Yves here. Richard Smith is on the trail of what looks to be his biggest international scam find ever, orders of magnitude larger than the usual below the radar single to low double digit million dollar/pound/euro operation that he has ferreted out in the past. And mind you, even though he focuses on the dubious looking inter-corporate relationships and the often evident lack of normal investors protections and business substance, these companies sell hope and glamour to typically credulous retail investors who lose their money and have no recourse.
Naked Capitalism, January 2015
By Richard Smith
For nearly two years now, but with much greater frequency since January this year, I’ve been blogging the story of a group of New Zealand Financial Services Providers and their connections to a sprawling series of international investment frauds, operating between 2010 and now, with operational bases in Switzerland, New Zealand and London, but usually aimed at Malaysian, Singaporean and Chinese investors and, sometimes, mugs in many more locations.
The toxic brand “London Capital” looms over everything. Here’s an old screen shot from London Capital’s web site:
Connected to all of the scams, in one way or another, we find now-convicted fraudster and stock manipulator Bryan Cook, and henchman Thomas Yi of London Capital, depicted above. Again and again, we also find Cook’s sister Julie Cook, Dubai associate Chris Eddy, lawyers David and Christopher Orchard, and a host of Swiss, Korean, Chinese, Malaysian and Rumanian assistants.
Here is a tabulation of the claimed and possible investor damage, where known. The low estimate is based on various unverified assessments, by apparently sober third parties, who have collated individual investors’ claimed losses, sampled in just a part of each scam’s known geographical footprint. The high estimate, of much lower quality, is estimated from what’s known of the scam’s overall footprint.
|Scam||Type||Low estimate of losses||High estimate of losses||Related Cook/Yi Vehicles|
|US OTC listed stocks 2010-2014||Oil exploration pump and dumps: Octagon 88, CEC Northstar, Tamm Oil. Unknown targets, but very possibly Far Eastern investors.||Unknown||Unknown||STS Swiss Treuhand Services (Switzerland), web site archive|
|German listed stocks 2010-2012||Stock price manipulation on Deutsche Börse (Frankfurt and Berlin), mostly targeting non-German investors.||Unknown||Unknown||New Zealand Financial Services Provider ABIL Finance Corporation, STS Swiss Treuhand Services (Switzerland), web site archive|
|GXG listed stocks, 2012-2015||Stock manipulation operations on GXG Markets, mostly targeting Far Eastern investors.||Unknown||Unknown||New Zealand Financial Services Providers London Capital NZ and “Asia Finance Corporation trading as London Capital NZ”|
|Virgin Gold Mining Corporation 2011-2015||Gold-related pyramid scheme and a multi-phase stock manipulation follow-on at GXG Markets, targeting Far Eastern investors||$250Mn||$2Bn||New Zealand Financial Services Providers London Capital NZ and “Asia Finance Corporation trading as London Capital NZ”|
|Power 8 2013-2015||Technology-related pyramid scheme, with major European football clubs for scenery, targeting Far Eastern investors.||$250Mn||$500Mn||New Zealand Financial Services Provider London Capital NZ|
|Euro Forex, PFS and FXCAP, 2011-2015||Guaranteed-profit FX investment pyramid scheme with fake ‘payment card’ (PFS) and fake ‘wealth manager’ (FXCAP) follow up scams, targeting Far Eastern investors.||$1Bn||$2Bn||New Zealand Financial Services Providers PFS Pacific Finance Services Limited,PFS Pacific Finance Services ,Pacific Finance Services Corporation (these really are 3 different FSPs),Euro Forex Investment Limited,EFIL – Euro Forex Investment Limited|
Whatever you make of the quality of the estimates, Messrs Cook and Yi have been busy boys these past few years, haven’t they? Lacking really hard numbers, that tabulation still can’t be the final story of what this crew have been up to, but it does start to give some idea of the scale of the operation.
Here is a brief summary of each scam, and the associated New Zealand Financial Services Providers, with links to press coverage, where it exists.
