This is the second article in a series about New Zealand's role in the offshore finance world. The first one is here.
By Gareth Vaughan, Denise McNabb & Richard Smith of Naked Capitalism
A secretive organisation using a name that looks like a play on that of investment bank Goldman Sachs appears to have run a pyramid scheme via a New Zealand registered company using an ANZ bank account.
In yet another demonstration of the exploitation for nefarious purposes of NZ's soft touch company formation and oversight regime, Fennas Finance Ltd is at the centre of the scheme that appears to have illegally pooled funds from investors probably located in Europe, and deposited them in an account at NZ's biggest bank.
For its part ANZ acknowledges it was used by these entities but says it was only for a short time before bank staff picked up the strange activity and returned money to investors.
'A world class investment academy'
We'll start this story at Icon Sachs, which describes itself as a “world class investment academy,” and whose website says it's based in Dubai. In what is at times broken English, and with pricing in euros, Icon Sachs' website sets out some very sketchy background on the entity and those behind it, and talks up the potential for high investor returns. Here's a flavour;
Icon Sachs is the result of the meeting between a group of sophisticated investors that met in Geneva, Switzerland during mid 2000. Among this group, two gentlemen from Switzerland had worked for large investment banks and hedge funds, one had experience from the trading floor in Frankfurt, and two more were asset managers working out of Dubai.
The Icon Sachs member mission is to provide opportunities for its members to obtain outstanding financial returns by becoming a better investor through education and training. The mission of Icon Sachs is also to foster an engaged and smart investment environment in an effort to enhance the opportunities for members to succeed.
The Icon Sachs program is a self-directed training and Education Package for people seeking knowledge and expertise in alternative investing including hedge funds, private equity, structured products, commodities, and real assets.
An Icon Sachs presentation talks about investment pools that make it possible for "everyone to access the world’s leading industry and profit making strategy through our unique online members club iPic." This club is purportedly the result of Icon Sachs founders' years of investment experience with structured leverage products, "which uniquely enables the possibility to earn high returns with a relatively small investment."
It says its investment pool data is a structured product with multiple elements for diversification and; "High use of leverage elements, to reach high returns - compounding effect starts after 3 months (2 months if you qualify for Fast Track) – indicative return per year is 40%."
A range of "education packages" priced from €95 to €1,775 are outlined, with maximum investment ranging from €250 to €8,000.
Then we're told; "The moment you join Icon Sachs, you can see your iPic Investment and directly be able to show the fantastic performance of your own trade to other interested people." (There's a video here).
An ANZ Napier branch
Smelling a rat, the investigative website behindmlm published this article last year. It features information not available on the public version of Icon Sachs' website detailing that investors should make payments into an ANZ bank account under the name Fennas Finance at the bank's 90 Hastings Street, Napier branch.
A NZ registered company, Fennas Finance describes itself as payment provider and multi-level marketing company (MLM) as below;
Fennas Finance Ltd, located in New Zealand, is building the modern partner for a global 200+ billion dollar industry. By building a truly unique portfolio of products and services including gold backed digital currency, Fennas is moving towards becoming a very important financial partner for the global direct selling industry. The combination of products are ideal to secure customer acquisition as well as recurring use of the payment services, including in the fast growing Chinese market. (Fennas services are not yet available for New Zealand citizens)
Fennas also says;
Fennas Investment portal will offer a service based on Angel project fundings. The angels in the Fennas system shall be primarily very successful MLM leaders and the projects should be related to the MLM sector primarily.
Selected MLM leaders may become Angels and head up a syndicate of investors to back projects related to the MLM industry. The benefit for the Angel will be that, as the leader of the syndicate, they may leverage their investments in the projects they select themselves. The Angel will choose a type of project or company to invest in, estimate how many investments they will make per year and promote this to their followers who then may take part in their investment pool.
Interestingly, the US Securities and Exchange Commission has warned investors to "beware of pyramid schemes posing as multi-level marketing programs," and the US Federal Trade Commission also has a long standing warning here.
