The alleged fraud relates to a managed fund, which was operated by CWM (Capital World Market). Investors deposited up to £50 million in the fund directly into a bank account in the Cayman Islands with DMS Bank & Trust Limited (DMS).
The monies were supposedly meant to be traded on the foreign exchange market, with the promise of generous returns. Indeed, the fund offered unsuspecting investors a 5% guaranteed return together with the ability to withdraw funds on 30 days’ notice.
However, after an investigation by the law firm Field Fisher Waterhouse LLP, it appears that no funds were actually traded on the market. Rather, investors were allegedly cajoled with returns that were paid out via an intermediary account.
The remaining balance was usurped and used for sponsorships within the CWM network of businesses, including the right to become Chelsea Football Club’s ‘online forex trading partner’ at the start of the year. Investigators also allege other spending on private jets and general lifestyle expenditure.
Chealsea Football Club has subsequently discontinued its relationship with the firm. Indeed, Finance Magnates has reported that football clubs have been overly quick to pocket millions in deals with brokers without undertaking proper due diligence on the firms.
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Back in March, the City of London Police raided the offices of CWM at the Heron Tower and arrested ten men and three women, who at the time worked at the foreign exchange brokerage arm of CWM. Foreign exchange dealing at the firm was also suspended in March.
The banks that held the CWM Limited accounts are liable for the losses incurred by investors as they were not authorised accounts.
With £49 million having left CWM’s account at DMS, approximately £1.2 million remains frozen in the account. The account should remain frozen throughout the forthcoming criminal investigation, which is expected to take up to two years to conclude.
Legal action is being taken against DMS, spearheaded by tax advisor, Tim Richardson, himself a victim of the alleged fraud.
A statement by the law firm opines, “The banks that held the CWM Limited accounts are liable for the losses incurred by investors as they were not authorised accounts.
DMS B&T has taken legal action against the Cayman branch Managing director for opening and maintaining account against the banks own Board’s wishes.”