THAT TENDER LITTLE TRUST IN JERSEY

On 19 July 2022 / Dossier Tax Havens, Finance, IBI World UK / Leave a comment

Castles and lighthouses in the sunset, pure romance: Jersey is an island off the coast of Normandy, at the exit of the English Channel, half the size of Elba Island. A wad of flat green meadows, disputed for centuries between French and English aristocrats, and then attaining independence, over 800 years ago, but remaining loyal to the British Crown: Queen Elizabeth II, as Duchess of Normandy, is the monarch of the island’s approximately 100,000 inhabitants who – despite this – have their own government, even though they are part of the British pound area and, in the event of war, have a defensive agreement with the British Empire^[1] .

For the rest, there is no reason to be interested in the islet, except for the fact that it is home to four species of very rare mice, and is overflowing with cows which, due to the excellent quality of the local grass, give very fine milk^[2]. The locals play cricket, golf and polo, and the island has, in proportion to its size, the world’s largest number of cycle paths and horse trails^[3]: a paradise for those with lots of money and who enjoy country peace. A paradise that has lived in peace for eight centuries, under the protection of the British Crown, but with a largely autonomous government that since the Second World War has staked everything on the financial intermediation of international trade^[4].

Jersey adheres to all international treaties on financial regulation and has established itself mainly for two reasons: it has very low taxation and is less than an hour’s flight from any private airport in southern England^[5] . There is only one scandal in its history that has had worldwide echo – but it is a horrible paedophile case^[6] . But even as a tax haven, Jersey prefers to help rich English aristocratic clans and small family businesses – hardly any industry or multinationals. This has created a tiny army of facilitators and trustees, all interconnected, one of whom is the subject of our analysis: the Baccata Trustees firm.

What Baccata Trustees is for

The International Finance Centre in St. Hélier, which continues to grow, like the volume of business on the island of Jersey^[7]

The group was registered in March 1990^[8], is headquartered in the International Finance Centre in Jersey^[9] and is duly licensed by the Jersey Financial Services Commission (JFSC)^[10]: Baccata manages private wealth and family offices, offers trustee services (not only in Jersey but also in Guernsey, the Virgin Islands, the Cayman Islands, the Bahamas, etc.), corporate administration and management services and offers investment advice to its clients – a hundred entities in Jersey alone, more than twice that number around the world. Baccata Trustees Ltd is controlled by Baccata Holdings Ltd St. Hélier, which in turn controls a number of ostensibly operating companies (Giggs Holdings, Danix Investments, Mysia Investment), each of which is used to channel clients’ money flows, concealing their original ownership, investing in financial and industrial products around the world, but above all creating a system of invoicing that legally allows money to be moved from the owner to the trustee, from the trustee to an investment company, and from the latter to an offshore company that contains the money earned from the investments^[11].

For each of these steps, the client pays an amount – in any case less than the taxes in the country of origin – and hopes that, thanks to the investments, Baccata will be able to replenish the original wealth. With the increasing number of clients, the Baccata group also founded Baccata Nominees Ltd St. Hélier in 1998, which controls about 50 per cent of other financial holding companies (Be Holdings 1, ITG International Technology Group and Bizfitech Holdings)^[12], with the aim of further reducing the tax burden on clients: a ‘nominee’ is an economic entity in whose name the title to real estate or ownership of shares is held, but which is not the actual owner ^[13]. A company that does nothing except hold shares at zero tax for a company that would otherwise still have to pay tax.

A few examples: Mysia Investments Ltd St. Hélier (incorporated in 1974) controls several companies, such as Goodinvest Ltd London ^[14], Openday Ltd London^[15] , Sheaf Properties Ltd London^[16] . Officially, all these companies are controlled by the Baccata group^[17], which however is only the administrator of the shares, because the ultimate beneficiaries of this network are the Marquis of Salisbury Robert Michael James Gascoyne-Cecil^[18] , David Hawksworth Horton-Fawkes (director of a dozen real estate companies in the family of the Marquis Gascoyne ^[19]), and Viscount Robert Edward William Cranborne^[20] (eldest son of the Marquis of Salisbury) ^[21].

