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ANDREW LINN EXPOSED BY UK PRESS

News and Views for September 2006

 

Consumer group trumps as watchdog

 

Financial investigator Tony Hetherington picked up the baton passed by Expat Investor readers and exposes the scam scheme Remington FTSE Index Funds.

 

It’s not often that a consumer group spots a questionable investment ahead of official watchdogs, so top marks to the Costa del Sol Action Group for contacting Expat Investor about a fascinating scheme called the Remington FTSE Index Funds comfortably ahead of warnings we received from government regulators.

 

The scheme involves trading in Footsie options ‘while limiting capital risk’, according to its prospectus. Behind the scheme stands Remington York Limited of Belize, and its boss Andrew Linn of Marbella. The prospectus is oddly vague about Andrew Linn’s professional experience, saying that he has ‘owned and operated several companies in Spain’, but without naming even one.

 

It certainly does not mention Sensible Options, operated by Linn in 2003, which advertised: ‘Invest your capital in a British government bond and receive a regular monthly income of 12 per cent a year’.

 

This was hokum! There was no 12 per cent bond, and the advertisement was completely misleading. Anyone who replied was asked to deposit tens of thousands of pounds with brokers in Gibraltar or London. Some cash went into government stocks but the monthly income was supposed to come from trading in FTSE options.

 

Linn’s firm did not even control the trading. This was done by another company, Investment Program Management, controlled by a man called Leonard Berney. And when one broker after another severed ties with Sensible Options and IPM over their advertising claims, Linn, who had earlier looked every inch a pukka financial adviser, was suddenly reduced to whining that he could not answer questions because his firm simply stuffed envelopes with material supplied by Berney! Leonard Berney was already known to financial watchdogs.

In the 1980s he was involved in a traded options scheme in which investors lost half their capital. In the early 1990s he advertised a return to investors of 41 per cent, but his Surrey address proved to be a mail-drop and UK regulators stopped Berney in his tracks. Then in 1998 Berney used a Dublin address to advertise a yield of 18 per cent, only to have the Central Bank of Ireland condemn his venture as ‘unlawful’.

 

And surprise, surprise, Leonard Berney is credited in Andrew Linn’s new prospectus as the author of the trading formula used by the Remington York funds.

The prospectus reassures investors that though retired, Berney is still a consultant, and uses ‘the modified Berney Theory’.

Against this background, nobody should be startled by the warning from authorities in Belize that Remington York is not licensed to operate international collective investment schemes or engage in investment promotion.

 

Nor should anyone be stunned by the notice from the Financial Supervision Commission of the Isle of Man. It quotes documents claiming that Remington York’s funds ‘are based in the protected British Crown Colonies of Isle of Man’, before adding that the company has no genuine presence on the island and is not licensed to offer investments.

Readers are invited to contact Tony Hetherington via the editor at

Hannah Beecham

 

Andrew Linn holds himself out as a highly respectable recently retired businessman and pillar of Marbella society who writes a monthly wine connoisseur's column for the prestigious glossy Essential Marbella magazine.


Linn has been chairman of the Marbella Business Institute for some twenty years and boasts that Britons who come to Spain to set up businesses have been recommended to him by the British Consulates and consular officials for many years.The reality is that Linn has been engaged in shady financial dealings for
many years and his business associates are by and large equally dubious characters. Fraudster brothers John and Alan Doust are known Linn associates.
Investment International magazine exposed Linn's activities a few years ago and now the UK's top financial investigative journalist, Tony Hetherington, has exposed yet another 'dodgy' Linn enterprise.
Read all about it at:


http://www.expatinvestor.com/viewarticle.asp?articleid=4864


Charterhouse Trust Credit Union is another ongoing Linn scam with Alan Doust and Andrew Adams. Investors in this Swedish Credit Union were guaranteed 12% per annum plus a 3% bonus. Cloud cuckoo land. This scam has Ponzi running through it like Brighton rock.