US OTC listed stocks 2010-2014
Ben Butler of The Australian, June 27, 2015 is on the case. Here are some excerpts:
It’s difficult to convince people to invest in you when you’re the alleged mastermind of a string of scams involving the manipulation of the share prices of at least 10 companies.
But Australian businessman Bryan Leonard Cook, 59, whose trial in Germany on fraud charges finished on Wednesday, and his Swiss associate Bruno Regli had a ready source of money: documents obtained by The Weekend Australian show they used money from the UBS bank account of an Australian living in Switzerland to fund their corporate empire.
Over almost three years, about $1 million made its way from the Australian’s account at UBS’s Zug branch to Regli or to businesses associated with him and Cook.
…Regli withdrew 46,300 francs — about $64,000 — in cash, of which he repaid only 4500 francs.
Regli also transferred more than $760,000 to a Swiss company called STS Swiss Treuhand Services, controlled by him, Cook and Chris Eddy, an Australian businessman based in Dubai. (Eddy declined to comment.)
Swiss company records show STS owns shares in three UK companies suspected by German authorities of being part of Cook’s pump-and-dump network, Klares Wasser, True Green LED and Alta Aerial.
About $150,000 eventually came back to Smith’s account, care of another Cook company, London Capital GmBH.
Regli also transferred more than $360,000 to a company in tax haven the Isle of Man called CEC Carbonate, where he was a founding director alongside Canadian Garry Tighe.
CEC Carbonate is among a number of companies associated with Tighe that have claimed to be in the business of exploring oil sands in Canada. The website of another, CEC North Star, has also been blanked in the past fortnight.
Mr Tighe’s companies haven’t got any other press coverage. The penny stock bulletin boards are pretty blunt about him though, in shouty capitals:
Amazing, “By the way, TAMM, CEC North Star, Zentrum Energie Trust AG and Octagon 88 resources ALL HAVE THE SAME OWNERSHIP OF INSIDERS WHO STARTED AND FLOATED EACH COMPANY” TAMM alone would be enough to scare me off. I am familiar with that scam. FOLKS, do some DD on ” “Mr. Tighe”
That sounds like a good idea…
German-listed stocks 2010-2012
On the Deutsche Börse, back in 2010-2011, the performance of the suspicious penny stocks mentioned in Ben Butler’s piece, UK registered True Green Led (TGLED), Alta Aerial PLC and Klares Wasser PLC, all controlled by Bryan Cook and Thomas Yi, will doubtless have helped to convince naive investors that the next issue from the same stable, an ‘investment holding company’ called ABIL Holdings, would perform in a similar manner. ABIL Holdings, of Guernsey, controlled by Cook, was 100% owner of UK outfit ABIL Holdings LLP, in turn 100% owner of New Zealand FSP ABIL Finance Corporation. As we know from Butler’s piece, Cook and Yi’s Swiss trust company, STS Swiss Treuhand Services, (web site archive: it’s vanished now, of course) also had holdings in at least three of the four stocks. The scope for insider manipulation and fraud is evident.
This activity came to an abrupt end in mid-December 2012, when the Frankfurt Exchange shut down their junior segment, the First Quotation Board, citing “massive and frequent suspected cases of market manipulation”. With 700 stocks delisted, it is clear that the market was by then so overrun by fraudulent stocks that no other practical course of action presented itself. The market shutdown had a knock-on effect on the Berlin Exchange, where 290 securities had a secondary listing.
Part of that massive cleanup was the Frankfurt exchange’s delisting of True Green Led PLC, Alta Aerial PLC and Klares Wasser PLC. Apparently, price quotes for ABIL Holdings had been terminated a couple of weeks earlier, implying specific official suspicions about that stock.
There is no estimate of the investor losses, and, so far, no press coverage apart from the Butler piece.
The GXG Frauds
With the Berlin and Frankfurt junior segments closed down, Cook and Yi need a new fleapit.
