By Richard Smith
Back in February, I wrote up, as best I could, the bizarre story of Questus Global Capital Market, a New Brunswick-incorporated, GXG-listed, New-Zealand-FSP-brokered company of monstrously fraudulent aspect that had apparently ensnared a Malaysian billionaire, various US-based small businesses and retail investors, and a couple of princes from the royal families of Kuwait and Abu Dhabi. As you can see, if you click through, I recently fiddled with my take on the story, though not with the facts that I set out.
Dodgy-looking Hungarian bank UVB Banco ZRT purportedly held a large share of Questus. Meanwhile, the Turin Financial Police’s “Goldenbank” investigation, into a fancypants advance fee fraud against small businesses in Europe, also implicated UVB Banco ZRT.
Coincidence? Hardly: in February there was already another evident connection between Questus and “Goldenbank”. The aforementioned Arab princes’ GoldBank SAC sported a board member from the very peculiar Italian club, Associazione Croce Rossa Garibaldina (Red Cross Garibaldi Association). The Italian investigation then found that one of the leading lights of the same club, one Antonio Morrone, was the ringleader of the “Goldenbank” fraud.
So it wasn’t very bold to guess that Questus would crop up in the Goldenbank investigation, and on the 4th August 2015, it duly did (Google Translate, with a helping hand from me):
Turin – A transnational crime organisation, exploiting the economic crisis, cheated hundreds of Italian and foreign companies, but was finally dismantled by the Financial Crime Team of the Turin Tax Police.
In the early hours of Tuesday morning, the Financial Police, in collaboration with the Hungarian police, executed to two European arrest warrants, issued by the Court of Turin against two persons resident in Budapest, as members of the criminal group connected with Hungarian company UVB Bank Zrt.
Accordingly, the total number of arrests arising from the year-long international “GoldenBank” investigation by the Guardia di Finanza in Italy, Hungary and Switzerland, cooperating via Interpol, rises to nine.
The extended partnership, made up of about twenty people and directed by a Roman fixer, had managed to create a real “bank” (hence the name of the operation) based in the Hungarian capital, and with offices located in Jakarta, Singapore and Malaysia, aimed to entrap Italian and foreign entrepreneurs looking for financing lines for their business projects.
The many victims were often introduced to the members of the organization by professionals and intermediaries (in some cases, after the victims had failed to get funding from mainstream sources).
The financial scams in question were well thought out: all interested parties had to travel to luxurious offices, located in the center of Budapest, to sign contracts. As revealed by the investigative measure, the sumptuousness of the premises made everything absolutely credible: two floors of elegantly furnished offices adorned with paintings, rugs, glass cases for cigars, monitors on the walls, pictures with celebrities and furnishings and fittings.
In many cases, to make it an even more plausible fraud, compared to the high fees required (“equity”), the victims received in compensation equity securities of Canadian company Questus Global Capital Market Ltd., which, according to investigations carried out by the Guardia di Finance, are not marketable and, therefore, of no real market value.
Well, they have that right: Questus was delisted from GXG Markets in September 2014. Mind you, with $500 dollars of cash and a claimed billion dollars worth of utterly fictional insurance policies in its balance sheet, Questus had no real value at all, on-market or off it.
Back to the Italian press:
Customers of UVB Bank Zrt, despite the advance payment of fees required (often well over 100 thousand euro), were seen continuously delay the disbursement of the loan, receiving various improbable justifications.
In fact, among the cases reconstructed so far (about a hundred, against promises of funding for more than 300 million Euros), no amount was never paid and the advances, except in exceptional cases of partial restitution, have never been made.
This blogger has read more email chains containing stories like that than he cares to remember. There’s the usual boiler room swank:
Wealth illicitly accumulated by individual members of the association also ended up in the crosshairs of the Financial Police.
Since the beginning of the operation, the Turin agents have seized, along with the two company websites, 26 properties, 16 plots of land, bank accounts, three gold watches (Rolex, Cartier and Buti) and 6 luxury cars, including a Ferrari 599, a Range Rover, a Mercedes ML and Audi Q5.
..and a plea bargain:
Summary proceedings against the promoters of the criminal organization are currently before the Court of Turin. The defendants, in the courtroom during the hearing of 10 June, have admitted the facts, asking for a plea bargain. The solid evidence acquired during the investigation has allowed the local Prosecutor’s Office to apply for confiscation of the goods seized, up to the amount of 4 million and 700 thousand Euros, equivalent to the proceeds of the crime.
Elsewhere in the Questus universe, there have been other mostly encouraging and not-unexpected developments.
In March 2015, the Ontario Securities Commission handed out a five year ban and a $50,000 fine to James Stuart Adams, the man in control of Questus Global Capital Market’s Transfer Agent, Integral Transfer Agency, for his involvement in quite another penny stock scam, a Maltese pump and dump formerly quoted on the Frankfurt exhcnage, A25 Gold Producers.
In June 2015, the Stuttgart courts awarded Bryan Leonard Cook, owner of Asia Finance Corporation, Questus’ GXG broker, a 21 month suspended sentence for fraud and serious market manipulation, in connection with quite another penny stock scam, an American pump and dump formerly quoted on the Berlin and Stuttgart exchanges, Clean Enviro Tech.
In July, the New Zealand FMA at last pulled Asia Finance Corporation’s official Financial Services Provider registration.
Admittedly, there’s no visible action by the New Brunswick authorities so far, but that would, I think, be asking for the moon. Apart from New Brunswick, every other relevant enforcement authority on the planet seems to get the idea, and maybe that will have to do.
Still, Paul Murphy of Alphaville asks the key pointed question about GXG:
…whether anyone is chasing down the crooks who used it.
Even considering just one defunct GXG stock, Questus, there are still some pretty big loose ends.
The reported EUR4.7Mn of scam proceeds seem to be a bit on the skinny side, compared with the voluminous Questus trading activity (hundreds of millions of dollars worth) reported to GXG Markets. It could all be faked trades, for sure: but what if it isn’t?
I wonder if that Italian plea bargain included information from Antonio Morrone about his Red Cross Garibaldi colleague Martin Bucher and Bucher’s apparent role in the sale of $100Mn+ of worthless Questus stock to the two Arab Princes. Or did Morrone say something about the precise role of the Malaysian billionaire that I mentioned in my February piece, who appears to have swallowed another $200Mn of worthless Questus stock with barely a burp?
That turns to be a burning question, for a bigger piece of the Questus scam is even now stirring up action in the courts, in the UK and elsewhere. Some of the apparatus, legit or not, is even threatening to make a return to the penny stock markets – this time, to the UK’s upscale equivalent of GXG, the fraud-infested failure that is the Alternative Investment Market (AIM).
So there’s more to come on this, including a special guest appearance by Mr and Mrs Robert De Niro. Watch this space.