Astarra and the financial planners – Ross Tarrant tells us how his business survived the financial crisis without shedding a job

By now it is obvious – the money in the Alpha Strategic Fund – now named the Astarra Strategic Fund – has been stolen. Who was the actual controller of this theft and who was “just following orders” has yet to be judicially determined – but Shawn Richard – the front-man for this mess in Australia – put forward (under privilege) the Nuremburg defense: he was just following orders from Jack Flader in Hong Kong.

More interestingly he testified that he paid large undisclosed commissions to financial planners – sometimes going under the rubric of entirely undocumented loans and sometimes called “marketing allowances”. The loans were particularly peculiar – after all when was the last time a financial institution “lent” you a million dollars based on a handshake with no documentation and not recorded in any accounts?

Anyway Ross Tarrant – who I gather perceives he has done nothing wrong – was the recipient of “marketing allowances”. He runs a large financial planning firm in Wollongong NSW. The local paper has reported that he has come out fighting. This may be the only time in my life I have quoted the Illawarra Mercury with approval – but this deserves to be quoted in full…

Tarrants managing director Ross Tarrant has broken his silence on bombshell claims his company accepted secret, illegal kickbacks from failed fund manager Trio Capital.

A NSW Supreme Court hearing last week was told Tarrants allegedly accepted $840,000 worth of secret payments last year as an incentive to invest clients' money in the failed venture.

In a statement released yesterday, Mr Tarrant described the money as a "marketing allowance" and said while the firm did not normally accept commissions, the one-off payment helped the firm survive the global financial crisis.

"During ... one of the greatest financial crises of our time, the receipt of this once-off marketing allowance from Astarra enabled Tarrants to weather the GFC without shedding a job," Mr Tarrant said.

"After receiving the marketing allowance from Astarra, Tarrants returned to a 98 per cent fee-for-service position."

I do not think this needs any embellishment.

(PS. For those that do not know the Mercury is a small – usually reactionary – local paper - which - given the style - I incorrectly thought was News Corp)

Astarra weekend edition: Lockhart Road

David Morisset is the nom-de-plume of David Andrews – a former director of Astarra Capital – later Trio Capital – the responsible entity for the Astarra funds.  The Morisset persona is a self-published poet and a worthwhile writer.  He writes a blog which deserves more attention.

However as an independent director of a financial institution he has a problem – under his nose it seems about 170 million has simply gone missing.  With respect to one fund (the Astarra Strategic Fund or ASF) the judge said:

there are strong reasons to believe that a substantial part of the funds of AFS were invested fraudulently and have been lost;

It is unlikely those were lost to David Andrews or David Morisset.  Instead he was just a director when it happened.

When you hear me sing in the corridor you would (justifiably) suggest I do not give up my day job.  But seeing how well Morisset writes and his problems as a financial director I suggest that he is much better at the weekend job.  Award winning even.

And below is a riff he wrote about a fictional funds management organization.  The resemblance to Astarra is surprisingly strong… 

The Sydney Morning Herald notes that this “cracking yarn” is suddenly missing from Morisset’s blog – which is a pity.  Like many things written by Morisset it deserves more attention.

To ensure that I have reprinted it below.

 

 

John

PS.  For Michael Mascasero in the fiction substitute Matthew Littauer who was murdered in Roppongi in mafia style circumstances…

WEDNESDAY, MARCH 17, 2010

LOCKHART ROAD

The following is an excerpt from the opening pages of David Morriset's crime fiction novel set against the background of Australia's trillion dollar superannuation industry.


Michael Macasero had apparently found out the hard way that the noise and traffic on Wanchai’s Lockhart Road in the early morning hours was ample cover for discretely committing murder in a rubbish-strewn alley. Two Chinese garbage men, who had shaken with fear at their discovery, had found the blood-soaked body. Overworked but politically sensitive police had come up with an inconclusive finding on the death. Macasero was, they had surmised, just another American who got into trouble in the red light district and could not find a way out of it with all his vital arteries intact. The police reports had skirted around the demonstrably obvious facts that the weapons used and the nature of the wounds suggested Triad connections.

