Analysis of Media Coverage

In December 2017, Bloomberg BusinessWeek wrote a prominent story about the fraud perpetrated by Fabien Gaglio at Hottinger & Partners SA. The story gives an account of Gaglio’s crimes and the impact on his victims. However, analysis of the evidence gathered by Swiss prosecutors and published on this website shows that some of the allegations made by the media are incorrect.


In its story, Bloomberg cites a company set up by Gaglio in Belize called Glendale Portfolio Inc. Bloomberg wrote:

“Gaglio also controlled a series of companies that fed into Glendale—shells, registered in such locations as Liechtenstein and Cyprus, through which funds passed back and forth until they became almost impossible to trace.

“Glendale kept about 10 cents of every dollar it handled, according to a detailed analysis Galli has passed on to authorities. Statements reviewed by Bloomberg Businessweek show that money from the company and other entities Gaglio controlled ended up in the accounts or businesses of Gaglio’s partner Clermont-Tonnerre and several figures who had figured in the dizzy courtship of Reissfelder, the Benedeks, and other Hottinger & Partners clients.”

Bloomberg’s implication seems to be that Gaglio laundered money through Glendale and its associated complex of companies. This may be true. However, not all payments by Glendale can automatically assumed to be suspect.

The transfers from Glendale to Jean-Francois de Clermont-Tonnerre, Gaglio’s business partner, have been accounted for and the relevant bank statements are in the possession of the Swiss prosecutor.

A review of those documents shows that all of the transfers from Glendale to Clermont-Tonnerre were to repay loans. For example, Gaglio occasionally asked his business partner to cover his credit card bills. On the 29th of March 2006, Clermont-Tonnerre transferred $140,000 to cover Gaglio’s American Express bill, which is noted on the bank statement below. On the 21st of April 2006, Clermont-Tonnerre received reimbursement from Glendale of $141,000.

On the 29th of August 2006, Clermont-Tonnerre transferred £20,000 to Gaglio’s wife Fanny, who was living in the UK at the time. Gaglio repays this amount from Glendale’s account on the 13th of September 2006.

While not all of the reimbursement amounts exactly match the amounts paid out by Clermont-Tonnerre, the total for all the transactions is a near match. There was therefore no net benefit. The transfers were simply repayment of debts run up by Gaglio.

By only looking at the payments made by Glendale, Bloomberg appears to have jumped to conclusions that are not supported by the evidence now in the hands of the authorities.

None of these transfers to Clermont-Tonnerre are under investigation by the Swiss Public Prosecutor.

Cap Sud

Another allegation made by Bloomberg in its December 2017 story was that Gaglio and Clermont-Tonnerre had invested in a French company that they covertly controlled called Cap Sud. Bloomberg wrote:

“Gaglio and Clermont-Tonnerre started putting money into commercial enterprises using complex structures that effectively obscured their identity, records reviewed by Bloomberg Businessweek show. One such company was solar energy firm CAP SUD SAS, established in France by their wives, rugby friend Tordo, and a fourth individual named Stephane Gilli, that was the recipient of loans totalling €3 million from an offshore vehicle owned by Gaglio and Clermont-Tonnerre.

“From 2013 to 2015, CAP SUD subsidiaries received an additional €19 million in cash injections, according to the records. The documents don’t show where the money came from.”

The documents supplied to the Swiss prosecutor show that Clermont-Tonnerre and Gaglio set up and owned two Luxembourg companies called Assurinvest and Prima Private Equity. Their clients at HPSA were able to buy convertible bonds in these two Luxembourg companies and received a coupon, or interest, in return. The Luxembourg companies were controlled by independent directors and neither Gaglio or Clermont-Tonnerre had any management, administrative or financial control over them.

The main investment made by the Luxembourg companies was into Cap Sud, a French solar panel maker. Gaglio had heard of Cap Sud via his friend Jean-Francois Tordo, a former French rugby player, and brought the investment pitch to Clermont-Tonnerre. Thanks to the generous subsidies being given by the French government to solar companies at the time, this seemed to be a good bet and Gaglio’s wife and Clermont-Tonnerre’s wife invested €150,000 each to buy stakes in the business.

By using phrases such as “complex structures”, “obscuring their identity” and “offshore vehicle”, Bloomberg appears to be implying that HPSA investors were conned into investing in Cap Sud. The evidence does not support this. Cap Sud was a legitimate investment and none of the HPSA clients lost money in it.

In fact, they made a profit because when the fraud scandal broke Clermont-Tonnerre bought the HPSA clients out of the Cap Sud investment so they could liquidate their positions.

One client, Tilman Reissfelder, did lose money but only because Gaglio stole it. Gaglio arranged for Reissfelder to invest €600,000 in Prima Private Equity on the assumption that this money was to be invested in Cap Sud. But Gaglio instead fraudulently used the money to pay his children’s school fees, the rental of a villa, holidays and limo hire.

In testimony to the Swiss prosecutor in early 2018, Clermont-Tonnerre said that he had offered to repay Reissfelder’s €600,000 but that Reissfelder had declined the money.

Cap Sud was used by Gaglio to steal from Reissfelder but there is no evidence in the prosecutor’s file to suggest that HPSA or the Luxembourg companies did anything wrong or that clients lost money because of the investment.

The last paragraph of Bloomberg’s reporting on Cap Sud states that the company received a further €19 million in loans from investors. The inclusion of this information suggests that Bloomberg thinks the money may have come from HPSA clients. Again, this is wrong. The money came from companies called Batisol 1, Batisol 2 etc., which had nothing to do with HPSA.