Director of company linked to EUR 87-million fraud resigns

Readers may remember how, in February of this year, police searched through the offices of a fiduciary agent in Baar after they were made aware by German police that he may have been complicit with others in an illegal EUR 87-million snowball investment fraud. It was reported at the time that the businessman in question, who has still not been named, expressed great shock at the accusations and denied any involvement. Now he has resigned as the sole director of the Piccor AG company of Baar and claims he himself has been a victim, though German police have their doubts about this.

As reported in February, too, not only were the offices in Baar searched, so, too, were six business associates of the financier in Berlin, Munich and Leipzig. All of them had been involved with a parent German firm providing expert advice in matters such as financial consulting and planning, not least in relation to tax and the law, the Baar office acting as a clearing house.

According to the information in documents found, it appeared those involved began to set up an illegal investing tool, known as snowballing, promising investors returns as high as 30% if they put their money in high-risk DAX futures, a contract duly drawn up between the various German consultants involved and the office in Baar.

However, it seems the money raised, some EUR 87 million, was not invested, but simply transferred from one to another of all involved, each hiving off commission and fees, the investors duly kept happy with bogus information about how well their funds were doing.

When asked for his response to the allegations at the time, i.e. in February, the fiduciary agent in Baar said there was no evidence of any fraud in the figures he had looked at and he was supported in this by his lawyer. However, he did mention work in relation to the management of these assets had been outsourced to a company in Gibraltar, with whom contact was suddenly lost last November, as a result of which the Baar financier and his German associates had gone to the British Overseas Territory themselves to investigate but had been unable to find the person responsible for running the asset management company there. As a result, legal proceedings were taken out both in Zug and Berlin, the brokers involved duly informed, too. The Swiss Financial Market Supervisory Authority (Finma) has also been investigating the case.

The Baar fiduciary agent said it was only natural his name had appeared in documentation emanating from Berlin as his company had an arrangement with the tax consultancy involved in Germany. “As I am a member of the board of this company, my details appeared, too, of course,” he said, as he announced he was prepared to cooperate fully with the authorities, German ones, too, as they delve into the matter.

Seven months on, as mentioned, the sole director of the Piccor AG company has announced his resignation. When a journalist of the Zuger Zeitung asked him why, he said he felt unlawful activity had been taking place within the company, activity over which he had no control. “Hence I could no longer fulfil my duties as a member of the board,” he said. As to why he had waited seven months before resigning, he declined to respond. “All I can say is that I was confronted with facts about which I knew nothing. Hence I lost all faith in the German ownership of the company.”

With the director’s resignation and no-one seemingly taking his place, bankruptcy proceedings will be initiated. Indeed, when asked about the future of the company, the now former director said, “This is in the hands of the Office of Bankruptcy.”

Martin Wolters, a Düsseldorf lawyer representing clients who have lost money in the scam, said the excuse the Baar agent gave for resigning was most strange, bearing in mind he was the sole director and had supervisory powers. “If he now claims unlawful activity had been taking place, it was up to him to have intervened; he has therefore failed in his duty,” he said, adding that the agent in Baar may well have known about such activity since the end of 2016, at the time operational business stopped. It was at this time that clients were subsequently advised to transfer their investments though a company in Luxemburg, “in which Piccor also held administrative rights”.

What is clear to Wolters is that the director in Baar simply closed his eyes to everything from the outset and failed to keep records of financial transactions, which, under German law, is a punishable offence. The lawyer went on to say that, even if Piccor AG was forced into liquidation, little money would be able to be retrieved for cheated investors. “All we have managed to get out of Piccor AG so far was EUR 100,000 deposited in a bank in Berlin,” he said. (The photograph shows the bank.)

So where is the rest of the money? Wolters suspected it had found its way into various other companies but doubted the director’s tale about a connection to Gibraltar.

According to prosecution service in Berlin, there are up to seven suspects, with whole operation having been led from the basement of villa in Berlin.

On Tuesday of next week, a creditors’ meeting of those investors affected is to take place in Berlin. So far, only one investor from Switzerland, from a German-speaking canton, has come forward. He said his loss amounted to EUR 200,000.