Law System UK!

Trio Capital has mixed with a starry cast of companies, writes Stuart Washington.

It reads like an airport spy novel: an unsolved murder in a Tokyo red-light district, exotic tax havens around the world, and thousands of defrauded investors in Britain.

Add to that some $118 million tipped in to Astarra Strategic Fund by Australian investors which, almost three months after authorities blew the whistle, is still not properly accounted for.

The investigation by regulators is understood to include every possibility – from the $118 million being ”misplaced” to misappropriation.

Unfortunately for investors in Trio Capital, the Albury funds manager did not read the first part of the book when it began its relationship with Astarra Strategic, a hedge fund managed by Absolute Alpha.

Absolute Alpha and its associated cast of characters have links with one of Britain’s biggest stockbroking scandals, Pacific Continental Securities UK, with estimated losses of up to £300 million ($520 million).

One of the characters, Matthew Littauer, can be seen with his fingerprints on stockbroking cheats and swindles dating back to the internet boom of the late 1990s.

Many of the same characters, through companies registered in Belize and the Federation of St Christopher and Nevis, appear to be outright owners of companies that came to control $426 million in Australian investors’ money, including $300 million in superannuation money.

By August last year, Absolute Alpha had rebadged itself Astarra Asset Management and had been appointed as investment manager to all of Trio’s big funds, responsible for investing money on behalf of Trio.

Authorities were alerted in September in a letter from the Bronte Capital blogger, John Hempton, about the improbably smooth returns achieved by Astarra Strategic, which advertised itself as an investor in hedge funds.

Administrators appointed to all of Trio’s managed investment schemes before Christmas are still trying to establish the existence of Astarra Strategic’s $118 million that was invested through a company in the British Virgin Islands.

A Canadian, Shawn Richard, 34, and New Jersey-born Eugene Liu, 33, have been the sole directors of Astarra Asset Management and its predecessor, Absolute Alpha, since it was established in April 2005.

They are clean-cut and plausible – and Richard has been a confident media performer. But the extent of their links to the disgraced British broker Pacific Continental Securities has not been fully understood.

Until recently, Liu’s online biography showed he worked for PCS. Richard’s showed he worked with the firm in Taiwan from 1996 to 2000; but in October 2007 he dropped all online mention of it .

Well he might: in June that year, PCS UK collapsed with estimated investor losses of £300 million from dodgy stocks the broker had flogged. The business was castigated by the Financial Services Authority, which found it had acted without integrity between 2005 and 2007.

Accesspoint, AccuPoll and eSat were among 40 high-risk, ”over-the-counter” shares that could not be sold to US investors but were marketed by PCS to unwary investors in Britain, often using high-pressure selling tactics.

Richard and Liu have more than a passing employment record with PCS UK and its offshore owners. Company filings show multiple links exist to this day.

In one link, Astarra Asset Management is wholly-owned by a Hong Kong company called Century Investments Holdings. No such company exists on the Hong Kong companies register, but it gives its address as Level 13 Silver Fortune Plaza, 1 Wellington Street, Central Hong Kong.

Until late 2008 the address was also used by Zetland Financial Group, a company that was reported in the British press as the ultimate owner of PCS. James Sutherland is named as Zetland’s owner.

The emblem of Zetland Financial Group, a British Virgin Islands company, is now being used by Zetland Fiduciary Group, a company registered in Belize, Central America, in June 2008.

The website of Zetland Fiduciary Group describes it as ”working with a select group of individuals and corporations to achieve their objectives in a cost-effective, private and conservative manner”.

Since 2003 Richard, and later Liu, have served as directors of Wright Global Asset Management, which has a formal business relationship with Astarra Asset Management.

In 2004, Wright Global also had as a director a Vietnamese-American, Matthew Nguyen Littauer. A 1998 Securities and Exchange Commission document shows Littauer was president of PCS.

In December 2004, Littauer, 34, was stabbed to death in the Tokyo red-light district of Roppongi. Police were reported to have been unable to solve the case.

An anonymous July 2005 posting on a Japanese expat chat site about his death said: ”Matthew was a penny stock fraudster who tricked ‘clients’, partners and employees and many times dealt with mafia types. This is not surprising at all.”

Until August 2005 a Hong Kong resident, Jack W. Flader, also served as a director of Wright Global. Until at least December 2005, Flader was managing director and general counsel of Zetland. His personal address given in Wright Global’s company filing is the same address as that of Zetland until late 2008.

Wright Global is owned 100 per cent by a company called Bella Donna Ltd. No such company exists in Australian or Hong Kong company registers, but Flader appears as the authorised signatory of Belladonna in a 2001 stock purchase agreement with the US company Accesspoint Corporation (one of companies flogged by PCS UK).

