Published On: Sat, Jul 21st, 2018

Long fight to recover stolen millions for victims of Swiss fraud

Five years on from the discovery of one of Europe’s largest investment frauds the victims are still trying to recover millions of dollars in stolen funds.

An article published by Tribune de Genève reveals the story of Hottinger & Partners SA (HPSA) and the fraud committed by one of the Swiss investment manager’s founders.

According to the newspaper, Fabien Gaglio stole about 42 million Swiss francs ($42m) from clients over a period of eight years at HPSA. As a result, Gagliohas been dubbed the “Gallic mini-Madoff” by the media.

Image/mohamed_hassan via pixabay

Gaglio was found guilty of fraud and money laundering by the Court of Luxembourg in 2016 but that was not the end of the story for investors who have continued their attempts to recover the stolen money.

The HPSA fraud was discovered by Gaglio’s former business partner, Jean-Francois de Clermont-Tonnerre.  According to the article in Tribune de Genève, Clermont-Tonnerre did “not suspect anything until a phone call started a saga worthy of a novel”.

One of Gaglio’s clients had sent a financial statement to HPSA to clarify certain investments managed by HPSA’s Luxembourg subsidiary. By chance, an administrator at HPSA had just received a bank statement for the same client and the numbers on the two statements did not match.

The administrator took this discovery to Clermont-Tonnerre, who immediately realised something was wrong. He called Gaglio, who insisted that he could put the mistake right. With mounting fear, the HPSA team started to check accounts and soon discovered that Gaglio had been falsifying financial statements for numerous clients.

Clermont-Tonnerre alerted the Swiss authorities and called in Deloitte to do a forensic investigation into what had happened. “The audit work [to uncover the scale of the fraud] was so big that I had to ask Deloitte Forensics to send us an emergency team of experts to peel back everything,” Clermont-Tonnerre told Tribune de Genève in his first public interview since the fraud was discovered.

Clermont-Tonnerre has spent the years since the fraud trying to understand how his former partner could have cheated so many people for so long. He has visited each of Gaglio’s victims personally and has recovered more than $10 million of their money. According to Tribune de Genève: “Jean-Francois de Clermont-Tonnerre is committed to establishing the truth.”

Clermont-Tonnerre comes from a French aristocratic family and he and his wife are involved in many charitable works. He admitted to Tribune de Genève that being linked with the fraud scandal had been damaging to his reputation but he accepted some of the blame.

“I was an administrator,” Clermont-Tonnerre said. “I have some responsibility. There was a lack of vigilance. I should not have trusted that much. I learned a lot.”

When the Court of Luxembourg investigated the HPSA fraud it ruled that Clermont-Tonnerre had not been involved and had no case to answer. He was classified as a victim of the fraud and was awarded damages against Gaglio.

Author: James North

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