The beautiful gardens of Hatfield House, which the family of the Marquis of Salisbuty registered as the property of the Baccata Trustees^[22]

The family owns Hatfield House in Hertfordshire, whose 2000 acres of land belong to Samos Investments Ltd and Syros Investments Ltd, two companies ‘owned’ by Baccata. The Gascoyne family also owns Cranborne Manor and another 2000 acres in Wiltshire, again transferred to both Samos and Mysia Investments Ltd. The current Marquess, Lord Salisbury, when he was leader of the Tories in the House of Lords in the 1990s, vehemently opposed far-reaching reform of the land laws^[23].

And here are the first problems: not all the companies whose shares are administered by the individual entities created by Baccata, belong to the same ultimate owners: Syros Investments Ltd St. Hélier controls several companies in Cyprus and Germany: Raznomap Ltd Aglantzia Nicosia, which in turn controls GC Grund Gmbh Berlin, which is involved in property management (through two subsidiaries, GD Real Gmbh & Co KG Berlin and GD Grund Gmbh Berlin)^[24] . The clients are a small German real estate group, whose holding company is officially 50% owned by Baccata Nominees and 50% by Baccata Trustees^[25] . Mysia Investments and Syros Investments control another London-based real estate company – Giltwood Properties Ltd^[26], but in this case we could not find out who the real owner is.

So: nobody, not even the clients, knows exactly which assets are part of which administrative entity. Should the management of Baccata Trustees decide to shuffle the cards, they could do so without anyone noticing, at least until an individual client’s assets disappear. Baccata Trustees has never been involved in any investigation into possible fraud.

But it makes good money, so much so that it set up the Bizfitech Ltd group in 2015, which has developed software (called Handle) aimed at lending to small businesses that have had an application rejected by a bank, and has so many clients that it runs a tech hub in Nottingham^[27] . The company is run by a team that includes analysts and product designers who have worked at Google, Capital One and Experian^[28] . Bizfitech controls 100% of Business Finance Technology Group Ltd^[29] and FWF Holdings Ltd Nottingham^[30] .

The method used by Bizfitech is rather obscure, and its technicians are among the most celebrated Hackers in the UK – many of them celebrated in the ‘Hack24’ symposium, which took place in 2018 in Bizfitech’s offices and led to 130 hackers exchanging information on how to infiltrate computers around the world and across banking and tax administrations^[31] . In any case, the London financial centre considers Bizfitech and its mysterious systems for obtaining bank loans a ‘dangerous’ and ’embarrassing’ development^[32] .

The role of Nick Falla

Bizfitech’s hacker staff working closely with Baccata Trustees asset managers^[33]

This system allowed Baccata Trustees to grow until 2005, when former banker Nicholas Peter James Falla^[34] was appointed to head the group, bringing in numerous international clients (such as the Norwegians of the MSOL Group^[35], active in the maritime sector^[36]). Falla, who has worked in several offshore banks, comes from the same aristocratic circles that form the main basis of his client portfolio. He became well known in the gossip columns as the godson of Judge Jean Southworth, an elderly lady who, shortly before her death, civilly married Mrs Wendy Cook, who buried two husbands and a wife 30 years her senior, inheriting their multi-million dollar fortune – Cook having inherited the entire family fortune, Falla was forced to go through a court case to get at least part of it^[37].

Falla introduced a new business: that of penny stocks, for which he created a series of nominees, such as Meantime Nominees 1 Ltd London, Meantime Nominees 2 Ltd London, Astel Ltd Jersey and others^[38]. The shares of a company that have an initial value of almost always less than a dollar, or a pound, are called penny stocks: thus a capital of $1,000 can be divided into 100,000 shares, and these are legally sold on the New York Stock Exchange via over-the-counter transactions by electronic means^[39]. The original idea was to allow entrepreneurs with a great idea but little liquidity to build their company from the bottom up and grow as their product brand becomes established.

