Exit Madoff, enter the global ponzi scheme fraudsters

One might think that after Madoff, Stanford and other Ponzi-like schemes, big banks would be more careful about the money managers they do business with — especially people running highly speculative investment opportunities.

But it appears not everyone at the global banking giant HSBC got the message.

Consider the case of Dividium Capital, a now-defunct investment fund that was registered in the Isle of Man, an offshore banking haven located in the Irish Sea.

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Dividium, which operated out of Switzerland, promised investors high double-digit returns from the sale of gold certificates backed by an investment in a Russian gold mine project.

HSBC had been a primary depositary bank for the fund. Some of Dividium’s investors say their money was wired to bank accounts that the fund maintained at an HSBC branch in the Isle of Man.

Dividium billed itself as an “international investment firm, which generates its returns on the basis of ethical principles with the objective of generating the best possible yield for the person and investor,” according to some of its marketing literature.

But Dividium was anything but ethical, according to investors, lawyers and regulators.

Over the summer, Dividium was forced into bankruptcy by Swiss authorities after some of the firm’s estimated 3,000 investors began complaining they weren’t getting updated statements on their accounts and were unable to redeem their money.

Soon after, Spanish authorities arrested a number of Dividium’s promoters after determining that much of the ¤33 million the fund raised may have gone missing.

To date, the Dividium story hasn’t received much attention outside of Germany and Spain, where most of the investors live.

I couldn’t find a single story about Dividium in an English-language publication or website, even though the firm was registered in the Isle of Man and shared a London mailing address with an accounting firm called Louw & Company.

London-based Risk Reward Ltd, a consulting firm, also did work for Dividium, says a person close to the investment fund.

But that lack of attention may change. Some of Dividium’s investors are looking for another deep-pocketed financial player to be held accountable — and some Dividium investors are considering targeting HSBC.

I asked HSBC on a number of occasions to talk about Dividium and the bank’s role in serving as a depositary bank for the investment fund.

Each time, an HSBC spokesman said the bank could not comment on client matters.