Patrick Cairns
4 minute read
6 Sep 2017
8:04 am

The world’s greatest Ponzi scheme that never was

Patrick Cairns

Cosgrove and Kellermann cleared in Guernsey.

The Guernsey Financial Services Commission (GFSC) has ended its investigations into David Cosgrove and Cobus Kellermann and will not be taking any action against them or any of their related entities. This ends more than two years of speculation that the two were running a sensational Ponzi scheme.

From March 2015 the Miami-based blog OffshoreAlert ran a series of stories claiming that Cosgrove and Kellermann were the masterminds behind a “massive criminal enterprise” and that the Belvedere Management Group, of which they were both owners, was involved in “rampant fraud”.

These allegations sparked regulators in both Guernsey and Mauritius to effectively shut down all funds linked to them. In Guernsey specifically, the regulator suspended the license of Lancelot Management, a fund manager owned by Cosgrove and Kellermann, and placed the three umbrella funds it managed under independent administration. Those were the Global Mutual Fund PCC Limited, Worldwide Mutual Fund PCC Limited and Universal Mutual Fund Limited.

However, after 30 months of scrutiny, the GFSC has called its investigations to an end and informed Cosgrove and Kellermann that it will be taking no action against them. This effectively exonerates them and repudiates any claims that they were involved in criminal activity.

Strategic Growth Fund

Much focus of the Guernsey investigations was placed on the Strategic Growth Fund (SGF), a cell under the Global Mutual Fund PCC. The SGF was suspended in 2013 as it did not have sufficient liquid assets to honour withdrawal requests from investors, and concerns were raised that money had gone missing.

In March 2015, international consultancy deVere went public on the fact that it had provided “evidence of wrongdoing” in this fund to OffshoreAlert. A deVere spokesperson was quoted as saying that “we suspect that this case could turn out to be one of the largest financial scams in history”.

However, it later emerged that the Strategic Growth Fund was actually a deVere vehicle. It was managed by United Asset Management, a firm linked to deVere’s CEO Nigel Green, and the only investors in the fund were deVere clients, placed there by deVere advisors who received large commissions for doing so.

In mid-2015, Cosgrove and Kellermann raised these inconsistencies in a document that questioned the role deVere and Green had played in the allegations against them. They claimed that they had been targeted in an “attempt to cover up the direct role that Nigel Green played in the losses to deVere Group clients and the exorbitant fees he (Green) personally received”.


This also highlighted the misconceptions around what Lancelot was doing in Guernsey. Through its funds, the company only provided a platform on which other, independent managers could run their own portfolios. Lancelot did not do any of the asset management itself, and all of the independent funds, or cells, had their own custodians that held the actual assets.

The only exception is that Kellermann was, for a few years, employed by United Asset Management as one of the managers on the Strategic Growth Fund. He however resigned in April 2012.

There was therefore never any way in which Lancelot could directly access any of the money in any of the funds on its platforms.

A statement issued on Cosgrove and Kellermann’s behalf responding to the decision in Guernsey, emphasised this point:

“The Global Mutual Fund was in fact a legitimate investment fund platform, which meant that ‘Belvedere’ in fact had no access to the assets in the funds, which were held by independent custodians and was not involved in any decisions in relation to the assets, which were managed by the independent managers.”

The statement added that, for this reason, it became evident to the GFSC quite early in the process that there could not have been any large-scale fraud within these vehicles.

“It soon became clear that the Ponzi scheme allegations were not sustainable and that much of the information that deVere claimed to have supplied to the GFSC about how transactions SGF had been involved in were structured and how they were valued was inaccurate. Although these facts were pointed out to the GFSC early on in the process, the GFSC seemed intent to find Cosgrove and Kellermann guilty of something. The GFSC downgraded the accusations to technical administrative breaches and even those have now been dropped.”

The statement from Cosgrove and Kellermann also raised concerns that investors in the Guernsey funds had suffered prejudice over the last two years because the GFSC-appointed administrators had failed to actively manage the funds. There is also not yet any clarity on what will happen to these funds now.

The GFSC declined to comment on the matter.

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