Because of the lack of liquidity and the small size of the companies, penny stocks are considered highly speculative^[40] – i.e. stocks through which investors could lose a considerable amount of money^[41]: as long as customers buy, the value of the stock goes up, but the moment someone decides to sell, because they need to realise, no one buys, and the stock collapses, destroying even in a few hours all the capitalisation achieved up to that moment – and the only ones to gain are the trustees who have cashed in their legal percentages on the purchase while the value went up^[42].

Some famous companies started as penny stocks: Ford Motor Company (cars), BlackBerry (smartphones), SiriusXM (satellite radio), Pier 1 Imports (retail), Xerox and others ^[43]. But in most cases these are empty boxes, whose share value rises according to the demand for their shares. Since, generally, the unwitting buyers are the clients of offshore trustees, they buy shares in companies whose capitalisation rises at a dizzying rate, but are unaware that they are buying shares in a company that has no business and is, in fact, a bubble^[44].

The rules for penny stocks are different from those for ordinary shares: (a) stock exchanges do not require much detail, the companies are practically inactive, and the information available generally comes from non-credible sources^[45] – as in the case of the clients of Baccata Trust, whose companies use Paul Rankine, an associate of Falla, as auditor ^[46]; b) it is almost impossible to establish the real market value of a penny stock company, because it does not sell a product, so it only has a value measured by the growing confidence of customers who buy – who are customers of a few trust brokerage firms ^[47]; c) penny stock companies have no liquidity, and so if forced to return money, they go bankrupt, and the value of the capitalisation collapses within hours (the method used is called ‘pump and dump’, and is a trading scam: one buys large quantities of a penny stock followed by a period in which the stock is pumped. Once other investors rush in to buy the stock, the scammers sell. By the time the market realises, it is too late^[48]. d) Another way of scamming customers is to make them sign contracts committing them not to sell the purchased shares for a fixed period (for example: three years), so that the trust company can use that cash to obtain a bank loan to be repaid in three years – a real investment, thanks to which the trust company earns money that is not shared with customers.

The Baccata Trustees group is involved in a considerable number of penny stock companies with their clients’ money. Our attempt to accurately quantify the number and nominal value of the capital invested has come to a halt when faced with the paucity or absence of official documents on those companies. We chose one out of all, Wits Basin Precious Metals Inc. Minneapolis, a mining company whose capital never exceeded $100,000, in which Baccata’s clients participate through a holding company, Kenglo One Ltd. St. Hélier^[49], which officially invests its clients’ money in gold and silver mines. This is interesting, because it introduces us to another novelty that Falla has brought to Baccata: mining investments.

The investments of Kenglo One

The Cononish gold mine in the Scottish Highlands, owned by Scotgold Resources^[50]

Kenglo One Ltd. St. Hélier was established in September 2009^[51] and is controlled by Benbrack Charkit Ltd. St. Hélier,^[52] which in turn is controlled by the BBCK Settlement Trust St. Hélier, which is not a real company, but a contract through which a certain Christopher Brown and some of his associates obtain money at the end of a litigation settlement and invest it together in Kenglo One and the mining group TomCo Energy Plc (a Utah-based^[53] industrial group specialising in fracking gas^[54]) – all managed by Baccata Trustees^[55]. Over time, Baccata increases the value of Benbrack Charkit by selling shares in this company to its clients, and consequently in Kenglo One, which specialises in highly speculative mining investments^[56] .

Kenglo One’s investments are not lucky. In 2011, Baccata Trustees accompanied it in the purchase of ever-increasing shares in the Canadian group Galantas Gold Corporation^[57] (20.9% in 2011^[58] , 25.8% in June 2012 , 32.29% in July 2012^[59] ), to which must be added a loan, never repaid, of 1.25 million pounds ^[60]. Galantas bets on an open-pit mine in Northern Ireland, in Omagh, which has been idle for almost ten years, and in order to find enough gold ($876,000 in 2020) it expands beyond the established boundaries and blasts hills and land without a licence – for which it is stopped by the authorities^[61] . Now the mine is working, but not enough to pay back the millions of pounds spent to start the work, which is why Kenglo One was unable to pay its annual fees and in December 2017 disappeared from the shareholder list without having recovered a single penny for its customers who had invested nearly 21 million pounds in it^[62].

