SEC Charges New York-Based Money Manager and Firm Touting Ties to Belgian Royal Family
FOR IMMEDIATE RELEASE
Washington, D.C., June 11, 2010 — The Securities and Exchange Commission today charged a New York-based money manager and his firm with fraud for touting investments he claimed were tied to the Chimay royal family of Belgium, and then stealing millions of dollars to pay his divorce lawyers and the mortgage on his house in the Hamptons.
The SEC obtained an emergency court order to freeze the assets of Guy Albert de Chimay and his firm Chimay Capital Management, Inc., alleging that they solicited investments in a vehicle known as the “Bridge Loan Facility” (BLF) that was to pool investor funds with millions of dollars of Chimay royal family money to make safe and profitable short-term loans to companies. Chimay claimed to be related to the current head of the Chimay royal family, the Prince de Chimay.
The SEC alleges that rather than using investor money to make bridge loans, Chimay simply stole it. Chimay falsified bank statements to hide the fraud while diverting at least $6 million into his personal bank account or otherwise misspending it on unrelated firm expenses.
“Chimay used the trappings of royalty to perpetrate the most common of frauds,” said George S. Canellos, Director of the SEC’s New York Regional Office. “Chimay blatantly lied to investors about non-existent investments and then used their money to bankroll his exorbitant personal and business debts.”
According to the SEC’s complaint, filed in U.S. District Court for the Southern District of New York, Chimay Capital claimed to have approximately $200 million in assets under management as the BLF investment opportunity was marketed to investors beginning in 2008. Investors were told that Chimay Capital had a long and profitable history as the U.S. investment arm for the Chimay royal family and a privileged circle of family friends, and the BLF investment opportunity was being made available to only a chosen few outsiders. Chimay promised outside investors they would receive guaranteed fixed annual returns of 12 percent regardless of the actual performance of the loans.
The SEC alleges that there is no evidence that any bridge loans were actually made, and investments were instead used to make mortgage payments on Chimay’s multi-million dollar home in the Hamptons and pay more than $500,000 to the law firm representing Chimay in a divorce proceeding. Investor money also was fraudulently used to pay Chimay’s massive credit card bills as well as Chimay Capital’s rent and payroll, and to pay off disgruntled counterparties in Chimay’s other business ventures. As recently as December 2009, Chimay sought a multi-million dollar bank loan on the basis of false representations that he had $13 million in liquid assets in a Bermuda bank account. The account balance was actually zero.
The SEC’s complaint charges the defendants with violations of Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. In addition to emergency relief, the SEC’s complaint seeks permanent injunctions barring future violations of the charged provisions of the federal securities laws, disgorgement of the defendants’ ill-gotten gains plus pre-judgment interest, and financial penalties from the defendants.
Michael J. Osnato, Jr., Alison Conn, and Charles LeRoux of the New York Regional Office conducted the SEC’s investigation, which is continuing. The SEC’s litigation effort will be led by Alix Biel. The SEC thanks the New York County District Attorney’s Office and the Bermuda Monetary Authority for their assistance in this matter.
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For more information about this enforcement action, contact:
Andrew M. Calamari
Associate Regional Director, SEC’s New York Regional Office
Assistant Regional Director, SEC’s New York Regional Office