Shepherds Select Income Drawdown Fund promised 9% pa tax-free drawdown with capital security. The investment was geared with a bank loan. Word of caution – if you don’t understand it: don’t invest in it.
Famous last words or the triumph of hope over experience.
‘Shepherds publicity boasted: ‘Policy values historically grow at a faster rate than the interest rolled up on the loan.’
Shepherds scheme was based on Shepherds TEP (Traded Endowment Policies) Plan and promised 150% return over 10 years.
Shepherds Select slogan stated ‘Innovation in low risk investment solutions’. The only truth in that mantra relates to innovation in that Shepherds found a new way to fleece investors who went like lambs to the slaughter.
Shepherds sales puff certainly pulled the wool over investors’ eyes claiming that they bought only ‘TEPs issued by leading UK insurance companies with excellent track records, further enhancing security and returns’. See Mutual Benefits Corporation.
Savignon Financial services of Gibraltar marketed Shepherds investment products thereby bringing about its own demise.
The Gibraltar Financial services commission issued the following statements:
‘1. Following receipt of several complaints from investors in TEP Plans purchased through
Savignon Financial Services Limited (SFS), the Financial Services Commission has conducted a preliminary investigation into the suitability of TEP Plans for certain categories of investors and certain aspects of compliance with relevant regulatory obligations.
Following the investigation, which was undertaken during 2003, the Commissioner has held meetings with SFS and its legal advisers and made clear that he expects suitable compensation to be made available in appropriate cases for those investors who have sustained loss. SFS has reserved its legal position, and has been conducting its own enquiry using an external independent consultant. The Commissioner is currently awaiting a response from SFS as to its position and hopes that such response will be made shortly. Once received, the Commissioner will consider that response before deciding whether further regulatory action is required. In the meantime, the Commissioner has imposed a number of conditions upon SFS including a requirement for the injection of new capital.
(14th January 2004)
2. The Financial Services Commissioner has imposed a number of conditions upon Savignon Financial Services Limited (SFS) in relation to the protection of investors in Traded Endowment Policy (TEP) plans.
These conditions are connected with the proposed sale of the business of SFS to another company and are aimed at ensuring that the proceeds from such a sale are available for compensation to be paid to TEP plan holders. They require that the Commissioner be given prior notification of such a sale and that the proceeds of any sale are transferred to a custodian appointed by the Commissioner.
The Commissioner, Marcus Killick, commented: "the aim of this action is to safeguard as much as possible for the plan holders. It is my intention, if the sale goes ahead, to seek a distribution order from the Supreme Court in relation to the proceeds. This should allow these proceeds to be paid to out to plan holders as the Court may consider appropriate".
This action comes after months of work by the Commissioner and his staff in seeking to maximise the amount available for compensation.
(11th November 2004)’
Shepherds bought 85% of its policies from and invested £26 million in Mutual Benefits Corporation. Mutual Benefits Corporation is a major global fraud with 29,000 investors, $1 billion and links to laundering Colombian drug cartel funds.
Mike Abraham who headed Shepherds is now a director of Indemnity First with offices in Marbella and Geneva.
The Indemnity First hagiography of Mike Abraham claims: ‘Having worked with traded endowments for over 15 years and TLPs since 2002 Mike is probably the most experienced adviser in Europe.’
Don’t hide your light under a bushel so presumably modesty forbids mention of Shepherds outstanding achievements. Investors in Shepherds are out of pocket to the tune of $40 million.
In a recent London High Court judgment it was revealed that huge commissions from MBC were paid into an offshore company controlled by Mike Abraham. In the 2003 financial year alone, some $1.3m was paid from over $10m worth of business.