How Fabien Gaglio
Got Away With Fraud

Hottinger & Partners SA (HPSA) was set up to manage clients’ money by investing in safe assets while producing a good return for them. Instead, Fabien Gaglio used his clients’ money to cover up his underperformance and to fund his lavish lifestyle.

“To summarise, my job was to make my client’s money grow,” Gaglio told the Luxembourg authorities. “I made bad investment choices, and when one of my clients asked for an account in his investments’ returns, I started forging documents and took the money out of another client’s account to pay back the other one.” (14th July 2016, p7.)

Gaglio has presented his fraud as a classic Ponzi scheme. He would falsify statements so clients thought their investments were growing but, in reality, Gaglio was using one client’s pot of money to pay off another client’s losses. Bloomberg described him as a “Gallic mini-Madoff”.

Ponzi Schemes

A Ponzi scheme is a type of pyramid scheme where early investors are paid returns from money brought in by new investors. As long as there is a constant supply of new money, everybody can get paid. But when the music stops, the fraud is revealed. This type of fraud takes its name from Charles Ponzi, who hoodwinked investors in New England in the 1920s. Many Ponzi schemes are accidental because the fraudster never set out to steal from his or her client. They give a small lie to cover up a mistake but then need to pile more lies upon more lies to keep it all from falling apart and being exposed. It escalates until the whole edifice collapses.

While it is true that Gaglio was operating a Ponzi scheme, his fraud wasn’t just about covering up his performance. A review of thousands of pages of court documents from both Luxembourg and Switzerland show that what initially started as a Ponzi scheme soon turned into outright theft. Gaglio was financing his lifestyle with money stolen from unsuspecting clients.

Gaglio tried to convince the Court in Luxembourg that the objective of his fraud was not personal enrichment but to cover up his underperformance but the Court found otherwise. It provided specific details relating to Gaglio’s lifestyle including lavish holidays, rental of a luxury villa, paintings by famous artists and the use of private jets that were paid for by his clients. The Court pointed out that Gaglio would have been unable to afford such a lifestyle on his own: “It appears that a significant proportion of the money embezzled was used to lead an expensive lifestyle and was used for onerous professional and personal travels.” (14th July 2016, p51.)

Getting Away With It

So how did Gaglio get away with such a large-scale fraud in a small investment firm with fewer than 12 employees?  To many of Gaglio’s former colleagues and clients, the answer seems to be found in Gaglio’s intricate personality: his allure; his ability to win people’s trust; and his ability to form strong emotional bonds with clients.

The German magazine Brand Eins gave an example of how Gaglio charmed one of his clients into giving him money. It told the story of Michael Kleemann (the name was changed) who had entrusted €7.7 million with Gaglio. The magazine wrote: “He became friends with Gaglio and they were soon on first-name terms, meeting up in London, Barcelona and Nice… When Kleemann fell ill, Gaglio was there, visiting him at his mother’s house in the provinces in Germany, wanting to see how he was doing.”

Gaglio’s clients often thought of him as a close friend, almost part of the family. Gaglio’s clients had their guard down and no suspicions even as he was faking bank statements and forging their signatures on wire transfers and loan agreements.

Gaglio was also skilled at portraying himself as a successful fund manager in order to impress prospective clients. His lavish displays of wealth were a demonstration of how much money he was making for everybody and helped to build client trust in him. These clients had no idea that Gaglio’s generosity was being paid for with someone else’s money.

An article about Gaglio in Bloomberg BusinessWeek details how he won the trust of Diana and Andrew Benedek, two Canadian engineers who had recently sold their business.

Bloomberg wrote: “Gaglio drenched them with attention. He arranged for tours of properties in Geneva and Monaco and once insisted Diana travel on what he said was his company’s private jet. (Hottinger had no plane; it was chartered especially for the occasion, for about $40,000.) “He got us by being relentlessly helpful,” Diana, 59, says. “We’re Francophiles,” adds Andrew, 74. “We both speak French, we love French food— so maybe we were vulnerable. We were impressed.”

Gaglio subsequently told the Swiss prosecutor: “I confirm that the Bank [Hottinger & Cie] does not have a plane and I would organise the renting of an aircraft and would put the expenses on the account of another client.” (Interview 13th August 2014, p6.)