Enter GXG Markets, where “London Capital NZ”, and its successor “Asia Finance Corporation, trading as London Capital NZ” are the origin of a whole series of absurd pump and dump scams. These are merely the most eyecatching of a dozen London Capital NZ scams that I could have written up:
- How a British Carbon Credit Pusher Got a Listing on a Danish Stock Exchange, Brokered by a New Zealand Financial Company Run by an Australian Residing in Switzerland (from November 2013, which gives you an idea of how long it takes to get things moving)
- The wrong kind of fraud expert, real Arab princes, and a fake bank. I owe the world an update on this one (a stock called Questus): there have been developments.
- Bond Star Sir Roger Moore, Three Million Phantom Geese in China, and a New Zealand Financial Services Provider
- Nonexistent sunken treasure, with a connection to an Attorney-General in Utah fighting corruption charges, and no connection at all to Mitt Romney
- MSNBC’s Egalitarian Krystal Ball, and Her Husband Jonathan Dariyanani, Star of Numerous International Pump and Dumps
For that matter, there were dozens more GXG scams that had nothing to do with London Capital NZ. It was merely one of many contributors to the rampant fraud problems at GXG Markets, which came under huge pressure to clean house after a regulatory visit in November 2014. Even before it had completed its cleanup, GXG was forced by a scathing regulatory report to surrender its licence. Here’s the choicest bit of the report:
Finanstilsynet has previously – in cases involving GXG’s admission of companies to trading – conveyed to GXG a number of risk statements, reprimands and orders. One case was reported to the police by Finanstilsynet.
During the on-site inspection, Finanstilsynet ascertained that GXG had admitted several third-country-based issuing companies to trading on its market places in violation of GXG’s own rules. In the opinion of Finanstilsynet, in many cases, GXG had interpreted its own rules such that companies only just qualified for admission, and in many other cases, GXG did not observe its own admission criteria at all.
It is the opinion of Finanstilsynet that GXG has grossly ignored the risk information notified to GXG over a long period of time, and that, by admitting the many additional companies, GXG took risks which, historically, GXG has been unable to manage.
Furthermore, the Finanstilsynet notes that GXG only had a profit for two months in 2014. These were the two months immediately before September 2014 when GXG’s revised rules entered into force and led to limitations on companies which could be admitted to trading. In the view of Finanstilsynet, this confirms the fact that GXG had a financial incentive to admit as many companies as possible to trading before the revised rules entered into force, without taking into account the special risks associated with admitting the companies. Finanstilsynet had already pointed this out to GXG.
During the on-site inspection, Finanstilsynet found that, internally in the organisation, GXG had allowed far more than 70 cases on possible violation of GXG’s own rules to develop without processing these cases or making the statutory notification to Finanstilsynet.
Bereft of listing revenues and raison d’etre after delisting the bulk of the scam stocks that it had hosted, and disappointed by a briefly enthusiastic suitor who ran away screaming just 9 days later, GXG closed on the 18th August 2015.
FT Alphaville (and Yves Smith) very kindly gave me a lot of credit for staying on GXG’s case for a couple of years or more, all by myself, as far as I could see. Those plaudits are very gratefully received, and you’d be surprised how far a backslap goes, but of course it was the regulators who intervened most decisively, in the end.
Assuming there’s anything left of GXG to sue, it is natural to expect legal action by any of the remaining honest GXG-listed companies that found themselves “quoted” on the illiquid, reputation-and-business-plan-destroying travesty of a stock market that GXG Markets was, from at least early 2013, when its pungent whiff first caught this blogger’s attention. Honest issuers clearly didn’t get much value for their listing fees, and right now, investors are stuck with unsaleable holdings, too.
It’s also a great shame that the full gory detail of GXG Markets’ web site has now disappeared. It was a trove of sulphurous names and dubious connections, useful for anyone’s due diligence, never mind scam-hunting bloggers who now have an extra dose of link rot to contend with.
One certainly hopes that at an absolute minimum, the underlying data (stocks, director names, brokers, advisors, trades, listing particulars, annual accounts) will continue to be available to any law enforcement agencies that are interested. Perhaps the remaining GXG web site developer would take one last assignment: inserting, at the new front page, a link to GXG’s old site. It could look like a cover-up, otherwise, couldn’t it?
