The Switzerland Investigation

The Public Prosecutors’ Office in Geneva opened an investigation into Fabien Gaglio and the Hottinger & Partners (HPSA) fraud in 2013. Given that Gaglio has already admitted his crimes and been found guilty of fraud and money laundering in Luxembourg, it is expected that he will be charged with similar offenses in Switzerland.

In addition, the prosecutor is looking into the role of SA, HPSA’s office administrator, and Jean-Francois de Clermont-Tonnerre, one of the directors of HPSA. All three have been classified as “prévenus”, or “warned” suspects.

SA is under investigation for alleged forgery and falsification of records done under the instruction of Fabien Gaglio. She is also alleged to have created fake bank statements in order to conceal losses and make clients believe that their investment returns were higher than they were. She has denied these allegations.

Clermont-Tonnerre is under investigation for falsification of records, although based on a review of the evidence published on this website there is little to support this allegation. The source of the allegations against Clermont-Tonnerre appear to come from Fabien Gaglio.

Gaglio initially accepted blame for what happened at HPSA but after Clermont-Tonnerre brought a damages claim in Luxembourg, Gaglio started to throw mud at his former business partner. Gaglio’s accusations were reviewed by the Luxembourg authorities and were dismissed. Indeed, Clermont-Tonnerre was adjudged to be a victim of the fraud and received damages.

Gaglio has made similar accusations to the Swiss prosecutor and, as a result, Clermont-Tonnerre’s role at HPSA is being reviewed.

In one interview with the Swiss prosecutor, Gaglio claimed that when HPSA moved from being a discretionary fund manager to an advisory manager the firm needed authorisation signatures from their clients. Gaglio said: “All the management contracts with our clients were changed into advisory agreements.  On some of such agreements, signatures were forged… It is likely that this (forgery) was also done for Jean-François’ clients.” (12th August 2014.)

When this accusation was put to Clermont-Tonnerre by the Swiss prosecutor he denied it under oath. He told prosecutors: “You ask me if, to comply with Bank Hottinger & Cie’s changes of policy [regarding the management agreements], I forged or had someone forge clients’ signatures on advisory agreements.  The answer is no.”

Gaglio also told the Swiss prosecutor that Clermont-Tonnerre had forged documents to cover up client losses, although his description of these alleged incidents is muddled. He first says he only heard “rumours” but then makes specific allegations against Clermont-Tonnerre.

Gaglio said: “You mention a statement I made in Luxembourg whereby I said I was aware that Jean-François asked SA to forge documents, both for his professional and personal use.  I heard rumours about this in the office.  But I have no certainty.” (13th August 2014.)

“I seem to remember that the signature on transfer orders for the client Mr W was forged. I confirm that I saw fake account statement for client Mr L [one of Clermont-Tonnerre’s clients].  I also remember travelling to the US with Jean-François and that he was putting together account statement with fake information.”

Gaglio also tried to implicate his former business partner in a plan to falsify accounts for a client called Mr K. He said: “Mr K had invested and lost USD 1 million in Madoff products.  Jean-François went to see him to tell him that we would reimburse him.  This refund was never made, but the client’s accounts were falsified to make him believe he had been reimbursed anyways.  We both showed falsified account statements to Mr K.”

Clermont-Tonnerre has denied any wrongdoing. The evidence shows that his clients Mr W and Mr L did not have money stolen and they have signed notary statements confirming that their HPSA account statements were correct. Mr K was a client of Gaglio’s and a review of his statements identified no problems.

Gaglio has offered no evidence to support his allegations against Clermont-Tonnerre, who has denied them all under oath to the Swiss prosecutor. The allegations have also been denied by Clermont-Tonnerre’s clients and by other witnesses interviewed by the prosecutor.

For example, a former HPSA employee, explained that he would remove from Gaglio’s client statements any information relating to losses resulting from investments in Bernie Madoff’s funds. He did not do the same for Clermont-Tonnerre’s clients.

Similarly, PM, another HPSA employee, said that Gaglio asked him to alter the Net Asset Value (NAV) of some investments on client statements so they appeared higher than they actually were. Ramin said this activity was known to some in the firm but not to Clermont-Tonnerre.

Even Gaglio’s own cousin, Andrea Asti, who also worked at HPSA, admitted that Gaglio was the only one asking him to change client information. He told the Swiss prosecutor:

“Sometimes I would add information that did not appear on the custodian bank’s system, respectively I would create deposit lines for clients that did not have deposits in any of these four banks.  In such cases, I would always receive the information from Fabien Gaglio.  Never from someone else.”

Clermont-Tonnerre’s position is further supported by his actions upon discovering Gaglio’s fraud. He alerted Hottinger & Cie, HPSA’s bank, and the firm’s clients. He hired Deloitte to investigate the fraud and sent the findings to the Swiss authorities. These do not seem to be the actions of a man trying to hide something.

Gaglio is a convicted fraudster who is now trying to deflect blame for his crimes onto others. It will be for the Swiss prosecutor to determine whether there is any weight to his allegations. Until then, it is worth repeating what Diana Benedek, one of Gaglio’s victims, told Bloomberg: “Fabien Gaglio lied every day for 15 years. Why would anyone believe him now?”