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Maltese Cross director lost €6.2 million to recoup €250,000 loss [MaltaToday](MaltaToday Via Acquire Media NewsEdge) An accountant charged with misappropriating millions in clients' investments lost over €6.2 million in a bid to recoup a €250,000 loss and also claimed that the MFSA had not carried out an inspection for six years, a court heard today. The revelation was made this afternoon during the compilation of evidence against 42-year-old accountant and the director of Maltese Cross Financial Services Ltd Jean Claude Bugeja, who is pleading not guilty to misappropriating and laundering €4 million in clients' funds between January 2008 and August 2014. Taking the witness stand, prosecuting inspector Ian Abdilla said things started to go wrong in July 2008, when the accused lost some €250,000 in a €1 million investment. The court heard that in an effort to recoup his losses, the accused allegedly misappropriated investors' funds, eventually losing €6.2 million in failed investments over an eight year span. During questioning, Bugeja is said to have described the system as "very easy" to exploit, claiming that the MFSA's last inspection was in 2008. During the inspection, Bugeja is said to have told police that he gave auditors a summary of what the clients had and not what they were meant to receive. Moreover, Bugeja told police in an effort to cross-examine the accounts, MFSA auditors only checked with the banks' documents and not the clients themselves. Testifying, prosecuting inspector Ian Abdilla explained that the police's investigations started after the other directors of Maltese Cross Financial Services Ltd – namely Robert Cutajar and Stephen Spiteri – filed a criminal complaint in which they claimed that Jean Claude Bugeja had admitted to a €6 million shortfall in clients' assets. The court heard that subsequently, Bugeja – who owns 85% of the firm's shares – was ordered to resign from his post by the MFSA. The financial watchdog also suspended the company's operations and banned Bugeja from providing any financial services and prohibited from accessing the company's records, IT system, or offices. Maltese Cross Financial Services Ltd was formerly known as Island Financial Services Ltd, but after its previous directors put it up for sale, the accused bought it to avoid revealing what was going on. 'This had been going on since 2008 ever since he [Bugeja] liquidated some of his clients' assets without their investment, and lost some €250,000. From then onwards, he used the clients' funds to recoup these losses, but the losses continued to accumulate, eventually totalling to around €6.2 million," the inspector said. The inspector explained that things started to go wrong in March 2008, when Bugeja sought to invest €1 million in a BNP Paribas Fund. "The company only managed to raise €700,000, and therefore, Bugeja liquidated €300,000 in clients' assets without informing anyone. The investment went well and he made a profit of around €8,730," he said. However, the inspector said that Bugeja's decision to invest in another BNP Paribas Fund proved to be his undoing, as this time he lost some €250,000. "Once again, he used the clients' funds to meet the minimum investment requirement of € 1 million. The value of the fund went down, and in July 2008, he lost some €250,000," he said. The inspector said that in a bid to recoup the losses, he continued to make more investments, opting for more risky investments in return for a high profit. "Eventually, during 2012 and 2014, the investments continued. The investments became more risky in an attempt to recoup the losses. By 2014, the total losses stood at €6.2 million, and only €500,000 remained of clients' funds," he said. The inspector also said that Bugeja had admitted to fabricating two bank documents and whenever his clients requested their money, he used to pay them by misappropriating the funds of other investors. "He [the accused] told me that no one knew of the shortfall – not even the directors, or his family. He liquidated anyone's funds in a bid to recoup his losses, including those belonging to his father and wife." "He was very serene. He told me that now that the case ended up in court, he is feeling relieved because he does not have any more energy," the inspector while adding that the accused had cooperated with the police. Lawyer Joe Giglio was defence counsel, while Inspector Ian Abdilla prosecuted. Lawyers Stefano Filletti, Gianelle de Marco, Kathleen Grima, Gianluca Caruana Curran, and Adrian Delia are parte civile. The case continues on 14 October. (c) 2014 MediaToday Co. Ltd. All rights reserved. Provided by SyndiGate Media Inc. (Syndigate.info). |