Another company that had Liu, Richard and Littauer as directors, Wright Global Investments, has as its ultimate owner a Hong Kong company, Astral Investments, and its sole director is a company, GCSL Ltd, or Global Consultants and Services Ltd.

Global Consultants and Services Ltd says on its website it ”was established in Hong Kong in 2006 by a group of like-minded fiduciary services professionals who possess a wealth of experience in servicing the simplest to the most complex needs of our global clientele”.

A director of the GCSL Group of Companies Ltd, registered in the Federation of St Christopher and Nevis, is Jack W. Flader.

Boiler-room operators and PCS have previously used threats of legal action to silence critics. The Herald has been threatened by Richard on the grounds of defamation since following the story in October last year.

The hunt for the money goes on.

A couple suspected of helping spread some of the internet’s most aggressive computer viruses has been arrested in the English city of Manchester, police said.

Scotland Yard’s electronic crimes unit said a man and a woman, both 20, were arrested November 3 on suspicion of helping spread malicious Trojan computer programs sometimes known as “Zbot” or “ZeuS.”

Police said the viruses are thought to have infected tens of thousands of computers worldwide, and one technology consultant described them as the “most notorious pieces of malware of recent times.”

“This is one of the most frequent families of worms that we encounter,” said Graham Cluley, a technology consultant with the UK security firm Sophos.

“The ferocity with which it’s been spammed out on occasions has really hit our radar.”

Cluley said the Zbot family of viruses first came to his attention in 2007. Since then it has periodically swept across the internet, stealing personal information from computers across the world and feeding it back to cyber-criminals. The viruses are commonly known as Trojans because they sneak onto computers and attack it from the inside, harvesting millions of lines of data – including banking information, credit card numbers and social networking passwords.

The viruses spread by sending emails or other messages from infected computers, impersonating banks, tax officials, credit card companies or even friends and enticing potential victims to click on a link.

Police said given the amount of information stolen “the potential financial gains to the culprits and losses to individuals and institutions are very substantial”.

Cluley said it was impossible to know just how much money had been lost to the viruses, adding that attacks were ongoing – including two in the past week alone.

It is not clear exactly what role the Manchester pair are suspected of playing in the viruses’ spread.

Scotland Yard says the two have since been released on bail and declined to elaborate on their investigation.

AP

A former far-right British member of the European Parliament who cheated on his expense money to buy fine wine and a car has been jailed for two years.

“This fraud was so blatant, I do not believe for one moment you were disadvantaged in understanding the system or that this fraud should be seen as falling into some grey area which you might not have fully comprehended,” Judge Geoffrey Rivlin said in sentencing Tom Wise, 61, a former representative for the fringe UK Independence Party.

Wise, who represented the UKIP before becoming an independent, spent a year channelling some 40,000 pounds ($66,080) in taxpayers’ cash into a bank account he secretly controlled.

He maintained a 3000-pound “secretarial assistance allowance” he received every month was for his researcher, but paid her just 500 pounds while keeping the rest for himself, buying a car, expensive wines and paying off debts.

“It is no exaggeration to say that you had hardly got your feet beneath your desk as an MEP before you were planning to defraud the parliament to which you were elected and the people you were elected to serve,” Rivlin said in remarks carried by Press Association.

Wise, from Leighton Buzzard, north of London, had denied false accounting but changed his plea on the third day of his three-week trial at London’s Southwark Crown Court.

He was kicked out of the UKIP over the scandal and did not stand for re-election in June. The judge said in addition to being jailed, Wise would have to pay 30,000 pounds in costs.

The probe into Wise was unrelated to an expenses scandal which embarrassed politicians and damaged trust in Britain’s parliament earlier this year. Taxpayers were shocked to learn that some lawmakers had claimed expenses ranging from porn films to moatcleaning.

Reuters

FUND manager Perpetual has said it may face more court action after its opponents moved to appeal a recent UK court decision that could ultimately affect billions of dollars.

Perpetual Trustee won a Court of Appeal decision in London on Friday that sought $125 million frozen from Mahogany Capital noteholders since the collapse of Lehman Brothers last year.

$12.5 billion may be affected.

A JUDGE has confiscated a Nintendo Wii belonging to a 12-year-old boy as part of his bail conditions.

In the past nine months, the boy has been charged with vandalism, assault and breaching court orders, Sun Media reports.

Judge Marvin Garfinkle has granted the boy bail, but he must continue to live with his grandmother, appear at all court dates, keep the peace and participate in a bail management programme.

“He is pledging as a security, akin to a cash deposit, his Nintendo Wii. If he doesn’t comply, he loses it,” the judge said.