Belvedere allegations: Fund administrator says Brighton SPC is not a Ponzi

Update: Faure clarifies Drake’s position.

CAPE TOWN – Over the last few days allegations have been emerging about a supposed $16 billion (R200 billion) Ponzi scheme run by a Mauritian-domiciled company called Belvedere Management Limited. The allegations were first made in an article on OffshoreAlert, which claimed that Belvedere was essentially a “massive criminal enterprise”. 

This has caused waves in South Africa because one of the people implicated is South African fund manager Cobus Kellermann. He together with Irishman David Cosgrove and Mauritian accountant Kenneth Maillard are the supposed masterminds behind Belvedere.

In the original article, OffshoreAlert says it has evidence of “funds that are blatantly fraudulent, including a current $130 million Ponzi scheme in Cayman”. The fund in question is Brighton SPC, a registered mutual fund in the Cayman Islands.

The evidence for OffshoreAlert’s claim is apparently not that any investors have been unable to reclaim their money from the fund, but that its performance has been suspicious. However, the current administrators of the fund have told Moneyweb that all of the assets can be verified and there is no evidence of any fraudulent activity.

Brighton SPC has two sections of cells, CWM and Kijani. The allegations pertained to both.

However, Brighton SPC has not yet even launched the CWM cells. So the allegation that it is a Ponzi scheme is hard to substantiate.

That leaves the Kijani cells. There again the truth appears to be somewhat different to what appeared in OffshoreAlert.

Nicolaas Faure, director at Drake Fund Advisors in Cape Town, says that the Cayman fund was only recently structured and their role as administrator was only activated last month. They therefore cannot comment on any performance that they have not disclosed themselves. However it is their duty to check on the assets within the fund and everything they have suggests that those assets are valid.

“We were still onboarding the assets when the rumour broke,” Faure says. “But we have received independent evaluations to confirm their value.”

He says that he is puzzled that the claims about Brighton SPC would be made without Drake as the independent fund administrators being asked to provide any evidence.

“Everything we have done points to the fact that the assets are valid,” Faure says. “We expect an audited set of financials within 14 days, but our work points to the fact that the allegations of Brighton SPC being a Ponzi scheme are baseless. They were made with little or no evidence.”

Faure also points out that Brighton SPC is a registered mutual fund in the Cayman Islands, and this is a well-regulated market.

“I believe that the necessary processes and applications and regulatory approvals are in place,” he says “A well-respected law firm structured the vehicle, and it has every licence and registration it is required to have, including the necessary service providers.”

In addition, Brighton SPC is not run by Belvedere. It is managed by London-based firm Straffan Asset Management, which is regulated by the UK’s Financial Conduct Authority (FCA).

The link to Belvedere appears to be that Belvedere ran a fund in Mauritius called Four Elements. One of its sub-managers set up in the Cayman Islands, and that is the current Brighton. However, there doesn’t appear to be any way in which Belvedere could take any assets out of the fund.

Following the allegations that Brighton SPC was a Ponzi scheme, the directors elected to suspend any trading in the fund. They felt that while an investigation was taking place, they did not want to put any assets at risk of a run.

However, Faure says that Drake welcomes any review and it is currently working with all the parties concerned, including the regulators.

One of the more curious points made by OffshoreAlert is that Faure went to the same university as Kellermann. Faure says that while this is true, it isn’t that unusual given that they are both Afrikaans-speaking Cape residents, and there is only one local Afrikaans university that they could attend.

However they were not in the same year, and he says he has never met Kellermann.

Update: Faure clarifies Drake’s position

Following further comments made by OffshoreAlert’s David Marchant on the Moneyweb website, Faure provided some additional detail on Drake’s role with the Kijani sub-fund. He pointed out that while Brighton SPC was set up in 2014, its assets were only received in 2015. It was therefore only at that stage that Drake could begin the primary job of reconciling those assets.

