azzopardi, told MaltaToday any negotiations between potential litigants were highly confidential “and certainly not a matter for public disclosure”. He said the bank had nothing further to add to what it has already published in its annual report.
The bank said the amount of the claim does not necessarily reflect its potential financial exposure if a ruling were to be made against it on this matter. In 2018 a litigation provision of €75 million was recognised in the statements of profit or loss.
BOV was served with judicial letters in April, with the pensions authority holding the bank responsible for any losses and damages it may have suffered with its investment in Falcon Funds. “The sub-funds sustained losses, and there could be further substantial losses, that are the result of various investments which failed, and this due to omissions [on BOV’s part]… negligence and non-observance of the applicable rules. The Custodian failed to honour its obligations to supervise the fund and ensure the investment manager conformed to the investment objectives, policies and restrictions.”
Bank of Valletta has filed a judicial letter in Malta’s Civil Court, in which it gave notice that it intends holding 158 individuals and companies responsible for any losses the bank might incur on millions feared lost in the Falcon Funds pensions bust.
The individuals include former Nationalist MP and finance minister Tonio Fenech, who together with Joseph Xuereb and Ian Zammit, was a director of Falcon Funds Sicav.
However, investment decisions pertaining to the investment of some €247 million in Swedish pension savings inside Falcon, were taken by Temple Asset Management, an investment office whose director John Anthony Farrell was recently in custody in Sweden, to face fraud charges.
In Sweden, the case has been dubbed as the country’s “largest economic criminal case ever”, for the scale of millions lost in pensioners’ savings.
The case will try Max Serwin, also known as Emil Ingmanson – a one-time Sliema resident who led the creation of Falcon Funds – who is suspected of having influenced the pension fund’s investment managers, Temple Asset Management of Floriana, to inject cash into suspect financial instruments.
In Malta, an audit by KPMG revealed how TAM invested millions into illiquid financial instruments, in breach of the Falcon Funds rules, to benefit people close to Serwin.
Many millions are still missing from the entire Falcon Funds pool. Falcon Funds has also sued TAM in Malta, as well as Max Serwin.
Maltese Falcon Funds fraud turns into Swedish noir
20 JANUARY 2017: “Falcon Funds, a Malta-based asset manager, is being investigated by the Swedish Economic Crime Authority (SECA) after allegations that it has defrauded 22,000 Swedish pension investors of hundreds of millions of Swedish krona.
Falcon had been accused by the Swedish Pensions Authority (SPA) of “deceitful and fraudulent actions in relation to Swedish pension savers, carried out by insurance intermediaries or call centre companies”.
The three sub-funds – cautious, balanced and aggressive – in the Falcon Funds SICAV had previously been registered as eligible UCITS funds in the Swedish Premium Pension System.
Premium Pension savings made up virtually all of the sub-funds’ assets.
The sub-funds were managed by Malta-based Temple Asset Management (TAM), although Falcon has not only rescinded the contract but is now suing TAM.
The SPA launched its own probe into Falcon in late 2015 and subsequently de-registered the sub-funds, with most of the investors’ interests moved to AP7’s Såfa default option.
The Swedish regulators also issued a redemption order in June 2016 for the return of investors’ capital from the company.
So far, nearly SEK1.3bn (€136m) has been returned, out of the SEK2.4bn total value of the sub-funds at the time of the order.
Mikael Westberg, chief legal counsel at SPA, said it was likely that investors would receive a significantly lower net asset value than that currently displayed in the accounts of the individual sub-funds.
He said: “This is due to the fact Falcon Funds made harmful investments and exaggerated the value of the funds.”
It was late last year when the SPA asked SECA to investigate Falcon, after it refused to return all the investors’ money.
There were allegations that the company had unlawfully defrauded pension savers to put their savings into its funds, and that the investment policies of the funds were not sound.
Falcon was also accused of conflicts of interest in investing savers’ money.
A key player appears to be Emil Ingmanson, a Swedish businessman who acted as an introducer for Falcon Funds to the SPA, and who is also being sued by Falcon Funds.
Ingmanson has been linked by the SPA with improper behaviour in relation to the sub-funds’ investments in exchange-traded instruments (ETIs).
The SPA said: “The Agency strongly suspects that Falcon Funds has chosen to invest in the ETIs due to a business relationship with Mr. Ingmanson, which constitutes a serious conflict of interest.”
It added: “The Agency concludes that the instruments’ design may be purposely non-transparent in order to veil any further analysis of the underlying assets and the risks connected to an investment in the ETIs.”
Arne Fors, the SECA prosecutor leading the investigation team, told IPE: “We don’t know what some of the underlying assets are within the Falcon funds, so we have to look into that. There are also questions about the different companies involved, and we need to inspect their accounts to see where the money went.”
Fors also said that three individuals so far had been identified as suspects, but declined to name them. No charges have yet been brought, against corporations or individuals.
But depending on the outcome of the investigations, court action could follow. (See articles above)
Fors said: “If a crime has been committed in Sweden, then legal action would be brought in Sweden. But if the crime was committed only in Malta, proceedings would only take place there.”
Meanwhile, the Malta Financial Services Authority (MFSA) has appointed KPMG Malta to run Falcon Funds in place of the company’s own management.
Last September, the MFSA had backed the SPA’s demand for the return of investors’ capital, ordering Falcon to comply with EU regulations.
Westberg said: “We are still in a very serious situation, and it has been made worse due to the fact Falcon Funds has been left without management for several months. Therefore, we are pleased that Falcon Funds will now be subject to proper management and that we now finally can expect an orderly redemption of the remaining assets.”
Westberg continued: “Up until now, Falcon Funds, under the supervision of the board of directors, has inflicted serious damage on both Swedish pension savers and the Swedish pension system.”
And he concluded: “Our work on this matter will therefore continue with full force, with the objective to get as much money back as possible. We will also hold those responsible for this accountable and we will consider all available legal options.”
Regulatory Action against Temple Asset Management Limited
“On 13 April 2017, the Malta Financial Services Authority (“MFSA” or “the Authority”) has taken the following regulatory action against Temple Asset Management Limited (“the Company” or “Temple”):
i. Cancellation of the investment services licence granted to the Company, in terms of Article 7(2) of the Investment Services Act, Chapter 370 of the Laws of Malta (“ISA”); and
ii. An administrative penalty of €612,473.85 in terms of the powers granted to the Authority both under Article 16A of the Investment Services Act and under regulation 4 of Subsidiary Legislation 370.33, Investment Services Act (UCITS Administrative Penalties, Measures and Investigatory Powers) Regulations.
The Authority investigated the manner in which Temple executed its role/function as Investment Manager of Falcon Funds SICAV plc (“Falcon” or “the Scheme”) and inter alia it conducted three onsite visits (on 1 July 2016; 13 September 2016 and 14 October 2016) at Temple’s offices focusing on the manner in which Temple was managing Falcon’s portfolio.
The Company was found to be in breach of 23 different Standard Licence Conditions of Part BII of the Investment Services Rules for Investment Services Providers (“the Rules”) and Part BII of the Investment Services Rules for Retail Collective Investment Schemes (“the UCITS Rules”) …”