None of the Hong Kong law enforcement agencies had seemed inclined to give the matter any more thought until years later when the Australian Federal Police raised some questions at the instigation of investment regulators puzzled by apparent irregularities in a Sydney-based superannuation fund. Even then the Hong Kong authorities had been artfully unhelpful and the Australians appeared to give up and go away to solve less complicated problems – or at least that is what they did at first.

Macasero had been proud of his reputation as an investment guru in the baffling field of hedge funds and he had claimed the equivalent of US$100 million under management. Still in his thirties when he was killed, he had set up supposedly sophisticated vehicles in various tax shelters to provide services for his clients in Hong Kong and was expanding into Australia. He knew very little about the great southern land but he had been attracted by its various governments spruiking the notion of Sydney as a major financial centre. His young English colleague, Joel Rogers, had an Australian mother and he had already set up a small Sydney office. Rogers was ready to move there permanently as soon as Macasero made the call.

Like many Filipino Americans Macasero was the product of a family that had escaped people power with a fortune assembled during the Marcos years and had then relocated everything but its money to the land of the free. An only child, he attended college at UCLA and then set off for New York to learn about hedge funds. Tiring of the compliance obligations of working for Wall Street firms, he was seduced by a job offer from a charismatic English investment banker who was looking for a hedge fund specialist to exploit new business opportunities in Hong Kong.

By this time Macasero was unencumbered by any unbreakable links to his adopted country. His parents had died and left him with ample financial resources, which his father had cannily spread around the Caymans, the British Virgin Islands, and several other similar havens of the rich and secretive. There was even a large balance in a Swiss bank account that gave Mr Macasero senior some evident respectability when he wanted to source political donations. Where the fortune came from was not clear to Michael but he was grateful for it and determined to preserve it as a first priority and add to it as a matter of urgency before he retired to enjoy the rest of his life. Inheriting his father’s entrepreneurial gifts and distaste for traditional ways of doing things, the hedge fund industry was a natural fit. It was mysterious, gently regulated and seemingly irresistible to high net worth customers and ill-governed institutions. Returns were driven not by the overall market trend but by the wits of the investment manager. Some would say it was all a matter of luck, but Michael Macasero described himself as skilful without any embarrassment.

Rodney Hawker was more than twenty years older than Michael Macasero when they met by chance at an investment seminar in the Pierre Hotel in a huge function room overlooking the yellow taxis of Fifth Avenue and the tree-lined borders of Central Park. When the conversation switched to hedge funds and the opportunities for new business they presented, Hawker mentioned his interest in prospecting the money men of Hong Kong as a first foray into the vast wealth management sector that was ready to be born in China. Macasero was all ears. They walked over to Trattoria del ’Arte on Seventh Avenue and, while they sampled the restaurant’s paper thin pizza and home-made pasta coated with subtle sauces, Hawker talked Macasero into coming with him to Hong Kong later that month. Macasero severed his Wall Street ties, sub-let his apartment and hopped on a plane without a second thought.

To the eyes and ears of a young American, Hawker epitomised suave English manners and style. His navy pin-striped suit was expertly tailored, but a little crumpled, his sky-blue and white check shirt did not quite match his Ferragamo tie of tiny red golf clubs on a grey background, but his voice was full of rounded vowels and seemed to come from the depths of his throat where it seemed a double bass had lodged. A more urbane observer might have noticed the traces of cockney in his accent – traces that became more pronounced as he drank his favourite scotch.

Hawker was a self-made man of the most determined sort because he had reinvented himself several times over. Now well into his fifties he could look back on stints as a junior civil servant in the sprawling administrative divisions of the Foreign and Commonwealth Office, a commercial banker for Barclays at a time the bank was struggling to come to grips with the fallout from deregulation, several roles as researcher and stock-picker with small funds management groups that ended when his employers were gobbled up by bigger players, and a time as a freelance investment consultant, which was proving to be hard going to such an extent that his financial reserves were starting to diminish at a rather alarming rate. Convinced that he was finished in England, he decided to try Hong Kong.