“On 28 January 2015, the directors of Brighton SPC signed the necessary agreements to fund Brighton SPC’s Kijani cells, and the counterparties signed on 5 February 2015,” Faure explains. “This is the date we could start our work, as prior to this date, we did not have the necessary agreements making Brighton SPC the owner of the assets in question.”

Faure confirms that Drake was listed as the independent administrator from the fund’s conception in 2014, and that will be reflected on any prospectus from an earlier date. However, Brighton was an unfunded entity until the date that it became the legal owner of the assets it now holds, and so Drake could not have done any verification of the assets prior to that date.

On the question of whether or not Drake removed its name from Kijani’s website, Faure points out that the company was erroneously listed on the site as a partner.

“Once this came to our attention, we requested that it be removed, as we are the independent administrators of Brighton SPC, and can only be listed in that sense,” Faure says. “We have no problem with being listed, but it must be in the correct way, indicative of our role as independent administrator. Being listed as a partner may indicate that we are not independent, which is not acceptable.”

He points out that Drake is still listed as the independent fund administrator under the ‘contact’ section of the website.

Kellermann was not available for comment at the time of publication.

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This is one of the most naive, irresponsible and inaccurate articles I’ve ever read. It reads like a paid-for commercial for the fraudsters. You do your readers a grave disservice and you will be made to look like a fool over time.

So the fraudsters have told you that Kijani Commodity Fund is not a Ponzi scheme and … er … that’s all the evidence you need. What naiveté!

Re. “In the original article, OffshoreAlert says it has evidence of “funds that are blatantly fraudulent, including a current $130 million Ponzi scheme in Cayman”. The fund in question is Brighton SPC, a registered mutual fund in the Cayman Islands.” That’s inaccurate. The “fund in question” is Kijani Commodity Fund, which is a sub-fund of Brighton SPC, and we have plenty of evidence that other funds are frauds. Error # 1.

Re. “Brighton SPC has two sections of cells, CWM and Kijani. The allegations pertained to both.” Error # 2. The allegations pertained only to Kijani Commodity Fund.

Re. “However, Brighton SPC has not yet even launched the CWM cells. So the allegation that it is a Ponzi scheme is hard to substantiate.” Error # 3. CWM is a group of many companies and the Ponzi scheme referred to in the article does not concern the CWM cells within Brighton SPC but CWM’s London forex operation, whose office was raided by City of London Police on March 6th with 13 arrests. This is clearly stated in the OffshoreAlert article, which you apparently are having great difficulty understanding. The raid has been widely reported by the British media. Obviously, a little old police raid on an office is nothing to be suspicious about in the La La Land that you seem to live in.

Re. “Nicolaas Faure, director at Drake Fund Advisors in Cape Town, says that the Cayman fund was only recently structured and their role as administrator was only activated last month. They therefore cannot comment on any performance that they have not disclosed themselves.” Error # 4. I have copies of a Brighton SPC prospectus (which covers Kijani) dated October 24, 2014 and performance figures for Kijani for December, 2014, January, February and March, 2015 and all of these documents identify Faure’s Drake Fund Advisers as the Fund Administrator. I can provide these to you if you want them, which I doubt. It’s clear that your ‘research’ for this article involved speaking with Nicolaas Faure, who suffers from your inability to comprehend the OffshoreAlert article.

Re. “… our work points to the fact that the allegations of Brighton SPC being a Ponzi scheme are baseless. They were made with little or no evidence.” Error # 5. OffshoreAlert never reported that Brighton SPC was a Ponzi scheme. We reported that Kijani Commodity Fund was a Ponzi scheme, which it undoubtedly is. Faure is laying the foundation here for the end of his career in the BVI, where OffshoreAlert is taken as gospel by the BVI regulator, as you can read from his comments in a Wall Street Journal profile of OffshoreAlert in 2009 at http://www.wsj.com/articles/SB124112584249174551. To quote the article: “Mr. Marchant’s newsletter is considered a must read in the offshore centers. “David’s work is a total sine qua non for everyone in the industry,” said Robert A. Mathavious, the managing director and chief executive of the British Virgin Islands’ Financial Services Commission, the islands’ main financial regulator.”