Things are no better with TomCo Energy, a British company, registered with the Isle of Man’s Baccata Trustees office, which has been trying to obtain gas and oil from the sands of Mesa Verde, in the Utah desert^[63], or from other lands in Ireland, Israel and other parts of the world^[64] for almost twenty years . Nick Falla’s clients, over the years, have invested over 20 million pounds in it, guaranteed by the presence on the board of Christopher Richard Brown^[65] and Paul Rankine ^[66], who has been the group’s CEO for years ^[67].

The result is that TomCo Energy, whose shares were worth 5 cents each when it was founded, is now worth only 5 thousandths of a pound, and can practically no longer be traded^[68]. Again, therefore, the clients of Baccata Trustees recovered less than 10% of the money they invested when they were forced to divest in 2018^[69] . Chris Brown (apparently) lost everything: the other operations he started in the last twelve years also failed as of 2018. Ten years after leaving a managerial job with the ArcelorMittal group, the Australian engineer, who had been living in London for years, found himself having to start all over again ^[70].

Nicholas “Nick” Falla^[71]

The TomCo disaster is heralded by another financial mishap: that of Red Leaf Resources Llc Salt Lake City (Utah), which sold the technology used by TomCo Energy ^[72]. In return, the hedge fund Altima (another penny stock company in which Baccata Trustees’ clients invest) and Kenglo One bought 24% of Red Leaf Resources^[73] for USD 31 million – all money lost, because Red Leaf’s mining project is so polluting that it was first blocked and then banned by the US federal authorities^[74] . Part of that money came from Kenglo One’s 2011 investment in 26% of Conroy Diamonds & Gold Ltd. Dublin, a company, founded by geologist Richard Conroy, that discovered (and still operates) a mine in the centre of Ireland^[75]. Baccata Trustees supported its creation in 2011 by paying 26% of the initial capital (just under half a million euros)^[76], but then withdrew, by a fair margin^[77], when it realised that the necessary investment would be too expensive for Baccata’s clients’ pockets.

A similar thing happened with Scotgold Resources Ltd. Stirling Highway Nedlands (Western Australia), a company that owns two gold mines in Scotland, and which immediately ran into major difficulties because the mines affect two protected areas, Loch Lomond and the Trossachs National Park^[78]. In 2011, Kenglo One bought 9% of the shares, allowing the company to survive^[79], but then did not have enough strength to hold on during the years when the company was only making losses, and sold its stake before the two mines started to make a profit^[80]. The investment in TomCo Energy sucked in, like a vortex, tens of millions of pounds: in 2018 Kenglo One declared bankruptcy – everyone who had invested their money in it lost it^[81] .

But how is it possible that an unknown number of customers agreed to lose everything without recourse to the courts? The answer is simple: when a client signs a fiduciary contract in which speculative investment in penny stocks is also contemplated, in the event of a total loss of the invested assets, the client has no right to complain, because he had been warned in advance, and is in trouble because, driven by the hope of increasing his capital without doing anything, he has stumbled into one of the dozens of lawful traps with which the asphalt of the global financial centre is littered – as yet another example shows.

Moravia Cans

The ultra-modern Moravian Cans factory in Bojkovice^[82]

Moravia Cans a.s.^[83] is a company in Bojkovice (Czech Republic) that produces about half a billion aluminium spray cans a year^[84]. The Novak family bought the company shortly after the Prague ‘velvet revolution’ of 1989, turning an old aluminium tube factory into a state-of-the-art company that sells throughout the European Union^[85]. The company was registered in 1992 and has an annual turnover of around 75 million euros, and in 2020 it closed the year with an after-tax profit of 8.2 million euros^[86]. It has been led for almost 27 years by George Miroslav Novak, while his brother Lubomir has since retired from business ^[87].