Within six weeks of his arrival, Hawker had set up a tiny office on the fringes of the Island’s financial district near where it merged into the night life of Wanchai and then he had acquired an apartment in a nondescript building just off Nathan Road in Kowloon. He had also hired Bo, a young Filipina, as combination concubine, housemaid and procurer of alternative sexual services when he felt the need for variety or multiple partners. A veteran of two disastrous marriages, Hawker made it clear from the outset that he offered Bo sexual experimentation, a steady income that allowed her to meet the needs of her extended family in Manila’s slums, a comfortable place to sleep, ample food to eat, and a much more secure life than she had as one of the city’s unfortunate bar girls. The fact that Bo was almost thirty and losing her ability to pull customers on a regular basis meant that she was easily persuaded and, indeed, she was actually grateful for the chance to be exploited on such a generous basis.

Setting about the task of networking amongst the expatriate community and finding his way around Hong Kong’s financial labyrinth was second nature to Hawker. He had a glib tongue and his resume was edited in such a way that it looked both impressive and authentic. However, running an office and the administrative chores that went with it were a bore. When it was time to buy information technology items like computers, software and printers, Hawker was quick to surrender to the obvious. He was a twentieth century man with enough in the way of people skills to sell himself and his services to people like him. But when it came to dealing with twenty-first century office infrastructure and its suppliers, he was lost in a jumble of words, symbols and business practices that were indecipherable. So he did what any sensible twentieth century man would do – he placed an advertisement for an assistant with a superior IT skill set and an interest in starting a career in the investment industry on the bottom rung of a very high ladder.

Most of the respondents knew almost as little about IT as Hawker but one of them was different. Joel Rogers had only been in Hong Kong for a few days and he just wanted a start. Hawker offered him the job and he commenced work immediately after the interview, during which Rogers had babbled on about hedge funds and the dearth of them in Hong Kong.

Rogers was more than capable. He had graduated from the University of the West of England in business studies. While students came from all over England to study at what used to be the Bristol Polytechnic, Rogers was almost a native. He was raised in Portishead on England’s dreary west coast in a house on Blaggard Street, so named, according to regional folklore, because of its former associations with smugglers and pirates. Unfortunately his west country accent and the origins of his qualifications did not play well in the City of London and all he could manage after six years of trying was a series of low-paid but extremely stressful dealing desk jobs. One day he found himself gazing out of a Canary Wharf skyscraper window and looking east. Like many others before him, sensing failure in London, he decided to give it a go in Hong Kong.

After three months, Rogers formed the view that Hawker was a bit of a pain-in-the-neck. He delegated only the most menial tasks and left his assistant almost office-bound. However, new business opportunities were abounding. Very soon, Rogers expected, he would be managing money in a hands-on way that would have still been light years away in London. Hawker, unfortunately, had other ideas. He flew to New York, ostensibly to attend a hedge funds conference, but, in reality, his main aim was to find a fund manager. He found one in Macasero.

When Macasero landed in Hong Kong and set himself up in Hawker’s office suite in a corner offering a view over Wanchai, Rogers was disappointed at first. However, that soon changed. Macasero knew what he was doing and started taking care of all the details that were beyond Hawker and unknown to Rogers. More importantly, he adopted the role of mentor to Rogers in a collegiate fashion that reflected the small age difference between the two of them. Rogers was learning business development from Hawker and money management from Macasero so he was happy.

Within three weeks of Macasero’s arrival, the firm had adopted the catchy name of Triadica Securities and was about to launch its flagship fund, labelled, rather pretentiously, as the Masterwork Macro Fund. The word "triadica" was the name of flower common in Southeast Asia, chosen by Macasero for sentimental reasons and because it seemed to refer to the firm’s founding by three theoretically equal partners. Lack of awareness that there were other organisations in Hong Kong who might find the company’s name interesting was evidence of Macasero’s naïveté and a testimony to the entire group’s ignorance.