Re. ““Everything we have done points to the fact that the assets are valid,” Faure says.” Yes, he’s so confident of this that his firm’s name was hastily removed from the Kijani Commodity Fund’s web-site soon after OffshoreAlert exposed the fraud. See for yourself at http://kijani.com/partners/.

Re. “Faure also points out that Brighton SPC is a registered mutual fund in the Cayman Islands, and this is a well-regulated market.” Ah yes, no regulated mutual fund has ever collapsed in Cayman or anywhere else! Again, what planet are you living on?

I will attempt to re-post my original posting in two tranches.

This is one of the most naive, irresponsible and inaccurate articles I’ve ever read. It reads like a paid-for commercial for the fraudsters. You do your readers a grave disservice and you will be made to look like a fool over time.

So the fraudsters have told you that Kijani Commodity Fund is not a Ponzi scheme and … er … that’s all the evidence you need. What naiveté!

Re. “In the original article, OffshoreAlert says it has evidence of “funds that are blatantly fraudulent, including a current $130 million Ponzi scheme in Cayman”. The fund in question is Brighton SPC, a registered mutual fund in the Cayman Islands.” That’s inaccurate. The “fund in question” is Kijani Commodity Fund, which is a sub-fund of Brighton SPC, and we have plenty of evidence that other funds are frauds. Error # 1.

Re. “Brighton SPC has two sections of cells, CWM and Kijani. The allegations pertained to both.” Error # 2. The allegations pertained only to Kijani Commodity Fund.

Re. “However, Brighton SPC has not yet even launched the CWM cells. So the allegation that it is a Ponzi scheme is hard to substantiate.” Error # 3. CWM is a group of many companies and the Ponzi scheme referred to in the article does not concern the CWM cells within Brighton SPC but CWM’s London forex operation, whose office was raided by City of London Police on March 6th with 13 arrests. This is clearly stated in the OffshoreAlert article, which you apparently are having great difficulty understanding. The raid has been widely reported by the British media. Obviously, a little old police raid on an office is nothing to be suspicious about in the La La Land that you seem to live in.

Re. “Nicolaas Faure, director at Drake Fund Advisors in Cape Town, says that the Cayman fund was only recently structured and their role as administrator was only activated last month. They therefore cannot comment on any performance that they have not disclosed themselves.” Error # 4. I have copies of a Brighton SPC prospectus (which covers Kijani) dated October 24, 2014 and performance figures for Kijani for December, 2014, January, February and March, 2015 and all of these documents identify Faure’s Drake Fund Advisers as the Fund Administrator. I can provide these to you if you want them, which I doubt. It’s clear that your ‘research’ for this article involved speaking with Nicolaas Faure, who suffers from your inability to comprehend the OffshoreAlert article.

And the second tranche:

Re. “… our work points to the fact that the allegations of Brighton SPC being a Ponzi scheme are baseless. They were made with little or no evidence.” Error # 5. OffshoreAlert never reported that Brighton SPC was a Ponzi scheme. We reported that Kijani Commodity Fund was a Ponzi scheme, which it undoubtedly is. Faure is laying the foundation here for the end of his career in the BVI, where OffshoreAlert is taken as gospel by the BVI regulator, as you can read from his comments in a Wall Street Journal profile of OffshoreAlert in 2009 at http://www.wsj.com/articles/SB124112584249174551. To quote the article: “Mr. Marchant’s newsletter is considered a must read in the offshore centers. “David’s work is a total sine qua non for everyone in the industry,” said Robert A. Mathavious, the managing director and chief executive of the British Virgin Islands’ Financial Services Commission, the islands’ main financial regulator.”

Re. ““Everything we have done points to the fact that the assets are valid,” Faure says.” Yes, he’s so confident of this that his firm’s name was hastily removed from the Kijani Commodity Fund’s web-site soon after OffshoreAlert exposed the fraud. See for yourself at http://kijani.com/partners/.

