An advertisement for the Empire Property Holdings mini-bond, whose investors have been told that their first three interest payments will be delayed, includes a graphic proclaiming that the bond offers “guaranteed returns” that head into double digits.
The advert appeared on the website of Marbella-based Templar Settlement Services and an Empire spokesman said that although it had no control over third-party advertisements it would contact Templar regarding the wording used in its advert.
Individuals in senior positions who are associated with past frauds, scandals or failures should be another warning sign to investors that a bond issuer may be suspect. The Companies House database is now free to access. It can be used to look up company filings and find out which other firms directors have been associated with. A Google News search is also a good idea.
For instance, at Providence Group, the parent company of Providence Bonds, Stephen Dewsnip, the global head of distribution, appears in news reports and Spanish court documents related to a property investment scheme that turned sour. No wrongdoing on Mr Dewsnip’s part has been proved.
An insider’s view of Providence
Telegraph Money spoke to a former employee of Providence Investment Management, another failed part of the Providence Group.
The group’s former chief executive, Antonio Buzaneli, has had his global assets frozen by the US regulator, and the Miami-based Providence Financial, part of the same group, has been accused of securities fraud.
An initial report from Deloitte, the UK administrator, claimed that the money invested in Providence Bonds was largely not spent on its intended purpose, and was instead lent to other Providence Group companies, and other companies in Brazil controlled by Mr Buzaneli.
The former employee painted a picture of closed-door meetings, strong egos and a disregard for keeping costs down. Providence spent money sponsoring events, bringing in big-name speakers such as former England footballer Gareth Southgate. Staff, many of whom had invested in the firm, were apparently kept in the dark about how it was run.
The individual said the compliance team at Providence Investment Management had walked out in May. The firm’s auditor, PwC, resigned after its first audit.
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