The financial losses of fleeced investors in worthless GXG stocks, brokered by London Capital NZ and others, are unknown.
Virgin Gold Mining Corporation
So far, what we’ve seen from London Capital and related entities is a set of variations on the theme of jurisdiction-straddling pump and dump operations, conducted on third-rate unregulated small cap stock exchanges, with unidentified investors suffering unquantified losses.
Sometime between 2011 and 2013, the modus operandi became more elaborate. Alongside the penny share action, Cook and Yi hooked up with people in the Far East capable of operating terrifyingly vast multi-country pyramid schemes. Many victims are visible, which means that one can get an inkling of the losses, which are enormous.
“Virgin Gold Mining Corporation” (VGMC) is apparently the first of them, a pyramid fraud that suckered perhaps tens of thousands of investors, resulting in well-documented losses of $250Mn (based on a sample of ~900 investors). There are indications that the total bill is much higher, at $2Bn or more, and this isn’t inconceivable, given that there are purportedly 14,000 scam victims in Singapore alone, and that VGMC is very visible in a vast range of other populous territories: Egypt, the UAE, Saudi Arabia, India, China, Malaysia, Indonesia and the Philippines. NC’s introductory blog post about VGMC is here.
GXG Broker “Asia Finance Corporation, trading as London Capital NZ” is a key player in the follow-up phases of the VGMC scam, via two GXG-listed stocks, first VG Resources and then Asia Pacific Gold Mining Investment (APGMI). APGMI, incorporated in New Brunswick, leads us to prodigiously bent Canadian pump and dump outfit Integral Transfer Agency, also very active, and not in a good way, on GXG Markets; sometimes in cahoots with London Capital NZ, sometimes not.
By this time, and with, as we now know, the regulators breathing down their necks, not even GXG Markets can overlook the aroma surrounding London Capital NZ, and they kick it out.
APGMI also leads us to the pugnacious David Mapley. Mapley, a Switzerland-based City veteran, and involved with a couple of capital-hungry startup companies, was initially attracted to GXG Markets by the modest listing hurdles and the promised access to an international investor base. Looking for a suitable GXG Broker, he was referred to London Capital NZ by GXG Markets itself. The international investor base was a mirage. What Mapley got instead, by dint of that disastrous referral, was a reputation-threatening entanglement in a world of giant international investment scams. It took Mapley no more than a couple of months to smell a rat about New Brunswick-registered APGMI. Then Mapley went to war: just for starters, with Bryan Cook, with his sidekick Thomas Yi, and later with the entire somnolent, impotent regulatory apparatus of New Brunswick, which in fact seems to be completely paralyzed. That paralysis is particularly intriguing given the regulators’ very close connections to cretinous New Brunswick securities lawyers Stewart McKelvey, who acted for the blindingly obvious insider fraud vehicle London Capital Associates, a company controlled by Bryan Cook’s henchman Thomas Yi, in its successful effort, via its 80% holding in APGMI, to dismiss the honest whistleblowers (Mapley at al) from the APGMI board.
By now there is sustained media interest in the VGMC story, notably in The Australian and in the New Zealand Herald. Soon, New Zealand’s rather slow-moving Financial Markets Authority, who oversee the FSP registration of the likes of “Asia Finance Corporation, trading as London Capital NZ”, is beginning to bumble its way into the spotlight. That’s accompanied by Gareth Vaughan’s local coverage: of the GXG Markets imbroglio here, in which New Zealand FSPs loom large, and of the flawed concept of the FSP itself, for instance in an interview with David Mapley, here.
Assiduous readers of this blog will be aware that by 26th June 2015, it was known that Bryan Leonard Cook, the owner of “Asia Finance Corporation, trading as London Capital NZ”, had landed a 21-month suspended sentence in Germany for multiple counts of serious market manipulation and stock fraud on the German small-cap exchanges.
