Swedes said ‘deceitful, fraudulent’ tactics led them to halt Maltese pension fund

The Swedish Pensions Agency (SPA) has delivered a damning verdict on the way a Maltese pension fund was being run and on the involvement of one Emil Ingmanson, a Swedish entrepreneur who has business interests in Malta, and who is now alleged to have had some sort of access to the money Swedish pensioners poured into Falcon Funds.

Picking up the pieces was Nationalist MP Tonio Fenech, one of the three directors of Falcon Funds SICAV, a €276 million pension fund which reinvests the pension savings in blue chip stocks like BMW, Allianz and Michelin.

Fenech is not the owner – the SICAV is ‘owned’ by Falcon Funds’ 23,000 savers themselves, who can redeem their savings on any day.

The former finance minister says the SICAV will take legal action against the SPA, which he accused of having an agenda against the Maltese fund, after they brusquely delisted Falcon Funds from the Swedish premium pension platform. “The SPA did not give us a right to appeal the decision. On the content of the letter per se, this clearly leaves much to be desired,” he said.

But the Swedes have hammered out a thorough 15-page decision listing their suspicions about Falcon Funds: misleading sales tactics, the role of Ingmanson in starting and now, taking control of Falcon Funds’ investment decisions, suspected takeovers of clients’ IDs, and even the possible misuse of €31 million for Ingmanson’s own ends. So serious, that the SPA want Falcon Funds out of their pension system because they claim they are not acting in the interest of Swedish pension savers.

The SPA claims that either Falcon Funds or Temple Asset Management, the investment manager of the fund, are aware of how this money has been invested: specifically in instruments for the benefit of Ingmanson, “which constitutes a conflict of interest… [these instruments’] design is purposely non-transparent in order to veil any further analysis of the underlying assets and their risks.”

Fenech doubts that the grounds on which the SPA condemns Ingmanson, saying they are claims made by press articles and that no case of conviction in the Swedish courts or decisions by the Swedish Financial Services Authority back up the allegations against him.

Ingmanson: common denominator

The reason Ingmanson is the dark horse in the downfall of Falcon Funds is the way he features in the pension fund: nowhere at all, and everywhere. You cannot find him listed anywhere, but the SPA says a trail of breadcrumbs convinces them otherwise.

In November 2013, when Falcon Funds was authorised by the MFSA to market its sub-funds in Sweden, Ingmanson represented the fund in talks with the SPA. He had already been the subject of police investigations on false accounting and tax fraud, with a history of bankruptcy behind him.

While Ingmanson is not a director of Falcon Funds, he is positioning himself to take control of Falcon Funds’ investment decisions. To do this, he is awaiting for a licence from the MFSA so that Falcon Asset Management takes over from Temple as investment manager of Falcon Funds. 

And both Temple and FAM share the same Floriana address. Temple’s own CEO was a director on FAM up until February.

The SPA has argued that not all the pension money is going into blue chip stocks. Falcon Funds invested €31 million in three ETIs (exchange traded instruments) that are too opaque for them to know what the money is being used for.

“It is not possible to measure, either the investment potential or the risk exposure associated with an investment in the ETIs… it seems clear it did not matter for Falcon Funds what type of underlying asset the sub-funds would be exposed against through an investment in the ETIs. Rather, the only reasonable explanation is that Falcon Funds made the investment in order to accommodate the interest of a third-party beneficiary.”

That beneficiary could well be Ingmansom, the SPA suggests.

First of all, two ETIs have names – Solid Venture P2P and Boardwalk Real Estate – already associated with Ingmanson. In Malta, Ingmanson set up Solid Venture Capital back in 2012. He transferred its ownership in 2013 to an Isle of Man company called Roxy Tiger Limited (the names of his two children). Together with another Isle of Man company called Boardwalk Limited, these two companies are officers of the company Metropolitan Venture Capital LLP. So far, so coincidental.

Secondly, the SPA suspects Ingmanson uses the money invested in these ETIs so that he can extend this capital as credit to other companies.

To prove the incestuousness of Ingmanson, Falcon and Temple, the SPA said emails leaked from a renowned international bank, showed Ingmanson using a falconfunds.eu domain and Temple letterhead. The emails show Ingmanson requesting to set up similar ETIs in Luxembourg, and Temple’s COO Philip Eaton Richards revealing that Ingmanson’s new company Falcon Asset Management would be soon taking over as Falcon Funds’ investment manager.

“There are good reasons to suspect that the plan was that the proceeds from investments made through the structured products proposed to the bank, would be used by companies closely linked to Ingmanson,” the SPA said.

An example was a €3 million emergency loan his company Solid Venture Capital extended to beleaguered payday loan company Trustbuddy in the summer of 2015. Ingmanson’s ‘kickback’ was supposed to have been 10%. Provided that this episode, as reported in the Swedish press, is accurate, this is what the SPA suspects that Ingmanson could be using the money for.

The Swedish Pensions Agency said that a further investigation by the MFSA would question whether Falcon Funds’ investments in the Solid Venture, Boardwalk, and WV Mittelstand ETIs are a conflict of interest when Ingmanson could be their beneficiary. “The agency concludes that the sub-funds investment into the ETIs is in breach of the obligation of Falcon Funds to act in the best interest of its shareholders and in breach of its obligation to carry out its assignment in a prudent and professional manner.” 