The investors' funds were invested either in the FTSE 100 Index Fund or similar or UK development land depending on which information sheet you read. The FTSE 100 Index Fund probably hit ground zero on 9/11 and now Linn and his accomplices refuse to reveal the whereabouts of the UK development land in which what is left is now invested. A promised audit and valuation last March proved to be hot air and yet another delaying tactic.


The fact is that none of the investors in CTCU has been paid a cent of income for a couple of years and one unfortunate has been trying to withdraw his capital (now 350,000 euros with bonuses by their own admission).


The case is grinding its way through the Marbella Criminal Court. The Swedish authorities are totally ineffectual. The UK FSA are totally useless despite clear evidence that CTCU was operating illegally in the UK.

Gwilym Rhys-Jones

Adviser and Investigator

 

Warning notice issued by the Financial Regulator of the Central Bank and Financial Services Authority of Ireland.
IPM Inc. held itself out as having a Dublin address implying authorization in Ireland. That is a criminal offence.
The persons behind Investment Program Management Inc. are Andrew Linn and Leonard Berney both of Marbella. The warning is on the Financial Regulator's web site now.

 

Investment Program Management Inc  (IPM)

This company is run by

Andrew Linn, John Findlater OBE and Leonard Berney



ANDREW LINN EXPOSED BY:           

 

 

 

INVESTMENT INTERNATIONAL MAGAZINE

 

Basta de Gilipollezas

 

The above phrase  a Spanish insult  was how a firm called Sensible Options signed its email correspondence with Investment International. Its nice to be popular.

 

Sensible Options, based in Spain, is marketing a capital guaranteed investment and expected returns of 12 per cent per year. In our opinion, there are attractions of the programme, but there are also some risks worth acknowledging, most notably that capital is not exactly guaranteed.

 

The investment programme is run by a Belize-registered firm called Investment Program Management Inc.

 

The guarantee comes in the form of a British Government Bond. The idea, says Sensible Options, is that investors buy a bond today with a higher future maturity value.

 

The 12 per cent yearly returns are achieved by a unique trading system that IPM employs. The program’s marketing literature and prospectus state that after the bond is purchased, the remaining funds are placed in a brokers segregated client account, to which the investment adviser does not have recourse.

 

Literature says investors can choose between two brokers*: one is the highly-reputable Man Financial, subsidiary of Man Group plc, based in London, a FTSE-100 company. The other is Rock Financial Services in Gibraltar. These brokers are the only people to administer the money, and do so in accordance with the directives of the adviser.

 

SOs websites administrative contact is a chap called Andrew Linn, and Mr Linns business card accompanies the prospectus. SO tells us the trading strategy has been developed over a 19-year period by a multi-millionaire investor who is approaching 80 years of age, and who has used the method as much as a hobby as anything else over this time.

(SO never gave us the name of this investor and his name is not on the website or the prospectus, but we now know him to be Leonard Berney).

Berney carries out trades by instructing the two brokers on a monthly basis, aiming to capitalise on trading FTSE 100 Index options and producing the monthly returns in all market conditions.

 

Man Financial confirmed two things about the investment programme. One is that trades can indeed be affected in a risk free manner. Broadly, it is possible to buy options such as  but not exclusively - iron collars, the idea of which is that if the FTSE does not move outside a given range, then the options make profit, potentially big profit.

 

Man says these investments do work, and if they fail there is no loss greater than invested capital.

 

The problem is that such options cost money. In essence, this means that if IPM was to buy too many of these options on your behalf in error, and the options were unsuccessful, then ultimately, you the investor would owe the broker money.

 

To this point, SO says we are nit picking. So, IPMs trader could make a mistake. Well, so can any fund manager, investment advisor, IFA, etc! Are Investment International’s advertisers immune from making mistakes which could cost investors money?

 

Of course not, so why even mention the possibility in this case? Do you mention this possibility when reviewing investment products which you approve of? Ive certainly never seen this caveat of this sort mentioned in any investment publication ever! Is this really one of your main objections to the Programme? It makes for a pretty weak case if it is.