The sole shareholder (100%)^[88] is Unican International Ltd. Birkirkara (Malta) ^[89], on whose board are Nick Falla, Paul Rankine and Jennifer Le Chevalier^[90] (a professional named ‘Woman of the Year’ in 2022^[91] ). Unican International Ltd. Birkirkara was founded in April 2014, has a capital of GBP 2000 and is officially controlled by Giggs Holdings Ltd. St. Hélier ^[92], one of the vehicles used by Baccata to conceal the identity of its clients, founded (1996) two years before the Novak brothers moved to the Isle of Man. Giggs Holdings also controls Seaford Ltd. Malta (with Nick Falla and Paul Rankine^[93] ) and Unican Developments Ltd Malta ^[94]. Falla created this structure for the Novak brothers, brought it under the umbrella of Giggs Holdings, and since January 2014 (when Unican Developments was established) has managed most of the financial affairs with virtually no control ^[95].

Novak came to Nicholas Falla to invest the profits, and Falla convinced him to invest in Brady Plc, a London-listed company that has been on the verge of bankruptcy for years. Novak trusts Falla, because with his help he also managed to buy T.&A. International Transport spol s.r.o. in Holešov^[96], founded in 1996 in a small town in the Czech Republic, which has an annual turnover of $3.3 million^[97] and also transports Moravia Cans’ products at a logically low price. George Novak is the administrator of the company, together with Jiří Novák ^[98]. In the meantime, the Novak family sold ownership of T&A to Tomáš Směšný (76%) and Alena Směšná (24%)^[99] .

Part of the business is absolutely legal, and this Chinese box system only serves to save some tax. Then there is the dark side, Petrokim Trading, which handles logistics and fuel and spare parts contracts for Blue Energy, which in turn is blacklisted for selling around sanctions in Syria and Iran. In February 2012, a new company was set up, this time in Moldova – Unican Service Srl Chişinău, which exports spare parts for mechanical equipment all over the world^[100], and this too is a rather suspicious activity. The sole director and owner of the company is Dmitrii Candiba. It is still active^[101] .

The role of Paul Rankine

Paul Rankine, second from right, on a British talkshow in 2014^[102]

The clients of Baccata Trustees often request an independent audit of the deals proposed by the trustees – and Nick Falla has his own trusted man, Paul Rankine, who, in the case of Seaford and Unican, is now not only the head of auditing, but also an employee of the company^[103]. In this capacity, Rankine, in 2005, bought, on behalf of Seaford Ltd., 668’223 shares of Brady Plc, in a rescue operation of the latter company, in which the company Warrington Investments Ltd. Hong-Kong ^[104], apparently controlled by the very wealthy Canadian Koschitzky family, which came to 23.16% of the company through the restructuring of Brady’s capital. While Seaford bought 2.57% of Brady^[105] .

Officially, Unican Developments is dormant, but in reality there is a bank account for this company, personally managed by the financier Karl Deacon^[106], who invests and disinvests in penny stocks at such a speed that he does not show the transactions in his monthly client reports. Whatever money he earned in the month disappears into the grid of his companies^[107], at least one of which, Seabrome Ltd. Nicosia, until 2018 (when it was liquidated) was controlled by Seaford Ltd. Birkikara^[108] . A figure that is impossible to establish was used by Deacon and his partner, Adrian Marcieca, to cover part of the losses caused by the fraudulent bankruptcy of the Abraaj Group^[109] .

As for Paul Rankine, he shifted all his earnings to Austria, where he built a small financial empire, with the intention of retiring there the day someone should hold him accountable for his financial operations carried out in open conflict of interest^[110] . Another part of the wealth he has accumulated is tied up in the shares he and Nick Falla bought, over 20 years ago, in Normandy Mining Ltd.^[111] and which now allow them a secure income after the merger into the Newmont Mining Corporation group^[112]. Rankine also bought a share in a mining company, the Cassidy Gold Corporation^[113], which has only one asset: a share in a small artisanal mine in Ghana^[114] .

