It ain’t easy being sleazy. Just ask the execs at Mauritius-based Belvedere Management, a financial servicing firm that counts over 100 smaller hedge funds as clients that was suspended by regulators in April of this year. Or Richard Fagan, the jet-setting, polo playing head of the Kijani Fund, who saw his $130 million fund seized by Cayman Island regulators less than two month ago.
Analysts note that with the seizure of Kijani, another domino has fallen in the ongoing global Belvedere Management fraud investigation. As reported by ValueWalk at the end of March this year, Offshore Alert called Belvedere Management “an essentially criminal enterprise,” noting it has strong evidence of “funds that are blatantly fraudulent, including a current $130 million Ponzi scheme in Cayman” and “funds that simply disappear or fail in dubious circumstances, including the £400 million Harlequin Property Fund that has been unraveling over the last few years.”
The Offshore Alert report specifically mentioned the Strategic Growth Fund and the Harlequin Property Fund as Belevedere Management serviced funds in which they had seen strong evidence of fraud.
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More on Kijani
Shortly after the Offshore Alert report this spring, the Kijani Fund announced it was undertaking an audit and would suspend redemptions.
Kijani had barely been incorporated for a year in the Cayman Islands, when was seized in June by Cayman authorities in order to protect investors.
Of note. neither Fagan nor Kijani have been accused of criminal activity by any authorities to date.
However, according to the Wall Street Journal, colleagues of Fagan’s said some of Kijani’s underlying investments are basically worthless because they involve early stage projects with minimal current value. Fagan contests that, saying in an email message that Kijani’s investments and investors are being subjected to unproven allegations. “Our focus is on maintaining investments and shareholder values,” he wrote.
Complex fund structure of Kijani
The ridiculously complex corporate structure of Kijani points to the difficulty the regulators of these funds are facing.
The primary company, Kijani Resources Ltd. (Fagan is a major shareholder) is registered in Gibraltar, a British territory off the coast Spain trying to become a financial hub, and actually undertook the investments. Meanwhile, the Mauritius-based Kijani Commodity Fund was assigned the responsibility of raising funds.
This contrived structure allowed Kijani Resources to avoid oversight in Gibraltar, noted Samantha Barrass, the head of the island’s financial regulatory agency. “This has all the hallmarks of things that regulators worry about,” Barrass commented, a reference to the ongoing investigation into funds linked to Belvedere management in Mauritius.
Fagan claimed in his email that the firm isn’t required to have a license in Gibraltar because it is not an investment management company.