Re. “Faure also points out that Brighton SPC is a registered mutual fund in the Cayman Islands, and this is a well-regulated market.” Ah yes, no regulated mutual fund has ever collapsed in Cayman or anywhere else! Again, what planet are you living on?

Second tranche:

Re. “… our work points to the fact that the allegations of Brighton SPC being a Ponzi scheme are baseless. They were made with little or no evidence.” Error # 5. OffshoreAlert never reported that Brighton SPC was a Ponzi scheme. We reported that Kijani Commodity Fund was a Ponzi scheme, which it undoubtedly is. Faure is laying the foundation here for the end of his career in the BVI, where OffshoreAlert is taken as gospel by the BVI regulator, as you can read from his comments in a Wall Street Journal profile of OffshoreAlert in 2009 at http://www.wsj.com/articles/SB124112584249174551. To quote the article: “Mr. Marchant’s newsletter is considered a must read in the offshore centers. “David’s work is a total sine qua non for everyone in the industry,” said Robert A. Mathavious, the managing director and chief executive of the British Virgin Islands’ Financial Services Commission, the islands’ main financial regulator.”

Re. ““Everything we have done points to the fact that the assets are valid,” Faure says.” Yes, he’s so confident of this that his firm’s name was hastily removed from the Kijani Commodity Fund’s web-site soon after OffshoreAlert exposed the fraud. See for yourself at http://kijani.com/partners/.

Re. “Faure also points out that Brighton SPC is a registered mutual fund in the Cayman Islands, and this is a well-regulated market.” Ah yes, no regulated mutual fund has ever collapsed in Cayman or anywhere else! Again, what planet are you living on?

DaviMOA,
Bring on your second tranche, we here in La La land is still not convinced that you provided the ”smoking gun” !

the fact is that all the Clarus funds are save – it has been confirmed by both METCIS/MMI and Standard Bank Trustees. Also if you visit https://www.fsb.co.za/Departments/fais/searches/Pages/providers.aspx you will see that CK is not a KI or rep of Clarus. You and AH is doing our local unit trust industry great harm as it is not impacted by the offshore issues.

the fact is that all the Clarus funds are 100% save – it has been confirmed by both METCIS/MMI and Standard Bank Trustees. Also if you visit https://www.fsb.co.za/Departments/fais/searches/Pages/providers.aspx you will see that CK is not a KI or rep of Clarus. You and AH is doing our local unit trust industry great harm as it is not impacted by the offshore issues.

@DavidMOA: I saw you full reply earlier this morning, and Patrick’s reply to you. Then the heading of the article has now changed, so that may be the reason.
(BTW this WordPress commenting system is pathetic – MW please bring back Disqus or at least tell us why not)

@DavidMOA Thanks again for your reply. To reiterate, we are looking at the issues here one by one. To the best of my knowledge Nicolaas Faure has not been accused of any fraud. He is not part of Belvedere and his connection to Kellermann is tenuous at best. Faure is an independent fund administrator, so alleging that “the fraudsters have told you it’s not a Ponzi scheme” is simply incorrect. The fund administrator, on conducting an independent audit of the assets in the fund has satisfied himself that the assets appear to be verifiable. This will be audited and confirmed in the next few days. Given that it is the administrator’s job to do this, I am simply making the first logical step in verifying this fund’s credentials. Nowhere do I make any judgement on the veracity of either your claims or Faure’s. I am simply reporting what the independent fund administrator told me. If he is being dishonest, then that will come out. I don’t know whether Drake removed its name from the partners page of the Kijani website, but it is still listed under the contact tab: http://kijani.com/contact/

I can show you that Nicolaas Faure is a liar and the information he provided to you is materially inaccurate.

Do you want it? If yes, send me an email and I’ll immediately email you documentation. If no, then … well … that speaks for itself !

David Marchant
Owner & Editor
OffshoreAlert

I don’t know all the ins and outs of this story and obviously it will develop later, but Cobus Kellerman’s silence on this matter doesn’t create a good impression. If he has nothing to hide, why doesn’t he go on TV or radio and do an interview to put his investors at ease?

jnrb@. Cobus Kellerman did reply to Alec Hogg at BizNews via his Werksmans attorney, Johan Theron yesterday!

