Maltese Cross bust: investor fund demands payment of €2.4 million

The Investor Compensation Scheme has filed a court case against the managing director of the now defunct Maltese Cross Financial Services (MCFS), Jean Claude Bugeja, demanding a refund of the €2.4 million it paid out to investors affected by the company’s collapse.

In August 2014, the Malta Financial Services Authority (MFSA) suspended the company’s licence pending an investigation.

The authority determined that Maltese Cross’s financial position rendered it unable to meet its obligations, resulting from claims made by investors. Bugeja’s authorisation to act as a director, compliance officer, money laundering officer and investment advisor was revoked on the same day.

Later that month, the MFSA issued another notice, adding that there was a “material shortfall” in assets caused by misuse and manipulation of the assets. As a result, it said, investments which should have been controlled by the company on behalf of its clients “might have been lost.”

This shortfall was later confirmed as being just over €6,475,000.

The Investor Compensation Scheme accused Bugeja of having committed “several crimes, illegalities and mismanagement” in the running of the company, misappropriating monies through speculative investments that were not authorised by the clients or the MFSA, as well as falsification of documents, unauthorised transactions and totally false accounting.

In September 2014, Bugeja was charged in court, accused of misappropriation and money laundering amongst other offences. A month later, the court declared that there was sufficient evidence for him to be indicted.

The Investor Compensation Scheme had been subrogated into the rights of the investors and had paid them some €2.4 million in compensation. Only €33,275 were recovered from MCFS, leaving a balance of €2,380,852. It therefore asked the First Hall of the Civil Court to order Bugeja to reimburse it for this amount.

The case will be heard by Mr Justice Neville Camilleri. Lawyer Paul Cachia filed the sworn application.