I have asked Leonard Berney how many times he has bought too many options in the last 18 years. Once is the answer, since the computer programme he uses would have to run riot for it to happen (see, it could happen to anyone using a computer), and IPM reimbursed the investor in question.

 

Nonetheless, we dont think this is nit-picking. It is an important factor of risk. Just because you have given IPM power of attorney that does not mean that if there is an error, IPM must foot the bill if it makes an administrative error (Man confirmed this fact). Man or Rock will turn to you and ask you for extra funds to cover losses.

 

Incidentally, the actual amount of trading capital (as opposed to the bond component) is likely to be somewhere around 13 per cent of your overall initial investment. This is because it will cost you around £82 per cent to buy £100 per cent in five years time. On top of this, there is a 5 per cent commission, leaving the amount being used to trade at around 13 per cent.

 

What this means is that 13 per cent must achieve somewhere in the region of 100 per cent returns (£12 on £100) in years one, two, three, four and five; equating to around 500 per cent  but then, big returns are the whole idea of the programme.

 

Man has confirmed that attempting to receive such high returns would be high risk, although, if the trades are executed efficiently, there is no risk of losing more than the amount invested.

 

Although no track record can be noted on a new product, Berney cites only 2 months over a 231 month period of investment when monthly income was affected by adverse trading conditions. The strategy is said to change slightly periodically to reflect changes in the FTSE.

 

In such times, monthly income can be suspended, but this is said to be the very worst that can happen as all other capital is fully guaranteed by the bond. But, as we have said, since the brokers have recourse to your assets under certain scenarios, this is not entirely accurate.

 

The investment adviser behind the scheme (Mr Berney) predicts that from past performance, a £20,000 investment will give a regular monthly income of £200 (plus, of course, that capital return in five years time).

 

There is an initial charge of 5 per cent levied and there is a monthly management fee of 0.25 per cent (more than 3 per cent annual), together with commission paid to the broker for each trade carried out. Despite all fees paid, the 12 per cent annual returns will, says SO, be unaffected.

There are a few points that investors might want to think about. In 1998,

 

David Franks, chief executive of Blevins Franks, defended an investor in court against a broker after the broker (executing trades according to the instructions of Berney) sought access to investors funds after things didn’t go to plan.

 

The basis of the claim was that investors claimed to have been told their capital was guaranteed. But the fact the defence failed is the telling point.

 

The broker successfully argued that there was a clear clause stating he did have recourse to investors assets if things turned bad. And the broker won. And Man is now telling us there is a clear clause and scenario where it can have recourse to your funds.

 

To this, IPM retorts: David Franks formed a group of (from memory) about 20 of these clients and organized a 'class action' defence. He charged £2,000 to each person in this group. In the event, he was not able to cancel or reduce their debts to Union Cal, so the only person to gain was David Franks! Franks says he did not profit from this.

 

SO suggested "someone around here has an axe to grind" and that reporting the above incident would be inappropriate. We disagree.

 

The important point is that the basis of the claim was that investors believed their capital was secure (which is what SO is saying now).

 

More importantly, perhaps, in 1998 the Irish central bank warned that Belize-registered IPM was acting criminally (see http://www.centralbank.ie/documents/red/Warnnotice.pdf) by marketing to investors in Ireland without due authority.

 

It was one of 109 firms that the bank warned about. SO describes this as iniquitous’ and said the firm only had a PO Box in the country. The CBI said the firm was “promoting itself as an Irish investment firm”.

 

*During the course of researching this article, we were informed by Man Financial that it would no longer act as broker for this scheme “after reviewing the [Sensible Options’] marketing material”. IPM says this is because Man does not act as broker to schemes where future returns are forecast. It has also asked us to point out that Man still acts as IPM's broker for other investment schemes.

 


 

 

© COSTA DEL SOL ACTION GROUP
Against Unlicenced Financial Advisers & Product Providers that support them.