Weekend edition: In the tradition of Yves Smith’s – antidote du jour

I went to a free concert on the Opera House steps on the weekend.  The billing was very strange: Laurie Anderson (and possibly her partner Lou Reed) were giving a concert on the opera house steps for dogs.  Thousands of dogs.  It was billed as inaudible to the owners – and I could not tell whether Lou Reed was having us on.  After Lou Reed brushed off the Metal Machine Trio for an impressively loud show in the concert hall (earplugs supplied) – and he was going from something you could not listen to to something you could not hear.
I was pleasantly surprised. Dogs and family loved it.  Lou Reed did not appear but milled around the audience allowing this ridiculous photo of your blogger and his designer mongrel:


Lets call it a Walk on the Wild Side. 
Seriously though – how could I resist a connection – any connection – with the Velvet Underground and one of my favorite albums. 

A dark privatised social security story: Astarra, the missing money and how examining a fund manager owned by Joe Biden’s family led to substantial regulatory action in Australia

In Mid September I wrote a letter to Australian regulators which detailed my concerns about a fund manager in Australia known as the Astarra Strategic Fund – formerly known as Absolute Alpha.  This letter resulted in regulatory action against a cluster of related funds (almost twenty), however my letter was almost entirely about only one fund in the group.  I did not make any major suggestions in the letter about other funds in the Astarra complex.  My involvement was detailed today in the Sydney Morning Herald (see stories here, here and here, with the first story on the front page below the fold).  There was no genius in my letter – everything could be found (fairly easily) on the internet – and the original tip-off came from a reader of my blog – who noticed links with a story I wrote up in March 2009.

For reasons I will explain below this fund collapse is qualitatively different and more serious than any previous fund collapse in Australia and that the Australian press have not yet detailed why this one is important.

The letter argued that it was possible that the Alpha Strategic fund was a fraud.  I did not have the ultimate proof of that so I did not make my letter public and will not do so yet.  However there is a way of proving that a fund is not a Ponzi – and that is to “show us the money”.  If the assets are really there then it should be possible to convince regulators of that fact by showing them the assets.  If Bernie Madoff had been asked to prove the existence of all the money he supposedly managed then he would have been caught because he could not comply.  An honest fund should be able to comply fairly quickly – sometimes within 20 minutes – but almost certainly within a week.

The Australian regulator asked Astarra to show them the money – and to date that has not happened.  That does not mean that the money is not there.  It is however suggestive, especially as approximately three months have elapsed whilst regulators and fund administrators have tried to “value” the fund assets.  Indeed the difficulty of valuing assets was sufficient for the regulator to cancel licenses and to place the funds in the hands of administrators. 

At a meeting last week the (regulator appointed) administrator Neil Singleton said that with respect to one fund the only proof of assets they have is a letter from a Virgin Islands company stating that the fund (presumably the Strategic Fund) held 118 million in interests in other hedge funds.  This letter did not detail any interests held and gave no mechanism for confirming that statement.  However the administrator has not stated that the assets are not there – so – like the regulator and the administrator I too will leave that question open.  The press simply says the details as to the  $118 million are “sketchy”.

Background to the Australian privatised social security system and where various Astarra entities fit in to that system

Australia has a privatised social security system.  Much of the money is with large honest players run in a nearly index manner and which have cut fees to relatively low amounts.  Those funds are run by Australia’s otherwise dying trade unions.  Privatised social security (which Australians call “superannuation”) has been the saviour of the union movement in Australia – and – through their control of funds the unions now are within a breath of control (though generally do not vote their control) of a large proportion of Australia’s industry.  

The money that is not with the union funds is in a rag-tag of funds run by large banks (for example Colonial’s wraps owned by Commonwealth Bank) or with independents and/or self-managed funds.  The money in those funds (wraps) is let to a large number of sub-funds – sometimes large, sometimes boutique funds managers who live off the large and mandated fund flows from our “superannuation system”. 

The boutique funds range from very good to awful and shonky.  Indeed I think the best no load mutual available anywhere in the world is in Australia (I used to work for the manager).  But there have been some flea-bitten dogs sold to Australians.  One thing is for sure – you cannot do privatised social security without very good fraud protection because that amount of money from unsophisticated investors is a truly massive honey-pot for scammers and flim-flam artists.  As an aside, possibly the worst thing about George W’s privatised social security proposals was that they would be supervised by Cox’s toothless and supine Securities and Exchange Commission.

