By Stephanie Ayres
Dieter Behring claimed to have a computer system which allowed him to speculate in commodities, currencies, and stock prices at very low risk by identifying market trends as they developed. He claimed that the system had been working for years, returning large profits. Large Swiss banks were skeptical, but Swiss news reports said Behring's system was defended by Karl Frey, a professor at a Zurich college who had himself been experimenting with such systems.
While Behring supposedly kept control of the computer software from his office in Basle, Switzerland, he told investors that the trading was to be conducted through an offshore entity called Moore Park Investments, set up for him in the British Virgin Islands by the controversial financial services firm ATU of Liechtenstein. Behring was known to the Swiss financial community as a self-proclaimed hedge fund "guru," but apparently kept a much lower profile in Basle, where his neighbors were suprised to learn from press reports in April 2004 that one Dieter Behring of Basle had spent some 100,000 Swiss francs (Sfr) on a dinner for seven at a posh restaurant in London, an extravagance that caught the attention of the British press.
Investigative reports by Swiss newspapers say that Behring raised money from individual investors across Switzerland by marketing interests in his investment program, described as a hedge fund, through insurance agents, financial advisors, and bank asset managers, who allegedly received commissions from Behring for promoting the investments. Swiss newspapers allege that some of the promotions were done illegally, including cold-calling of individual investors, which the reports say is illegal in Switzerland.
How much money Behring actually raised from investors is just one of the quesitons yet to be answered in the Behring affair. Press reports say that many of the individual investors believed they had bought a safe instrument promising a return of some 12% per year, purchased through advisors they had known and trusted for years.
Some individuals reportedly invested with Behring through accounts at banks, such as Bank Sarasin, which reportedly received commissions related to the Behring funds from customers who invested indirectly through another entity, Creative Invest, which received deposits which were to be invested in Behring-related entities. Bank Sarasin reportedly claimed it did not itself advise customers to invest in Behring's funds.
"Das Geld sei verschwunden."
Fund investors were presumably not informed of previous investment schemes carried out by Behring or of his previous bankruptcy. The Swiss newspaper "Tages-Anzeiger" reported on October 23 that Behring had been an insurance agent in the late 1980s and had solicited clients to invest through him believing that their funds would be placed with a large insurance company. Instead Behring allegedly kept the money and filed bankruptcy.
Fund investors were shocked when Behring announced on October 1, 2004 that his hedge funds were short some Sfr950 million! The money was simply gone, vanished, verschwunden. No further explanations were offered, and the hunt began to discover what had happened.
Reporters located a Behring associate, Arthur Buck, who had claimed in July 2004 to have personally seen Behring accounts totalling some SFr571 million and knew the names of the banks and accounts where these funds were kept. By October Buck was telling reporters that these were simply documents that Behring had shown him, and that the names and accounts reported in July were not correct.
Attention shifted to the British Virgin Islands and the Bahamas where the Moore Park funds, repeatedly described in Swiss press reports as the "Geldmaschine" (money machine) of Behring's system, were located. Two local Caribbean fund managers had been identified in Behring's fund promotions. One of them, Jon Knight, was dropped from fund literature after he was charged in a New York case alleging fraud in connection with the Evergreen Security offshore fund scam run by convicted fraudster William Zylka. Knight's day in court in June 2004 ended in a mistrial. (See "Financial Crime News" story "Second Mistrial in Evergreen Security Case," June 22, 2004).
The other Caribbean fund manager, Swiss expatriate Raymond Pousaz, pointed the finger back at Switzerland, where Behring and his associate, Willy Wüthrich, were said to be responsible for the Moore Park funds, whose accounts and activities were shrouded in the bank secrecy policies of the British Virgin Islands.
By the fall of 2004, Behring was reportedly disinclined to accept responsibility for Moore Park. He had purchased a controlling interest in a Swiss bank, Redsafe Bank, from an insurance company, and was under scrutiny by the Swiss Banking Commission, which took its time with an investigation of Behring's application for a bank license. On September 6, 2004 the Commission issued an order which effectively shut down Redsafe Bank and several affiliate entities, inluding Redsafe Investment Services and Global Direct Dealing.
Behring's dubious associates
Swiss newspapers speculated that the lengthy investigation may have been related to the presence on the Redsafe Bank board of individuals such as Alfred Fuhrmann-Sarmiento, whose involvement in a 1990s pyramid scheme called the European Kings Club had allegedly helped bring about the failure of the Diskont Bank in Austria, controlled by Furhmann-Sarmiento. A "Tages-Anzeiger" report of July 1, 2004 said that when Diskont Bank failed, about 30,000 European Kings Club members were found to have accounts there. The scheme reportedly had attracted a total of about 80,000 members.
The September 2004 closing of Redsafe Bank reverberated into Liechtenstein, where Vaduz-based Bank Behring & Eberle turned to liquidation after failing to find a buyer for the controlling interest of Behring's Schönkind Holding. A Swiss news agency, "News.ch" reported that Liechtenstein financial authorities (Amt für Finanzdientleistungen) had suspended Schönkind's voting rights in the Vaduz bank and that Liechtenstein police had carried out three searches relating to Behring interests in that country.
Back in Basle, Behring himself had been arrested on October 20, 2004, along with three associates. All were later released on bail. In addition to the ongoing curiosity over the fate of the missing millions of francs from the Behring funds, observers were now also trying to sort out what appeared to have been a sham sale of Behring's holding company.
On August 25, 2004, Behring had announced the sale of a majority interest in his Schönkind Holdings and Swisspulse Holdings to London Finance Group for an unspecified price. Swiss reporters quickly found that London Finance Group was a shell company with total capital of one British pound. It was being merged with an American entity called LFG International which itself had been created in a combination with the Vancouver-based Can/AM Autosales, which had claimed to be in the business of marketing used cars.
The penny stock bailout
By August 2004 Can/Am Autosales itself, now called LFG International, was almost a shell company, with a reported $41,200 of assets, no business activity, no business plan, and doubts about its future as a going concern, or at least that's what it reported in its last SEC filing. This did not seem to concern Dieter Behring, however, who hailed LFG as the savior of the Behring funds. He described it in an August press conference as a consortium of international banks and financiers experienced in energy, real estate, and shipping. The group was supposedly headed by Greek businessman Kostas Liapis.
A Behring spokesperson described Liapis as a wealthy Greek businessman with relatives in the Greek government. Swiss financial reporters were suspicious. They remembered Liapis from a previous venture into Swiss business in 1992, when he allegedly posed as a Greek millionaire ready to bail out a Swiss businessman named Phillip Maeder, that is, before Maeder was sentenced to three years in prison for fraud. Exit Liapis.
Liapis disappeared again in 2004 amid speculation that he was acting as a front for Behring, who could supposedly maintain control of his business "empire" despite the disappearance of at least two-thirds of its reported assets. By November Swiss authorites were freezing Behring fund-related accounts, and Behring was back in jail, now apparently deemed a flight risk.
There was concern, described in November press reports, that Behring might try to sneak off to the Indian Ocean island of Mauritius, where he reportedly had a long-term lease on a penthouse and had already shipped computer equipment. Or perhaps to Panama, where he reportedly had created a shell corporation and obtained a visa. But he won't be slipping away to a tropical hideout very soon. Dieter Behring remains in a Swiss jail, while authorities, investors, and journalists continue their search for the "fairy-tale fortune" that disappeared.
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FINANCIAL CRIME NEWS, January 2005
© STEPHANIE AYRES 2004-2005 ALL RIGHTS RESERVED