The world’s greatest Ponzi scheme that never was

Cosgrove and Kellermann cleared in Guernsey.
Reports of rampant fraud at the Belvedere Management Group sparked regulators in both Guernsey (pictured) and Mauritius to effectively shut down all funds linked to them. Picture: Shutterstock

The Guernsey Financial Services Commission (GFSC) has ended its investigations into David Cosgrove and Cobus Kellermann and will not be taking any action against them or any of their related entities. This ends more than two years of speculation that the two were running a sensational Ponzi scheme.

From March 2015 the Miami-based blog OffshoreAlert ran a series of stories claiming that Cosgrove and Kellermann were the masterminds behind a “massive criminal enterprise” and that the Belvedere Management Group, of which they were both owners, was involved in “rampant fraud”.

These allegations sparked regulators in both Guernsey and Mauritius to effectively shut down all funds linked to them. In Guernsey specifically, the regulator suspended the license of Lancelot Management, a fund manager owned by Cosgrove and Kellermann, and placed the three umbrella funds it managed under independent administration. Those were the Global Mutual Fund PCC Limited, Worldwide Mutual Fund PCC Limited and Universal Mutual Fund Limited.

However, after 30 months of scrutiny, the GFSC has called its investigations to an end and informed Cosgrove and Kellermann that it will be taking no action against them. This effectively exonerates them and repudiates any claims that they were involved in criminal activity.

Strategic Growth Fund

Much focus of the Guernsey investigations was placed on the Strategic Growth Fund (SGF), a cell under the Global Mutual Fund PCC. The SGF was suspended in 2013 as it did not have sufficient liquid assets to honour withdrawal requests from investors, and concerns were raised that money had gone missing.

In March 2015, international consultancy deVere went public on the fact that it had provided “evidence of wrongdoing” in this fund to OffshoreAlert. A deVere spokesperson was quoted as saying that “we suspect that this case could turn out to be one of the largest financial scams in history”.

However, it later emerged that the Strategic Growth Fund was actually a deVere vehicle. It was managed by United Asset Management, a firm linked to deVere’s CEO Nigel Green, and the only investors in the fund were deVere clients, placed there by deVere advisors who received large commissions for doing so.

In mid-2015, Cosgrove and Kellermann raised these inconsistencies in a document that questioned the role deVere and Green had played in the allegations against them. They claimed that they had been targeted in an “attempt to cover up the direct role that Nigel Green played in the losses to deVere Group clients and the exorbitant fees he (Green) personally received”.


This also highlighted the misconceptions around what Lancelot was doing in Guernsey. Through its funds, the company only provided a platform on which other, independent managers could run their own portfolios. Lancelot did not do any of the asset management itself, and all of the independent funds, or cells, had their own custodians that held the actual assets.

The only exception is that Kellermann was, for a few years, employed by United Asset Management as one of the managers on the Strategic Growth Fund. He however resigned in April 2012.

There was therefore never any way in which Lancelot could directly access any of the money in any of the funds on its platforms.

A statement issued on Cosgrove and Kellermann’s behalf responding to the decision in Guernsey, emphasised this point:

“The Global Mutual Fund was in fact a legitimate investment fund platform, which meant that ‘Belvedere’ in fact had no access to the assets in the funds, which were held by independent custodians and was not involved in any decisions in relation to the assets, which were managed by the independent managers.” 

The statement added that, for this reason, it became evident to the GFSC quite early in the process that there could not have been any large-scale fraud within these vehicles.

“It soon became clear that the Ponzi scheme allegations were not sustainable and that much of the information that deVere claimed to have supplied to the GFSC about how transactions SGF had been involved in were structured and how they were valued was inaccurate. Although these facts were pointed out to the GFSC early on in the process, the GFSC seemed intent to find Cosgrove and Kellermann guilty of something. The GFSC downgraded the accusations to technical administrative breaches and even those have now been dropped.”

The statement from Cosgrove and Kellermann also raised concerns that investors in the Guernsey funds had suffered prejudice over the last two years because the GFSC-appointed administrators had failed to actively manage the funds. There is also not yet any clarity on what will happen to these funds now.

The GFSC declined to comment on the matter.

A number of companies within the ‘Belvedere Group’ remain under investigation in Mauritius, but the regulator’s actions there are being legally challenged. The statement issued by Cosgrove and Kellermann noted that they “expect the outstanding Mauritian issues to be resolved shortly, especially in light of the developments in Guernsey”.



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Comments on this article are closed.

What “backtracking” on previous comments have occurred? Please highlight just one comment that I made and then “backtracked” on.

Re. the “judgment handed down by the Supreme Court of British Columbia”, this is a reference to a libel complaint brought by Duane McGaw, who was one of the principals of the Centaur/Argentum litigation fund group which collapsed after being exposed as a fraud by OffshoreAlert. One of the principals, Brendan Terrill, was later imprisoned in the UK after pleading guilty to child pornography charges. In a report to creditors, the liquidators confirmed that OffshoreAlert’s allegations were true and accused McGaw and others of profiting from the scheme in the amount of tens of millions of dollars. The liquidators filed a petition to be recognized in British Columbia, indicating they plan to file a lawsuit against McGaw to recover proceeds that he received from the scheme.

In 2010, the USA passed The SPEECH Act, which specifically prohibits foreign libel judgments from being enforced in the US on the basis that they are repugnant and are incompatible with the free speech protections afforded to US residents. As a result, I no longer enter an appearance in defamation actions filed outside the US because they are meaningless. The SPEECH Act is the difference between having to shell out hundreds of thousands – possibly millions – of dollars defending frivolous actions brought by reprobates and not having to spend one cent. I did not defend McGaw’s action, hence a default judgment was entered, just as it was in London when defamation actions were filed by Timothy Schools (a struck off lawyer whose assets were frozen by liquidators) and Privilege Wealth Plc (whose controlling person was recently disqualified as a company director in the UK and became well-known in South Africa several years ago when he claimed to own the world’s biggest diamond that, in reality, was a piece of plastic).

Re. “Your actions closed dozens of funds, which meant substantial damages and you should be held accountable.” Put another way, “Your actions closed dozens of fraudulent funds which saved pensioners and other future victims from being swindled by the crooks.” Thanks, you’e unintentionally paid me a massive compliment. I appreciate it

Thanks David, you’ve unintentionally paid me a massive compliment. I appreciate it. You proved my point that your good jurisdiction is a tax haven for mud slinging.

Your narcissistic behavior to have to have the last word proves the balance of my post.

@WTF yes, I don’t hide behind pseudonyms, or do I?

Why hasn’t a single person publicly complained? Perhaps people like to keep their financial affairs private. Perhaps people are embarrassed? Perhaps people would prefer to complain in private following the proper channels. Perhaps….

I’ve also met with and/or corresponded with numerous victims of both Belvedere and deVere. It’s been a shock to see how often people who’ve been ripped off blame themselves and prefer to keep things quiet. Some obviously fight with all they’ve got, but many just give up, which is a pity.

What I can say with absolute confidence – things are happening and in time many questions will be answered and the overall picture will become far clearer. No one should be defending these people!

The finding of the GFSC is what it is. It follows a lengthy investigation which apparently found nothing significant that warrants further investigation.
You may have your views on Moneyweb’s reporting, as I have of yours.
Moneyweb will report on the outcome of the Mauritius investigation when it becomes available.
Unlike the US, media institutions in South Africa are subject to defamation legislation – something that promotes responsible journalism.

End of comments.




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