The whole sequence of names of people and companies, so many that it makes one’s head spin, is the daily routine of the pulsating life of a trust company, which officially hides the assets of those who want to evade taxes from the tax authorities, but in reality, at the same time, uses that money to take out bank loans and invest on its own account, or swindles the client into participating in catastrophic financial transactions, in which the trustee secretly earns what the client loses. But since those who are supposed to check the balance sheets are in any case partners of the trustee, you can bet that they will find nothing wrong with the financial transactions – even those that end up worse.

That is why, if you really want to see Jersey, enjoy the view, have a nice horse ride, or a nice swim in the sea, but avoid taking your money there. You think you are putting it there for a while, until times are propitious. And instead it is likely that that money, after pretending to go round the world several times, will still end up in Jersey, but in someone else’s pockets.

[1] Ben Pimlott, “The Queen: Elizabeth II and the Monarchy”, Harper Press, London 1996, p. 314; https://books.google.de/books?id=UlY6unhtCEAC&pg=PA11&redir_esc=y#v=onepage&q&f=false, p. 11

[2] https://www.jersey.com/inspire-me/inspiration/seven-ways-to-experience-jerseys-wildlife/ ; https://www.jerseytravel.com/blog/the-wild-side-of-jersey/

[3] https://evieondemand.com/ ; https://www.jerseyridingclub.co.uk/

[4] https://www.baccata.co.je/about-us

[5] https://www.baccata.co.je/about-us

[6] http://edition.cnn.com/2008/WORLD/europe/03/03/jersey.abuse/index.html ; http://news.bbc.co.uk/2/hi/uk_news/7267632.stm

^[7] https://commons.wikimedia.org/wiki/File:International_Finance_Centre,_Saint_Hélier.jpg

[8] https://www.jerseyfsc.org/registry/registry-entities/entity/194595

[9] https://www.ifcjersey.je/

[10] Official website: https://www.baccata.co.je/about-us

[11] 2021.10.05 Baccata Trustees Limited; Worldbox Jersey

[12] 2018.12.29 Baccata Nominees Limited; Worldbox Jersey

[13] https://www.collinsdictionary.com/dictionary/english/nominee

[14] 2017.01.04 Goodinvest Ltd; D&B Shareholder Reports

[15] 2017.01.04 Openday Ltd; D&B Shareholder Reports

[16] 2021.03.16 Sheaf Properties Limited; D&B Shareholder Reports

[17] 2019.09.22 Mysia Investments Limited; Worldbox Jersey

[18] Marquess of Salisbury Robert Gascoyne-Cecil is a British Conservative nobleman and politician. Like many of the young heirs, he was the Queen’s page of honour from 1983 to 1986. During the 1990s he was leader of the House of Lords. The family fortune consists of land in Hertfordshire and London, treasures dating back to Elizabethan times, and Hatfield House: https://www.theguardian.com/money/1999/apr/11/theyoungrich4 ; https://members.parliament.uk/member/1124/career ; https://it.frwiki.wiki/wiki/Robert_Gascoyne-Cecil_(7e_marquis_de_Salisbury)

[19] https://find-and-update.company-information.service.gov.uk/officers/z_QvD8q-G4ci1neO0Ns19EPrepA/appointments

[20] https://find-and-update.company-information.service.gov.uk/officers/vr9D3_azWVu2vBEtRCjjS0UinK8/appointments

[21] 2021.06.07 Sheaf Properties Limited; D&B Financial Analysis Reports

^[22] http://loveisspeed.blogspot.com/2013/02/hatfield-house-is-country-house-set-in.html

[23] 2015.06.19 Scandal of 100,000 UK properties covering ½ million acres owned by offshore companies

[24] 2021.11.14 Syros Invetments Limited; Dun and Brandstreet Corporate Family Tree

[25] 2019.09.22 Syros Investments Limited; Worldbox Jersey

[26] 2017.03.02 Giltwood Properties Limited; D&B Shareholder Reports

[27] 2015.03.10 Core of the new hub. Nottingham Post

[28] 2016.11.21 Handle opening doors for firms. Nottingham Post

[29] 2019.07.17 Bizfitech Holdings limited; Worldbox

[30] 2021.06.01 FWF Holdings Limited; D&B Shareholder Reports