Trio Capital (the “mother-ship” of the Astarra entities) is a “wrap provider” – meaning a  financial planner might use Trio to invest all their client’s retirement money.  The Astarra Strategic Fund is an individual fund under that wrap.  My letter was about the Strategic Fund – and the collapse of the Strategic Fund would not be qualitatively different from the collapse of any of about six funds that collapsed during the financial crisis.  The financial planner might have put her clients in six (or more) funds – and the loss of one of them is a blow – but in no way imperils the system. 

But (somewhat surprisingly) the entire Trio edifice has been placed with administrators – which means that the end-beneficiary has had their entire retirement savings blocked.  In some funds there is not even enough cash to pay pensions to retired people for the month of January.  Some pensioners are not having their current payments blocked but there are doubts about future payments.  [Details as to who will receive pensions for the month of January can be found on Trio’s website.]  This is qualitatively different from earlier fund failures because it is a failure of every fund that a person might have invested – a failure of the core asset protection mechanism in the Australian system.  [I cannot work out why the otherwise sensationalist Murdoch press has not written a single story on this yet.  All they need to do is find a cluster of pensioners who will not receive their pension this month and who will have no idea as to why.]

How I came to write my letter to regulators

Six months ago a reader pointed me to a fund of hedge funds (called Absolute Alpha) based in Australia. 

I looked – and within forty minutes I became very concerned – but could not prove harm to the fund’s investors.  I tipped off the Sydney Morning Herald.

The journalists at the Herald worked hard at the story but alas they too could not prove harm.  Indeed a major bank misled them as to whether the assets were in (their) safe custody.  The bank confirmed the assets were in custody – a statement they have now withdrawn.  Obviously with a reputable third party vouching for the assets any hypothesis of harm was going to be hard to sustain.  The Herald published nothing. 

I however remained suspicious – but could not easily do anything.  For there to be something desperately wrong either the bank had to be a party or grossly negligent as to their custody of the assets. 

Absolute Alpha was a boutique fund manager loosely associated with – and partly owned – by a superannuation wrap provider called Astarra.  Astarra is now called Trio.  The wrap provider did all the superannuation compliance and in turn (claimed to) invest funds with other fund managers – mostly reputable managers.   The relationship between Trio and some of the funds in which they were supposed to invest is complex. 

The amount of money in Absolute Alpha was probably under 100 million.  There were plenty of things that did not look right – but I did not think there was much I could do about it.

So I let it go – though I did not forget about it.

Later I tried to log into Absolute Alpha’s website and it was dead.*  This (falsely) indicated my worst fear. 

Again I alerted the Herald. 

Alas it was not so simple.  Absolute Alpha it seems had taken over the funds management of all the money in the Astarra wrap.  They had renamed themselves Astarra.  Astarra later renamed itself Trio.  Astarra’s website boasted of a billion dollars in funds under management. 

This was potentially very bad news.  Australia is about a twentieth the size economically of the United States – so $1 billion in funds under management was the equivalent economically of $20 billion in the US.  If my bad-case was true we had a Madoff (at least proportionately) in the making.  [Now the funds have been taken into administration the official numbers are about 40 percent of the numbers boasted on the website.  The danger was not quite as big as I thought it was.]

Anyway I wrote a letter to the Australian Securities regulator (ASIC)  laying out all my concerns and (implicitly) the method for testing my concerns were false.  [I sincerely hoped I was wrong – and hoped the regulator would prove me incorrect by identifying and valuing the assets.  I still sincerely hope all the money turns up in the British Virgin Islands.]

I have heard lots of criticism of the Australian Securities regulator.  However on this important matter their actions were exemplary.  They did what the SEC could not do and act on a “Markopolos letter” within weeks.  They did what the SEC should have done when they investigated Madoff – and attempted to confirm the existence and value of the assets. 

