Johann Lotter*
Hi AlecI do find this Belvedere saga very interesting. I was hoping you can shed some light on how these guys get their hands on money?
I assume that they inflate the NAVs of the funds, which does two things:
1. Generate higher annual management fees which is paid to PMs
2. Attract more investors which could also generate more upfront fees and annual fees?Is this a fair assumption? Or do they get their hands on the money some other way?
2. Attract more investors which could also generate more upfront fees and annual fees?Is this a fair assumption? Or do they get their hands on the money some other way?
The inflated NAVs then become a problem because withdrawals have to be paid out at the higher price, but assets are disposed at real market value, which dilutes the value of the funds even more.
Your insight would be welcomed.
*Johann Lotter is a member of the Biznews communityAlec Hogg replies:
Hi Johann
You have described pretty well how a Ponzi fund works. OffshoreAlert’s investigations led it to the conclusion that this was how Kellermann and Cosgrove were operating. Their former funding partner, the deVere Organisation, agrees with OffshoreAlert’s conclusion. Messrs Kellermann and Cosgrove say this is not the case.
* Click here to read the “back story” and access links to all the Biznews.com coverage of the Belvedere saga.
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