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Defrauded investors get their money back

04 Nov 02

39 people living in a number of countries stretching from Iceland to South Africa have recovered some of the money they sent to Marbella-based fraudsters as a result of Court action by the Gibraltar Financial Services Commission.

In February 2000, the Financial Services Commission ("FSC") took action in the Supreme Court of Gibraltar against Vanguard Equities Limited ("Vanguard") under Section 3 of the Financial Services Act 1989. The Court has now agreed that defrauded investors should be paid back from Vanguard assets frozen by an earlier Court order. The FSC took action following a number of complaints from people who had been cold-called from offices in Marbella, southern Spain, and who had sent funds to purchase shares to a Vanguard account at a Gibraltar bank.

Investors who sent money to Vanguard, and who have submitted a valid claim to the FSC will now receive over 55% of their funds back. Prior to the injunction, money from the Vanguard account had been transferred to an account operated by a related company, Procon International Ltd (Procon). The FSC took similar legal action against Procon so that the transferred funds were returned to the Vanguard account, increasing the money available for restitution payments.

The FSC is pleased that the matter has been satisfactorily resolved, and that investors will now be receiving a substantial amount of their money back.

The FSC reminds the public that they should only deal with regulated institutions, which have been duly authorised in the relevant jurisdiction. They should be particularly cautious if they receive telephone calls or emails from people they do not know. Another warning sign is the use of more than one jurisdiction for no obvious reason to carry out simple transactions.

Notes for Editors:

1. Section 3 of the Financial Services Act 1989 provides that no person shall carry on, or hold himself out as carrying on, any investment business in or from within Gibraltar unless licensed to do so by the Financial Services Commissioner. Contravention of section 3 of the Act is a criminal offence.

2. The FSC obtained evidence that Vanguard had been holding itself out as providing investment services from within Gibraltar. The Supreme Court injunction ordered that Vanguard cease carrying on, or holding itself out as carrying on, investment business in contravention of section 3 of the Financial Services Act 1989, and also included an Order aimed at restoring investors to the position in which they were before entering into transactions with Vanguard.

3. Investors in a number of countries throughout the world had been contacted by Vanguard which had tried to sell them shares, particularly in a company called Old Dominion Holdings Inc. Vanguard, a Gibraltar registered company, had not been authorised by the FSC to conduct investment business. The company had used addresses in Gibraltar and Marbella, southern Spain. The company had no office in Gibraltar, and the individuals controlling the company were resident in Spain. The FSC informed the Spanish authorities at an early stage that an apparently fraudulent operation was based at a Marbella address.

4. Procon International Ltd is not related to a local Gibraltar construction company with a similar name, Procon Limited.