Investigative Website Claims To Expose $16 Billion Ponzi Scheme

The scope of this fraud is breathtaking.  It’s astonishing.  There’s probably never been a fraud like this in the history of finance, just in terms of the complexity, the number of investors, the number of jurisdictions involved, and the number of shell companies involved.  It is truly staggering.

-David Marchant, founder of OffshoreAlert.com

An investigative website has sent shockwaves through the international financial community with recent allegations that a Mauritus-based financial services conglomerate is a massive $16 billion Ponzi scheme on the verge of collapse.  Offshore Alert, a U.S.-based website whose founder, David Marchant, claims to be able to "spot a fraud in 10 seconds," published a shocking article last week claiming that Mauritius-based Belvedere Management Group ("Belvedere"), which is controlled by David Cosgrove and Cobus Kellerman, was operating a massive Ponzi scheme through hundreds of hedge funds the group controlled throughout the world.  If Marchant's allegations that Belvedere is on the verge of collapse are true, the scheme could possibly eclipse Bernard Madoff's Ponzi scheme as the largest scheme in history. 

OffshoreAlert, which touts itself as a independent leading authority on Offshore Financial Centers and serious financial crime, published an article on March 17, 2015 entitled "Exposed: Belvedere Management's massive criminal enterprise."  The article, which is limited to paid subscribers of the website, painted a dire picture of Belvedere's massive global empire and alleged that the conglomerate used a network of offshore financial companies to siphon billions of dollars in investor funds.  According to OffshoreAlert, there was evidence linking Belvedere to a $130 million Ponzi scheme in the Cayman Islands as well as a $100 million Ponzi scheme currently under investigation by British police.  

In the wake of OffshoreAlert's expose, another investment firm has come forward claiming it provided evidence of Belvedere's wrongdoing to OffshoreAlert.  deVere, an independent financial consultant, told CNBC Africa that it had been approached by a Belvedere-controlled fund in 2011 to invest in the successful Strategic Growth Fund ("SGF").  After the fund's ensuing returns plummeted, deVere advised its clients to withdraw their funds from SGF in early 2013.  However, this proved impossible as the fund nearly immediately suspended withdrawals.  deVere has stated that "we suspect that this case could turn out to be one of the largest financial scams in history and we will do whatever is necessary to recover value lost by investors worldwide.”

According to Marchant, "substantial amounts" of investor funds have either disappeared or were used to invest in massively inflated assets.  As Marchant remarked in a recent interview with BizNews,

It’s gone the way of all frauds – a lot of it into the pockets of the people running it.  A lot of money was kicked up to Kellermann and Cosgrove.  They basically had a piece of every action and there was a lot of action here.  From every fund, money was kicked back up to them in the form of administration fees or investment management fees.  Any way they could get money out, they were getting money out.  There were a lot of related party activities that were basically insider dealing – the effect of which, was to transfer millions of Dollars from investors into the pockets of Cosgrove and Kellermann.

Perhaps unsurprisingly, Belvedere initially reacted by turning to high-powered lawyers.  However, the legal efforts were directed only to BizNews - not OffshoreAlert nor any of the other websites that republished the information including CNBC Africa - and sought an immediate retraction of the allegations lest the website face legal action.  That missive set forth a March 27th deadline to retract or face legal action; it has not been reported whether or not the law firm followed up on the threat.  The website also suffered a massive cyber attack in the days following its publication of the story - an attack that allegedly originated from South Africa.

Shortly after OffshoreAlert's publication of the expose, one of the men implicated sought to distance himself from Belvedere by depicting himself as an "absentee shareholder" of a parent company with a majority interest in Belvedere.  In an interview at his lawyer's office in South Africa, Cobus Kellerman claimed he "wouldn't know if it was a Ponzi scheme," and claimed that David Cosgrove was responsible for managing overseas companies and had assured him there was no Ponzi scheme involved.  In later written responses to interview questions with BizNews, Kellerman denied that Belvedere was a Ponzi scheme as "no incoming investors' funds are used to pay existing investors."  

One website is currently reporting that Belvedere and two of its funds, Lancelot Global PCC and Four Elements, have been placed under the conservatorship of accounting firm PriceWaterhouseCoopers.  Multiple regulatory agencies are reportedly looking into Belvedere, including the South African Revenue Service, the Mauritius Financial Services Commission, the South African Financial Services Board, and the Guernsey Financial Services Commission.

The allegations remain just that, allegations, and have not been proven to be true or otherwise found to be accurate.