The alleged mastermind behind a billion dollar Ponzi scheme has been accused of causing a Bahamian brokerage firm, Alliance Investment Management, to issue false financial statements. On December 9th, the U.S. court appointed receiver for Battoo’s BC Capital Group accused Alliance of issuing fabricated financial statements.
In a court filing, the receiver said, “Battoo caused Alliance to issue fabricated portfolio statements…. in which asset values were overstated by a total of approximately $62.2 million. Battoo also caused Alliance to provide fabricated financial data to an independent accounting firm in Switzerland. Based on the fabricated data, the independent accounting firm issued independent financial and asset verification reports at December 31, 2009, to… investors that overstated asset values by approximately $86.7 million.”
More ominously, it appears that the receiver has obtained emails between Battoo and Alliance officials suggesting Alliance was a willing participant in the fraud. If the allegations are true, Alliance’s customers have a great claim against the brokerage firm. Collecting, however, may be a different matter.
Alliance’s website says that client accounts are insured to $25 million “in the event our custodian fails for financial reasons.” If that’s all the insurance covers, the customers are in trouble.
The SEC has accused Nikolai Battoo and Tracy Sunderlage of a masterminding a massive global fraud that cheated investors out of hundreds of millions of dollars. To date, parallel receivership proceedings in the Caribbean and the United States have recovered some money but not nearly enough to make investors whole.
Customers who invested in Battoo related funds (Maven, PIWM, Anchor Holdings) through a stockbroker or insurance agent might have much better luck recovering their losses. That’s because they have a claim against the person selling or marketing the investment. Unfortunately, some brokerage firms are not large enough to pay claims.
Already, our recovery efforts helped shutter one investment firm, Sovereign International Asset Management (SIAM). Their insurance was insufficient to pay even one claim. (The SEC has now started an action against SIAM’s former partners.) It is unknown if Alliance has enough money to satisfy claims but if the receiver’s findings and numbers are accurate, Alliance might not be around for long.
What is the lesson here? If you purchased through an insurance agent, or small investment advisory firm or brokerage firm, don’t wait before taking action.
Luckily, plenty of larger brokerage firms (JP Turner and NFP Securities, for example) employed brokers selling these products. While we are sympathetic to everyone who lost money in the Battoo / PIWM fraud, we remain most optimistic that investors who purchased through an insurance agent or larger broker have the best chances of recovering their losses.
The author of this post, attorney Brian Mahany, has teamed up with Chapman Law to pursue cases against PIWM, Maven, Anchor Hedge Fund, First Fidelity, BC Capital and others who may be associated Nikolai Battoo and Tracy Sunderlage. We have successfully brought claims against insurance agents too.
If you wish to discuss fraud losses in general, contact the author at or by telephone at (direct). Have a claim involving Jones, PIWM, Battoo, Sunderlage, Maven or Anchor? We can help. Cases handled nationwide.
Post by Brian Mahany, Esq.
Tagged: PIWM fraud, Maven fraud, Battoo fraud, Nikolai Battoo.