'They were a customer very, very briefly'
For its part ANZ confirmed to us that an ANZ bank account was indeed used by this scheme, meaning at least one individual involved either was, or managed to become, an ANZ customer.
"They were a customer very, very briefly last year. Not in that [Icon Sachs] company's name. Our AML [anti-money laundering] team closed them down quickly and we returned the money to the depositors," an ANZ spokesman said.
He declined to say how much money was returned, or where the investors were located.
Below are the bank account details as outlined by behindmlm.
Investors who have raised concerns about Icon Sachs, including here, note it has been registered since April 2015, but its domain name has been kept private along with its address and who is behind the scheme.
The rural Hawke's Bay, Johnsonville & Christchurch
So what do we know of Fennas Finance? It was incorporated as a company in May last year with an Adrian Douglas Brough, who provided a rural Hawke's Bay address, presenting documents to the Ministry of Business, Innovation & Employment run Companies Office. Brough is a shareholder with a stake of just over 5%. We have been unable to reach him thus far.
Fennas Finance's director is Australian resident Michael John Ivkovic. Other shareholders include Gabrioli Ltd of the US Virgin Islands, and Trans Global Trading Ltd of Dubai. Both have 42.85% stakes. There's also Henning Witte of Stockholm with 9.29%.
Meanwhile, Fennas Finance is in the process of changing the address of its registered office from 12 Manor Place, Bryndwr, Christchurch to 24b Moorefield Road, Johnsonville, Wellington. The Christchurch address has been the home of Wairakei Welcome Bed & Breakfast, but the phone number has been disconnected.
The Johnsonville address is the same one used as a mailing address by registered financial service provider NZ OSL Services, which featured in our previous article here. NZ OSL's shareholder, Steve Medley of Los Angeles and his small cap stock market shenanigans, also featured in our previous article.
Paul McDonald, who uses the 12 Manor Place address, is a director of NZ OSL Services. He was also briefly a director of Fennas Finance last year. Elusive and linked to software development, McDonald appears to be extricating himself from these business associations.
'I don't know who you are talking about'
Michael John Ivkovic, Fennas Finance's director, resides in the Sydney suburb of Mosman and is said to be in funds management .Here’s some information about Ivkovic that can be found on several websites including that of IVS Holdings Ltd here;
Michael has extensive experience in the structured finance, funds management and investment banking industry in Australia and Asia. Michael was formerly the Chairman of Brick Securities Limited, and Executive Chairman of NZI Securities Limited and NZI Investment Services Limited.
Michael established The Australian Private Capital Advisory Services Group in 1988 and retired from that position in 1998 following a management buyout. Since that time Michael has served as a Director of Paramount Securities Limited and the publicly listed Harrington Limited, AFT Limited, and Capital Mining Limited.
Michael is a Director of Global Payment Solutions Limited, Reckon Health Care Holdings Ltd and Hightower Enterprises Pty Limited. Michael holds a Bachelor of Commerce degree from the University of New South Wales.
Brick Securities was dissolved some years ago. It received some media coverage in Australia over the firm's attempts to peddle Auckland real estate to Australians. Ivkovic has a Bloomberg profile here. The phone number listed on it is that of serviced office provider Servcorp, where the woman who answered the phone said; "I don't know who you are talking about." Ivkovic has no phone number listed in Mosman.
Global Payment Solutions
Ivkovic was also chairman of a company called Global Payment Solutions when it sought to raise funds on the Australian sharemarket last year. Its prospectus showed many of its shareholders were connected to the Towah group.
Towah Norway AS, a collapsed pyramid scheme apparently interesting authorities in Norway and the US, is connected to Global Payment Solutions and Fennas Finance through several common shareholders. Icon Sachs, meanwhile, tells investors that Towah is the payment platform for Fennas.
Aside from Fennas Finance, NZ Companies Office records show Ivkovic has been a director of Orator Technologies and Trentham Goldrush Ltd on this side of the Tasman. Orator's liquidation wrapped up 10 years ago with liquidator Geoffrey McDonald saying; "The company was clearly insolvent at the time of my appointment." The liquidation coincided with a corporate restructure at Orator's Australian parent AFT Ltd.
