New Zealand’s Cathy Odgers and Fraud Stock HCI Hamilton: the Denouement

By Richard Smith

Back in mid-October, I wrote a post that, amongst other bits of knockabout, made some serious remarks on the apparent connection between Cathy Odgers, Pacific Fiduciaries (her Samoan fiduciary company), and an exceedingly obvious boiler room fraud, HCI Hamilton, that had a listing on GXG Markets, a small European stock exchange.  I wondered how it was that Odgers, a bumptious ex-blogger, wannabe politician, PR eminence grise, and lately, via email leaks during the recent NZ elections, genuine political mover and shaker, was so often to be found highly adjacent to large and small investment frauds.

The post attracted a succession of menacing but incoherent, then sulky, then sulky again, but always unconvincing and mistaken responses from Ms Odgers herself.

Odgers’ comments included mistakes that one really doesn’t expect a seasoned lawyer to make. For instance, she affirmed, emptily, that regulators are, relative to “keyboard googling”,  all-seeing and all-knowing:

I can assure you that banks and regulators all around the world run far more stringent tests than your keyboard googling on all these people and if they find anything wrong with them they act accordingly.

Well, that’s just clueless. Is that how anti money laundering and and Know Your Client processes work? Does one really just assume the regulators would have found  anything dodgy and take on the client anyway? And hang on a minute, the whole point of my post was that the regulators *had* found something dodgy about the people around HCI Hamilton. So even on her own terms, Odger is making no sense here.

Second, I made an entirely chivalrous offer to leave it to Odgers to tip off the regulators at GXG Markets:

Thanks for the tip about contacting a regulator. But it’s not my company that has its contact details splattered over this scam stock; it’s yours. It’s entirely up to you how you manage that reputation risk, of course.

Bafflingly, Odgers took this very kind offer to mean that, after all, I had no evidence and intended to take no action. She reached these conclusions despite the mountain of research, provided in my post, that suggests that HCI Hamilton is a fraud. Obviously, assessment of evidence, or for that matter, plain old reading comprehension, are not Odgers’ strong points. Those are striking deficiencies, in a qualified lawyer.

Last, despite a couple of prompts from me in the comments to the post, Odgers had nothing to say about HCI Hamilton’s relationship with Pacific Fiduciaries. More precisely, Odgers never took the opportunity to distance her firm Pacific Fiduciaries from HCI Hamilton. Maybe reputation risk just isn’t a consideration for offshore law firms. Or maybe there really is a hard-to-deny business relationship  between Pacific Fiduciaries and  HCI Hamilton.

That will be embarrassing if it is so.  A  timeline of selected GXG press releases from October 2014 to January 2015 makes it abundantly obvious why. Let’s start on October 30th, just two weeks after my blog post went up.

The market quotation and trading of HCI Hamilton Inc. (HCI1) has been suspended on the GXG First Quote under rule 17.2(b) & (c).

The suspension is pending a further clarification from the company and a review by the GXG Regulatory Team.

Rules 17.2(b) & (c) are here, relevant parts in bold:

17 Suspension of Issuing Companies

17.2. Additionally, GXG may suspend the trading of Securities where:

b. the protection of investors so requires; or

c. GXG considers the Issuing Company has brought the integrity and reputation

of the Market into question.

By 9th December the enquiry has delivered the results one should expect:

GXG Markets has today 09:00CET terminated the market quotation and trading of HCI Hamilton Inc. (HCI1) from the GXG First Quote due to the maintenance of an Orderly Market and in relation thereto non compliance with the following market rules:

Rule 9.3.: Submission of an incomplete Director’s Questionnaire.

Rule 13.1.: No communication with the Market.


GXG Regulatory Team

So much for HCI Hamilton; next up, their GXG Adviser, Touchstone, on 13th January 2015

Pursuant to non-compliance with the following Market Rules for GXG Advisors and Introducing Partners:

Rule 2.1 – The advisers’ responsibility for assessing the appropriateness of each Issuing Company’s application to the relevant Trading Venue

Rule 3.1 – The advisers’ responsibility for advising and submitting a completed Application Form for Issuing Companies and a completed Director’s Questionnaire for each Director

Rule 7.1 – Bringing the Market into disrepute

The GXG Regulatory Team has decided to:

  1. To terminate the membership of Touchstone International Business Services Limited as a GXG Markets Introducing Partner, pursuant to Rule 7.2.d.
  2. To publish the decision to impose a sanction against the advisor detailing the content of the breach, pursuant to Rule 7.2.e.