The Court of Luxembourg also recounted in its judgement against Gaglio how he had impressed one of his clients, Alfonso Ziribotti, with extravagant spending: “Ziribotti explained that Gaglio led a lavish lifestyle.  His wife would always wear designer clothes and wear expensive jewellery.  He said he owned various paintings and a wine cellar worth a significant value.  When Gaglio would visit Ziribotti, he would travel on a private jet.  He often organised social gatherings, at the Hotel Meurice in Paris, at the Hotel Metropole in Monaco…  He would always order prestigious and very expensive wines and champagnes and would spend a fortune on travels.” (14th July 2016, p9.)

Tilman Reissfelder

Fabien Gaglio stole more than €7 million from his client Tilman Reissfelder, a German tech entrepreneur. Gaglio used Reissfelder’s money to pay for the rent on his home and his school fees. He even claimed to be using $1 million of Reissfelder’s money to buy a nuclear fallout shelter, although this money was actually stolen. It was siphoned into various offshore companies and ended up in an Italian business run by one of Gaglio’s relatives.


Diana and Andrew Benedek became clients of Fabien Gaglio in 2007 and he stole millions of dollars from the Canadian couple. In one example, Gaglio arranged for Andrew Benedek’s signature to be forged so he could transfer €2 million from a company owned by the Benedeks to a company that Gaglio controlled. Gaglio then used this money to buy shares for himself in a French event management business called Eventeam.

However, to keep fooling his clients into thinking their money was being well managed, Gaglio needed to produce fake account statements that would show their assets were growing. He also needed to forge client signatures so that he could spend their money without their permission.

“Everything is fake,” Gaglio confessed in testimony to the Swiss prosecutor.

For example, the Court of Luxembourg was told that Gaglio had forged a loan agreement between two of his clients: Laith Al Sarraf and Alfonso Ziribotti.

The €400,000 loan was used to reimburse some of Ziribotti’s investment losses and to acquire three paintings from a gallery called Farsetti Arte.  Neither Al Sarraf or Ziribotti knew anything about the deal or paintings.

In multiple interviews with the Swiss prosecutor, Gaglio admitted that he had documents faked and signatures forged in order to steal money from his clients.

However, he insists that he did not forge documents himself and instead points the finger of blame at SA, the officer administrator at HPSA.

He said: “I confirm that forging other signatures was done by other people upon my instruction.  But I was not present when signatures were forged and I can’t tell you who was holding the pen… But I take full responsibility for the fake documents established and the forged signatures.” (Interview 5th April 2016, p16.)

In another interview, he said: “I have never forged a signature myself.  It is upon my instruction that signatures were forged.  Instructions were given to SA.  There was no exception… I would explain that the client was not available and that the document [with the forged signature] would be “normalised” later.  SA never objected to this.” (Interview 12th August 2014, p14.)

SA is under investigation by the Swiss prosecutor for allegedly forging documents on Gaglio’s behalf. She has denied this. She told the prosecutor: “Gaglio never asked me to forge anything. I always received the documents already signed.”

Gaglio claims that he misled SA into thinking that he would make all the paperwork right in the future. “I lied to her,” he told the Swiss prosecutor.

“She only wanted to do good. She has three kids and had a blind trust in her boss, which I think came from that she did not have responsibilities in the banking sector before.”

The set up at HPSA also made it possible for Gaglio to hide his activities. He and his business partner, Clermont-Tonnerre, acted independently of each other while control of accounting, appointment of auditiors and compliance was all managed by the Hottinger group. This created opportunities for Gaglio to exploit weaknesses in the system.

Another factor that enabled Gaglio to get away with his fraud for so long was that some of his clients were less than observant about how their money was being managed. This gave Gaglio free reign to lie about what he was doing with their money.

Gaglio was so blatant, he gave one client, Tilman Reissfelder, a stack of documents to sign that included old money transfer requests where Reissfelder’s signature had been faked.

Gaglio told the Swiss prosecutor: “I remember that, when the audit at HPSA started, a lot of documents needed signing from clients, including Reissfelder. I remember that I gave him a pile of document to sign to legalise some transactions made in the past. He signed them without really looking. Among them were old transactions for which I had forged his signature.” (Interview 5th April 2016, p14.)

As the saying goes: Caveat Emptor.