Meanwhile, the Henning Witte who is listed as a Fennas shareholder appears to be the conspiracy theorist featured here who apparently believes in mind control via implanted chips and the pseudoscientific theory of Scalar waves.
Companies Office records show a now deregistered NZ company Mirian Payments Ltd, with a familiar cast of characters. Witte, Brough and Gabrioli Ltd were all Mirian shareholders. As was British Virgin Islands company Aristander Holdings Ltd said to be Dubai-based, which was a Fennas shareholder between May and August last year before its holding was transferred to Trans Global Trading Ltd. Aristander also shows up as a major Global Payment Solutions shareholder.
'Bank grade security' from a mail services company
At 24b Moorefield Road we find Private Box Ltd, located in the same building as a medical centre. Private Box is primarily a mail forwarding company that also offers registered office services, and boasts on its website of "bank grade security, we protect your privacy."
Director and co-owner Gareth Foster says at last count Private Box had 700 to 800 companies on its books. But its staff don't necessarily know much about the business these companies undertake.
"[But] generally speaking if it does have a financial sounding name we tend to take a very hard look at them if we are a registered office provider because of the money laundering risk associated with that," Foster said. "But if it is a mail only customer we've got a pretty standard process for vetting them around checking their ID, making sure they are who they say they are."
Private Box is a reporting entity as a trust and company service provider under the Anti-Money Laundering and Countering the Financing of Terrorism Act (AML/CFT Act) supervised by the Department of Internal Affairs (DIA). Fennas Finance, however is not supervised for compliance with the AML/CFT Act by any of the Act's three supervisors being the DIA, Financial Markets Authority or Reserve Bank.
"We're pretty good in terms of vetting the account holder and all that sort of stuff. If they're just getting mail the risk from our point of view is quite low in terms of money laundering because it's just a mailing address," says Foster.
Fennas is due to change its registered office to Private Box's Johnsonville address on June 9.
"Once that comes through we'll go through some extra steps with them," says Foster.
Asked if he had met anyone from either Fennas or NZ OSL Services Foster said no. The firm's staff do sometimes do Skype calls with overseas customers and ask for certified documents and make sure they come from someone contactable.
"So we always do match a face to an ID. It's more a check that the ID they're supplying is sufficient or is actually connected to the person," Foster says.
(The picture below shows Private Box's small Johnsonville office on the left, and the sign outside the medical centre dominated building it's located in on the right).
NZ's simple company establishment process, the country's good international reputation and lax regulatory enforcement, have proven irresistible attractions to assorted international rogues and crooks over recent years. Key planks of the good reputation include consistently being ranked one of the least corrupt countries in the world in Transparency International's Corruptions Perception Index, and being regarded as one of the easiest places in the world to do business by the World Bank.
After it emerged that NZ registered SP Trading Ltd had arranged the charter of a Georgia-registered cargo plane in 2009 to fly 35 tonnes of weapons from North Korea to Bangkok, and ultimately to Iran, the Government attempted to toughen company rules through the Companies and Limited Partnerships Amendment Act, under which all companies must have one or more directors resident in NZ or Australia. Other changes introduced by this Act include in an application for registration every director must register their full name and place of birth (yes, really), and where the company has an ultimate holding company, prescribed information about that holding company must be disclosed.
Thus it remains a simple process to establish a NZ company, as the Companies Office notes here;
Starting a company online (incorporating) is as simple as reserving your company name ($10.22), completing the incorporation application ($150) and returning your signed consent forms. Here we will take you through how to incorporate the most common type of company - the New Zealand limited company - but you can incorporate or register all company types online.
Whilst great for legitimate business people, those scouring the globe for regulatory arbitrage opportunities are clearly still seeing NZ as a soft touch as highlighted by the likes of Fennas Finance and companies that featured in our first article such as United Global Holdings and Breder Suasso. NZ is somewhere they can establish a company simply and cheaply with the assistance of an obliging local or two, and then operate in jurisdictions of their choice trading off NZ's good reputation.