Three weeks later ASIC put a stop on all Astarra funds – prohibiting new money going in or any moneys going out.  They acted to protect investors.  This showed responsiveness that Mary Schapiro and American regulators can only aspire too.  The Sydney Morning Herald finally published a cryptic story on the front page.  The Sydney Morning Herald article did not suggest – and I did not reasonably think – that the problems extended further in the Trio edifice.

A few months have passed and eventually all major Trio entities were placed in administration by the superannuation regulator.  They will probably be liquidated.  The funds have been passed to (reputable) private sector “forensic accountants” – the choice of accountants being made by the securities and superannuation regulators.  They are the sort of liquidators you use when (as stated by the regulator in their press release) you are not “able to satisfy concerns regarding the valuation of superannuation assets”.

The whole mess will be explored by the accountants -  and if the assets are not there then the matter will played in court – at which point I will publish my “Markopolos letter” analysing what I got right and wrong. 

But for the moment I will leave you with what attracted me to Absolute Alpha in the first case.  It was the CV’s of the principal players.  Here they are:

Shawn Richard - Chief Executive Officer

Shawn is the founder of Absolute Alpha and a key member of the investment team.   Prior to founding Absolute Alpha, Shawn has held and continues to hold, various senior positions, including directorships of companies both in Australia and overseas.

Shawn has been involved in financial markets since 1996 and had been specialising in alternative investments for more than 8 years, both offshore and in Australia. Over this time, Shawn has established relationships with some of the most exclusive hedge fund managers around the globe.

Shawn’s offshore experience in alternative investments includes among others, structuring and analysis of derivative instruments with some of the largest private hedge funds in the United States. Shawn was also part of a small team of professionals providing risk management services to Asian institutions and regional banks in relations to their exposure in equities.

Shawn holds a bachelors degree in Finance from the University of Moncton.

Eugene Liu -Chief Investment Strategist

Eugene is the Chief Investment Strategist of Absolute Alpha. As Chief Investment Strategist, Eugene is involved in the development and evaluation of asset strategic plans, development and modelling of analytic tools, reviewing and analysing investment data to formulate investment strategies, and the investment risk management process. Prior to joining Absolute Alpha, Eugene worked with the Asset Management team of Pacific Continental Securities and World Financial Capital Markets in the US and Asia. In these roles, Eugene performed extensive financial modelling and valuation analyses of various hedge fund strategies. Eugene also led a team of arbitrage specialists who provided structured product deal flow to many of the largest hedge funds in the industry.

Eugene holds a degree in economics from Trenton State College in New Jersey.

Charles Provini (US) - Asset Consultant

Charles has been involved in hedge funds for more than 20 years and is a senior asset consultant and member of Absolute Alpha’s investment committee. Currently, he is the President of Paradigm Global Advisors, a well established hedge fund manager based in NY and he is also the Chairman of C.R. Provini & Co., Inc., a financial services firm, founded in 1991. Prior to this, Charles held various senior positions, including, President of Ladenburg Thalmann Asset Management, Director at Ladenburg Thalmann, Inc., one of the oldest members of the New York Stock Exchange, President of Laidlaw Asset Management, Chairman and Chief Investment Officer of Howe & Rusling, Laidlaw’s Management Advisory Group, President of Rodman and Renshaw’s Advisory Services, and President of LaSalle Street Corporation, a wholly-owned subsidiary of Donaldson, Lufkin & Jenrette.

Charles has been a leadership instructor at the U.S. Naval Academy, Chairman of the U.S. Naval Academy’s Honour Board and is a former Marine Corp. officer. He is frequent speaker at financial seminars and has appeared on “The Today Show” and “Good Morning America” discussing financial markets.

Charles is a graduate of the U.S. Naval Academy and has an MBA from the University of Oklahoma.

Now the first CV – Shawn Richard – is notable only for what it does not say.  It does not mention a single firm that Shawn ever worked for – and hence reduces the possibility of doing due-diligence. 

