German authorities are investigating a suspicious investment firm where statements have stopped being issued, payouts have been frozen, and principals in Switzerland, Liechtenstein, and Gibraltar are difficult or impossible to reach. These probes have not uncovered any wrongdoing, but goings-on at Berlin-based Picam show all the signs of being a potential fraud.
The firm promised investors returns of 15 to 20 percent at a time of negative interest rates, consistently reported fabulous gains and even honored redemptions for those desiring to take out their money – until last year, when it all came to a crashing halt.
On the hook are as many as 3,000 customers who have invested about €300 million ($368 million), many through several dozen advisers in Germany, and are now chasing their money as Picam, the funnel for German investment funds and Piccor, the supposed manager of these funds in Switzerland, prove elusive.
The nontransparent behavior of the people behind this makes you fear the worst. Matthias Schröder, Frankfurt lawyer
“It wouldn’t surprise me, if the alleged past investment successes attested by Piccor to its customers were incorrect,” says Matthias Schröder, a Frankfurt lawyer who represents more than 50 investors who have been waiting on their money since May. The double-talk and excuses they have been fed make them suspicious. “The non-transparent behavior of the people behind this makes you fear the worst,” says Mr. Schröder, “even fraud scenarios.”
Though on a much smaller scale, the Picam story conceivably could take its place alongside that of Bernie Madoff and Allen Stanford, who defrauded investors of billions in their Ponzi schemes. Named after the classic swindler Charles Ponzi, these investment frauds lure people in by actually paying off high returns, not from investment income, but from fresh deposits from new customers. At some point, however, the payouts stop and the house of cards collapses.
For the record, Picam’s representative in Berlin, Thomas Enzeroth, says any suspicion that previous reports of returns are falsified is “unfounded.” But in December, Mr. Enzeroth wrote to investors that a money manager had suspended settlements, and that “with the aid of legal counsel” he would be seeking “eventually” to safeguard any available funds for his customers.
That was hardly reassuring, and this latest missive was just the most recent in a series of baffling, vague and sometimes contradictory messages from Picam. Mr. Enzeroth’s original sales pitch was that Picam could achieve those impressive returns with computer-based trading of DAX futures, using massive leverage to enhance returns.
But from the beginning it was impossible to discern where this trading took place and where all these returns were stored. Picam, Mr. Enzeroth explained, was just a marketing handle. Swiss-based Piccor was the “administrator” of the fund and Liechtenstein-based Varian conducted the trades. The German investor funds were deposited with a Berlin accountant – but that’s where the money trail gets hard to follow. Handelsblatt could find no trace of revenue, profit or ownership for either Piccor or Varian.
The company register in Switzerland listed only a board for Piccor, and Mr. Enzeroth’s name appeared there. He was also listed as managing director for Varian. The brilliant algorithms that made all this profit possible were supposedly devised by a Paul Urban (the name has been changed for this report), but when Mr. Urban was contacted he said he had done some business with Mr. Enzeroth 20 years ago and has had nothing to with him since. And besides, Mr. Urban, added, he’s not a programmer.
In January 2017, Swiss authorities put Piccor on their alert list, indicating a potential risk for investors. That’s when statements and payments stopped coming to Picam investors. Mr. Enzeroth told investment advisers who had signed up their clients that Picam had restructured and developed a new product, this one based on a Luxembourg security.
Just weeks later, however, he informed them that Piccor had shut down its services due to stricter financial supervision in European markets. Not to worry, he said, the new partner is Varian – referring this time not to the Liechtenstein firm but two companies in Germany, Varian Defensive Capital and Varian DC Service. Liquidity would be restored shortly, he promised, and investors would be able to withdraw money on a daily basis if desired.
But the prospectus for the security in question, “Piccox Securitisation,” specifies only December 31, 2030 for redemption, and Picam funds remain unavailable. Stephan Blohm, administrator for the Piccox securities at the Median Group in Munich, says his phone has been ringing off the hook with investor queries.
According to Mr. Blohm, the former Piccor investors have subscribed about €100 million in the Piccox securities. And, in another twist, the manager for the security – none other than the Varian in Liechtenstein – has turned over those funds to, hold on, Piccor in Switzerland, the official alert status notwithstanding.
At this point, Mr. Blohm pulled the ripcord. He stopped further sales of Piccox, canceled the contract with Varian, and demanded the money back from Piccor. So far only about a quarter of the funds have been returned, all in the form of illiquid securities. Once the money is paid back, Mr. Blohm plans to unwind the Piccox securities and pay back the investors.
In recent days, Mr. Enzeroth has not been available for comment. A new blog on the Picam site is now blaming a certain Peter M. and his Gibraltar-based firm, LIT Ltd., which has been entrusted with management of the Piccor funds. And Mr. Enzeroth now insists, contradicting his earlier statements, that at no point in time was the Swiss Varian, where he is managing director, responsible for the DAX futures trades.
The blog concludes that it is not possible at this time to determine when the invested funds will be available. Mr. Schröder and other lawyers representing Picam investors have filed criminal complaints. Prosecutors have interviewed Picam representatives, but are keeping proceedings under wraps. In the meantime, Handelsblatt has not been able to locate this Peter M. or LIT Ltd. in Gibraltar.
Lars-Marten Nagel is an investigative reporter for Handelsblatt. Darrell Delamaide is a Washington, DC-based writer and editor for Handelsblatt Global. To contact the authors: [email protected] and [email protected].