Monday, June 15, 2015

Foreign Exchange: Chinese Allege $1.2 Billion Geneva Based Scam

From Bloomberg: 

Geneva Whodunit Has Chinese Up in Arms Over $1.2 Billion Lost in Alleged Scam
Street protests in Beijing and Hong Kong. Chinese investors flying 5,000 miles to show up on doorsteps in Geneva and demand their money back. It’s the fallout so far from an alleged scam that its victims say robbed 29,000 Chinese investors of $1.2 billion.

They were promised returns of as much as 10 percent a month from currency trading by API Premiere Swiss Trust AG and associated companies, according to interviews with six victims and documents they shared over the past three months. The money disappeared from their accounts in January, the investors said.
“We wanted to know the truth,” said Chen Biya, 43, an advertising agency owner in Beijing who flew to Geneva in late March with two dozen fellow investors to try to recover their missing millions. They sought redress at API’s locked former offices, the public prosecutor and in meetings with lawyers, then went to Bern and Zurich to appeal to the Chinese embassy and Swiss Financial Market Supervisory Authority, known as Finma, he said. “But nobody has been able to tell us the entire story.”

Unprecedented billions of yuan flowing from China and into investments around the world are creating opportunities for fraudsters, as well as legitimate money managers trying to get their hands on the cash. The cross-border nature of the flows is posing challenges for regulators and crime fighters alike.

More Vulnerable
“Frankly, the law enforcement authorities tend to be focused only within their own jurisdictions and move deadly slowly on investigations,” said Steve Vickers of Hong Kong-based risk consultancy Steve Vickers & Associates, who said the large amounts of capital seeking offshore havens, some by circumventing China’s currency controls, make Chinese more vulnerable to cross-border crime.

Geneva’s public prosecutor confirmed it’s investigating API and an associated company, Alpen Asset Management Trust Sarl -- both described as “heavily indebted” by Finma, which initiated bankruptcy proceedings against them last month. In January, Finma issued a public warning that API and Alpen were wrongly claiming to be licensed and supervised by the Swiss regulator. It came about 10 days after the investors said they discovered their accounts had been emptied....MORE