FMA at last deregistered Asia Finance Corporation on 1st July 2015. Had they not snapped into action around 20 days earlier (that’s how long a deregistration takes), FMA might have had to endure the embarrassing spectacle of a convicted fraudster owning one of their FSPs for rather longer. At any rate, not quite in the nick of time, something got FMA moving. Whatever that stimulus was, I am sure FMA are glad it turned up no later.
Back in January, this blog asked a sharp question: Is Power8, Sponsor of Everton FC, Fulham FC and RCD Espanyol, a Giant Ponzi? By last week, we’d accumulated and analysed enough info, via new sources and via the Spanish press, to characterise Power 8 more precisely: Power 8, Sponsor of Everton FC, Fulham FC and RCD Espanyol, is a $250Mn Pyramid Fraud, and as that post explains, Bryan Cook and his New Zealand FSP London Capital NZ are right at the heart of it again.
Remarkably, or not, Everton FC, Fulham FC and RCD Espanyol have been pretty tight-lipped about this affair.
At least in Spain there have been some valiant press efforts to get to the bottom of what’s going on. I can find no UK press coverage whatsoever.
Euro Forex, aka EuroFX
Bryan Cook’s also implicated in another multibillion scam recently reported in New Zealand, Euro Forex (details here and here in two great write-ups from Gareth Vaughan). A resourceful Chinese investor has identified 3,000 formerly rich folk who, between them, say they put $1Bn into this scheme. He is also confident that there are at least 10,000 investors in China alone. It seems safe enough, then, to claim that $1Bn has been lost in this scheme at least, with $2Bn as the much hazier upper bound.
Since the story broke in New Zealand, the same resourceful Chinese investor has put together a good dossier in English: eurofx_fxcap_international_fraud
explaining how the scam worked: the timeline, the pyramid scheme, and the bait and switch into a fake payment card service, PFS, which is yet another New Zealand FSP. I commend the dossier to readers’ attention; and to the attention of various English-speaking police forces, too.
The Euro Forex scam started in 2012 and is still running as “FXCAP”, with a magnificently dodgy online proposition: the photographs of the purported principals of FXCAP are in fact harvested from university web sites. For instance, compare the mythical “Simon Finch, Head of Private and Business Clients” at FXCAP (archived copy):
with the honest-to-goodness flesh-and-blood Clayton H. Riddell, donor of $2.5 million to the University of Manitoba:
One can work though all the FXCAP pictures like that, identifying the originals; it’s slightly spooky.
There’s one intriguing additional observation to make about the London end of the Euro Forex scam. It happens that the City of London Police are already investigating an FX investment fraud, just like Euro Forex, with high-profile sporting connections (just like Power 8), targeting naive Asian investors (just like both Power 8 and Euro Forex). It’s none other than sports sponsor and fraud CWM FX, blogged by Naked Capitalism in April, whose most numerous victims, if not the most affluent, are now said to be the Gurkhas of Nepal.
It also happens that when Euro Forex closed down its London operations, based in 21 Heron Tower, its office suite was taken over by…CWM FX. How deep the behind-the-scenes connections are, I don’t know, but it is certainly something to keep worrying away at.
What’s next? Both the ebullient Mr Cook and scandalous “affiliate” AFC (Asia Finance Corporation) have now understandably disappeared from London Capital’s latest web page, leaving only the narcissistic Mr Yi (and his guidance and wisdom):
But there are bigger ripples than that. Gareth Vaughan’s latest report on Euro Forex suggests that one formidable enforcement agency is stirring:
“Can confirm the City of London Police are investigating a foreign exchange company in relation to fraud. No arrests,” an emailed response from the City of London Police to interest.co.nz questions about Euro Forex said.
Meanwhile, the New Zealand Financial Intelligence Unit is being coy about what it’s doing, if anything, the Singaporean and various Chinese police forces are on the case, the Swiss Prosecutor’s Office is wondering whether to cover it up or not, the SEC is in the offing somewhere, and that distant thundering of hooves just might be the Mounties. Let’s see who makes it to Bryan Cook’s current residence first.