GXG Regulatory Team

This entirely predictable series of events now leaves Pacific Fiduciaries dangling upside down from GXG Markets’ Naughty Tree, in the company of

  • a stock delisted in order to protect investors and maintain an orderly market, and
  • an adviser expelled for bringing the market into disrepute.

Voila (click for extra bigness):

HCI Delisted Capture

This not-great look for Pacific Fiduciaries could have been avoided if only Ms Odgers had read and understood the evidence, and pre-empted the inevitable news flow Oct 2014 to Jan 2015. But she left it to others to provide the tipoff to GXG, with the results you see above.

One final emphasis: if the very obvious fraud vehicle HCI Hamilton ever really was a client of Pacific Fiduciaries, whether for poste restante services, or more, a question which Ms Odgers still hasn’t addressed, then Pacific Fiduciaries’ Know-Your-Client process really doesn’t look all that clever. Perhaps that is something that should attract the interest of the Samoan anti money laundering officials. One seldom encounters just one cockroach.

Meanwhile at GXG Markets a wider upheaval is underway. Oddly enough, a lot of that upheaval has New Zealand connections, one way and another, though not necessarily to Odgers. There will be more on that in my next.

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  1. Clive

    (2nd attempt, WordPress ate my previous comment which gave more detail, but this is sufficiently important just in the unlikely case that any NC reader might be that gullible. Apologies if it ends up a duplicate)

    While not strictly speaking a boiler room scam (you do notionally hold cash rather than an asset which was never there to begin with), ForEx retail trading is by my reckoning the next big thing in cross border cons (and the regulators don’t help with their “oh, they’re sophisticated investors so it’s all okay then” argument for doing nothing / very little until it’s too late for too many people).

    I’d further reckon that New Zealand will turn out to be the ground zero for this sort of scam. There is a good overview here. My TBTF has just issued advisories to tellers about large wire transfers to NZ, the hassle and admin cost of providing the evidence (to try and get money back, which will be pretty much a lost cause alas) is costing them money (no sympathies extended to the people on the sharp end of the scams though). You do have to laugh out loud at the article I linked to’s attempt to downplay the root cause of the scamming… “New Zealand has been widely regarded within the FX industry as a region with very rudimentary regulatory oversight”. Uh-huh, d’ya think ?

    In other news, Clive has been widely regarded within the group of people who know him as someone with very rudimentary resistance to tea and biscuits.

    1. Lambert Strether

      That’s awesome. Richard has been pounding away at this (in so far as an incredibly pointillist approach to the detail can be said to be pounding) and it looks as if a scalp he pointed out was worthy of collection may be collected. This is just great, and Richard was first at ground zero, AFAIK.

  2. ambrit

    Fascinating. I took a look at P.F.s website and read that it uses Wyoming state law in registering LLCs thus it “allows a Samoa LLC to be interpreted by the USA IRS as a transparent entity for income tax purposes.” Any connection to Dick Cheney and his clique? They are, after all, past masters of…
    I am wondering just who pushed this legislation through the Samoan legal system since the quoted rules state that the companies registered under this scheme pay no tax to Samoa. Those Polynesians and their “State of Nature.” Idyllic is the word.

    1. Yves Smith

      Wyoming LLCs are mentioned in Nicholaz Shaxson’s book Treasure Islands as a super opaque tax secrecy vehicle. If memory serves me right, they don’t have to disclose owners or directors.

  3. Gary

    Ironically, i’m volunteering in Samoa and working in the Le Sanalele Complex upstairs from Pacific Fiduciaries. Anything you’d like me to ask them?

    1. Richard Smith Post author

      Ask ’em who referred HCI Hamilton to them.

      Also, whether they intend to fess up to a breach of the Samoan Companies Act: backdated submission of Odgers’ resignation from Pacific Fiduciaries (see my next post).

  4. MrV

    Samoan anti-money laudering officials?
    You’ve got to be joking.

    I’m sure the reason these ‘companies’ base themselves there isn’t because of the superb oversight provided by their regulatory environment.

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