David Marchant – the man doth protest too much
If Offshore Alert is correct, then it should let journalists do their jobs which is to follow up and check the facts. I think Patrick’s story is the best I have read yet – it’s clear and it doesn’t make assumptions. After reading everything in the past few days, I still don’t know how this supposed huge fraud happened or if it happened at all.

Patrick you truly deserve the title “investigator” – you make me proud to be South African – well done, this what true professional journalism should be

Excellent article and coupled with the article confirming that 100% of their administered assets in South Africa are accounted for, the unraveling of Marchants ridiculous article is beginning to happen
Fact
1. DeVere shopped Belvedere to Marchant apparently armed with all this material yet by their own admission, only the SGF fund has affected them. Marchant chose not to mention SGF once in his entire tirade yet sought to link Belvedere to everything bar the plague….why?
2. It’s because deVere owned the SGF fund and clearly told Marchant not to mention SGF as they wanted to keep SGF out of the press…why?
3. Because deVere as an “independent” adviser openly promoted SGF over everything else…..consultants were paid more in SGF than anything else…..the whole fund was sold to clients as an independent fund but underneath the surface was an expensive, highly charged internal broker fund….and the less SGF is kept out of the press the better, so even though Marchant had all this material on SGF he chose not to publish it…..go figure…..
4. Marchant has sold his soul and his publication to the highest bidder….deVere furious with Kellermann and Belvedere over the locking up of SGF in 2013 and their refusal to sell down the underlying assets at any price have decided to exact revenge and in Marchant they have found a willing suitor….he betrays his subscribers and his readers.

Perhaps Moneyweb should be investigating deVere for openly selling in South Africa unauthorised long term savings plans paying almost 100% of first year premium in commission and hiding them behind short form offshore trusts…..the premiums are coming from South African credit cards…….maybe Alec Hogg should get Stockton on CNBC again and give him a proper grilling.

Boy, do you have a naive audience.

You spoke with a BVI administrator who is either lying or incompetent, treated everything he told you as factual (for reasons best known to yourself, with incompetence the most likely culprit) and made one easy-to-prove factual error after another in your story.

And then your readers congratulate you on a job well done.

It’s indeed a funny old world.

You will be left with massive egg on your face at the end of it and your reputation will be in well-deserved tatters.

FYI, the South Africa Financial Services Board released an unflattering statement today about Cobus Kellermann.

I presume the compliments about your ‘reporting’ come from the crooks who are probably amazed that they found a journalist gullible enough to publish nonsense.

I love watching a train wreck unfold.

FYI:I emailed the author indisputable documentary evidence – from the crooks themselves, no less – showing that Cosgrove and Kellermann are the de facto investment managers for Brighton SPC by way of their control over Straffan Asset Management. The information somehow hasn’t made its way into the article.

I can only seen one “investigative journalist” getting emotional, hot under the collar, and throwing insults.

On September 8th, 2015, the Cayman Islands Monetary Authority filed a petition to wind up Brighton SPC due to apparent wrong doing. In its petition, the regulator stated that Kijani Commodity Fund had ben a fraud “since inception” and had never conducted a single commodities trade. Instead, at least US$83 m was diverted and has disappeared. The regulator said that redemptions were paid out of new subscriptions, which is the defining feature of a Ponzi scheme, as first revealed by OffshoreAlert on March 17th, 2015 and which Moneyweb’s Patrick Cairns did his best to refute in the above article, including through his own comment that “the truth appears to be somewhat different to what appeared in OffshoreAlert”. Er … no … Patrick, the truth appears to be somewhat different to what you wrote. Only you know why you failed to take my up on my offer to provide you with documents showing fraud and, instead, chose to be a mouthpiece for the fraudsters, all while pretending to be an investigative journalist.

Moneyweb, I hope you have the honour of writing an unreserved apology to David Marchant and posting it on the Moneyweb website.

End of comments.

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