Eugene Liu’s CV is not so careful mentioning two firms, Pacific Continental Securities and World Financial Capital Markets.  Pacific Continental is easy to find – it was a bucket shop of enormous proportions in the UK.  Essentially the firm found hapless victims and steadily moved their life savings into soon-to-be worthless scam stocks for huge commissions.  This was explored widely in the UK press including beautiful articles about a salesman’s time as scam artists.  World Financial Capital Markets is a little harder to trace as a firm.  Several firms have had that name – but one firm by that name met an unfortunate end involving fraud and the principals reappeared at Pacific Continental. 

It turns out that Shawn Richard was a manager with Pacific Continental in Taiwan.

The third CV is of Charles Provini who used to be the CEO of Paradigm Global and who was (falsely) claimed to remain in that position.  When I copied these CVs off the Absolute Alpha website Provini had not worked for Paradigm for about two years.  Some of the rest of Mr Provini’s CV is raised my eyebrows too – for instance he worked as the President of Laidlaw Asset Management.  A firm of that name was cited by the UK securities regulator (the FSA) for cold-calling and selling scam funds to UK investors. 

The link to Paradigm Global was what raised my eyebrows.  Paradigm is an asset manager (for funds of hedge funds) owned by Hunter Biden and James Biden.  These are the Vice President’s son and brother respectively.  I have written about Paradigm extensively before as it has an unfortunate habit of being associated with scams.  Absolute Alpha was not difficult to do due diligence on.  It took me only 40 minutes to work out that they were needing very close scrutiny.  It does not speak well to the due-diligence of a fund of hedge funds (which is what Paradigm claims to be) that they keep being associated with cases like this.

The Biden connection was what prompted me to look at Absolute Alpha and hence what led me to write my “Markopolos letter” to ASIC and hence what rapidly led to the closure of Astarra and Trio.  It is worth asking how deep that connection is.

Are Absolute Alpha/Astarra really associated with the Biden’s firm?

At first glance the links between Astarra and the Bidens’ firm are weak.  Provini could have been marketing “vapourware” with no real association.

All that is certain is that Provini was cited on the Absolute Alpha website as an asset consultant and President of Paradigm for at least two years after he was sacked from Paradigm.  Provini is now running inconsequential penny stock companies. 

But the links run deeper than that.  Absolute Alpha also used to cite other staff members who worked at Paradigm – indeed the original “managing partner” was also a staff member at Paradigm.

Absolute Alpha used to publish a process diagram as to how they identified funds to invest in.  I have reproduced that diagram below:

 

It mentions two things which link Absolute Alpha (now called Astarra) to Paradigm global.  These are the use of the Park Score (named after James Park – the founder of Paradigm) and the PASS database – the core database of hedge funds from which Paradigm claims to make its investment decisions. 

Still, this could all have been ripped off Paradigm without Paradigm knowing. 

Alas Paradigm does not get off so lightly.  The boys from Absolute Alpha went to New York and co-marketed with people from Paradigm.  Indeed I know someone who thought that Absolute Alpha were OK because staff at Paradigm had vouched for them.  Whether Paradigm knew that Shawn and Eugene in Australia were using “Paradigm inspired” marketing material however is unknown. 

Paradigm – the Biden’s firm – had unwittingly got involved in another funds management firm which has been closed by regulators or been exposed as Ponzis.  That is four I know of now – and I have yet another one that I suspect of being unsound. 

A plea to Michelle Malkin

So much of what is published by the conservative blogosphere is non-fact based muckraking.  And yet – sitting here has been my observation that the fund of hedge funds associated with the Vice President’s family has an unnerving habit of association with scams and other funds closed by regulators.  Surely a competent muckraking conservative blogger can actually do some digging rather than pontificating from the sidelines. 

It makes me think of conspiracy theories.  Maybe conservatives in the US do not want to do this sort of financial digging because most the fraudsters and scamsters are part of the Republican movement and do not like regulators because – well – they might catch them.

But there must be honest Republicans out there.  It is time for Michelle Malkin to do some honest work.  So I will plead with her – can you please do some digging into Paradigm or find some other muck-raking conservative to do it for me. 

I for one want to get back to making money honestly.

 

 

 

John

 

*Incidentally – I was attempting to log into the Absolute Alpha website because I was discussing the whole matter with a reader from Talking Points Memo.  You know you you are.  Thank you.