Fenech insists that the MFSA has specifically written to the SPA and gave them the assurance and conformation that the assets Falcon Funds invested in are UCITS eligible. “The contract clearly says that the SPA is not an authority and the authority to whom we are accountable regulatory wise is the MFSA since we are licenced in Malta.”

Illegal fund transfers

But Ingmanson’s curious role extends to another serious allegation against Falcon Funds, which is precisely in the way their fund grew to €270 million by the end of 2015.

The SPA claims that Ingmanson is a common factor in the way a massive customer register was used “as a tool for criminal and illicit purposes”, traded between intermediaries and call centres.

This part of the story starts in 2012 when the SPA started receiving complaints from savers who said an insurance intermediary, Positiv Pension, had transferred their funds from Insider Fonda without their consent into another pension fund, PP Aktiv. A criminal investigation was launched but never concluded.

When Positiv went into bankruptcy in August 2013, it was sold to American company ABS Investment Group, the owner of fund manager Optimus Fonder, which ran the fund Optimus High Yield.

Positiv’s customer register, which included the PIN codes to access savers’ pension accounts, was transferred to another insurance intermediary called Strategi Placering – a subsidiary of Solid Equity Nordic, on whose board Emil Ingmanson sat between 2012 and 2014.

All of a sudden in the summer of 2013, approximately 21,000 pension savers found that their monies had been moved to Optimus High Yield without their knowledge. A call centre company, Astartes, was responsible for carrying out the transfers. Ingmanson was a board member on Astartes too, between 2012 and 2013.

The Swedish Pensions Agency took action, alerting pension savers of the transfer of their pensions to Optimus High Yield. Savers followed suit and demanded they leave Optimus. Savers dwindled from 32,000 to 12,3000 in March 2015, which is when Optimus decided to merge with one of Falcon Funds’ sub-funds.

Even here, the SPA suspects that Ingmanson facilitated the merger, through his contacts with Falcon Funds as well as ABS Investment Group. The result was that 12,000 pension savers and €127 million in savings were added to Falcon Funds.

But Tonio Fenech says that if the SPA had evidence that these other funds had used illegal means to obtain savers’ money, “why did they not act against them? Why did they allow Falcon Funds to merge with Optimus in March 2015? Why did they not then alert us of this concern? Clearly as directors of Falcon Funds we cannot be asked to carry the responsibilities of actions performed by these other funds.”

Additionally, there are serious allegations that the call-centre Konsumentkraft carried out at least 1,971 suspect ID takeovers and used fraudulent sales tactics to tell Swedish pension savers to put their monies in Falcon Funds between January 2015 and February 2016.

“Konsumentkraft’s employees illegally gained access to individual pension savers’ accounts through electronic IDs, sometimes by presenting themselves as representatives of the Agency, and transferred their pension capital to the Falcon Funds’ funds.”

Falcon Funds has defended itself, saying that it was its Swedish paying agent, Stellum, which engaged Konsumentkraft between July and September 2015, before terminating the agreement.

But the SPA says that the Konsumentkraft transfers continued well into 2016, when the agency finally stopped the transfers by suspending Falcon Funds. “Falcon has been unable to explain why the sub-funds, despite Stellum’s claims that the agreement with Konsumentkraft had been terminated in September 2015, continued to receive larger amounts of capital from fund changes carried out by Konsumentkraft.”

Konsumentkraft is now being investigated by the Swedish police, and its permission to act as an insurance intermediary has been withdrawn by the Swedish Financial Services Authority. Its name has now changed to Hic Salta.

Even here, Ingmanson lurks in the background: the SPA says that Konsumentkraft’s board members were changed with straw-men who had also been on the Strategi Placering board.

Fenech here insists Falcon Funds cannot be held responsible for the actions of Swedish-licenced entity that was sub-contracted by Stellum.

“It is not uncommon that some companies come to claim the commission retroactively after proving their success in selling our funds. The use of misselling methods cannot be attributed to us and it was the entity licensing the company that carries the responsibilities for allowing it for months to act in such a manner.

“From our information the only action taken to date on this entity was that the consumer agency formally asked it to remedy its selling action within two weeks. The only proof presented in the letter for the wrong doing of Konsumentkraft was the interview in TV4’s ‘Cold Facts’, when they said they had recordings that they never presented. As a minimum I would have expected that they would have referred to as prove of evidence.”

Ingmanson’s latest moves

Ingmanson has had several Maltese addresses, and it is clear that he is known to the people at Temple Asset Management, Falcon Funds, and the directors that appear on Falcon Asset Management, like Tonio Depasquale, the former Bank of Valletta chief executive.

The decisions as to which shares and stocks Falcon Funds invests savers’ monies in are taken by Temple Asset Management, which is run by John Farrell in Floriana where Falcon Asset Management is also registered.

As emails from Temple show, Falcon Asset Management – of which Ingmanson is its ultimate beneficial owner – is planning to become the manager for Falcon Funds’ underlying funds. Company documents show that in February 2016, Ingmanson transferred his one share in Falcon Asset Management, to Falcon Asset Holdings; and his sole share in Falcon Asset Holdings was then transferred to London firm Comino Holding LLP, which is in turn owned by two companies in the Isle of Man – Falcon Gozo and Falcon Comino.

The ultimate beneficial owners of these two companies are hidden behind nominees.