Before You Invest Your Money

It’s the British Madoff as far as I’m concerned. I first invested £50,000 in November 2007 – it went up to £54,000 within a matter of weeks so I just put more in.
Terry Freeman, 60, a foreign exchange trader, was arrested at his home in Buckhurst Hill, Essex, on Monday by detectives from the City of London Police Economic Crime Department. Mr Head said: “There is no doubt in my mind that the present economic situation has led to this rise in reporting [of fraud]. “Most fraud is discovered internally by businesses, but historically I believe only a fraction of those crimes have been reported to the police. Time will tell if we are experiencing two rare positive effects of the economic climate: not only are procedures to prevent and detect fraud being tightened, but victims have a greater confidence to report suspects to the police.” His home and offices were searched and large quantities of documentation were taken away for analysis. Mr Freeman, director of GFX Capital Markets Ltd, was released on police bail after questioning. The City of London force has appealed to investors in the firm, which had offices in Leadenhall and Moorgate, to come forward if they had concerns. It is understood the company recently stopped trading. A police spokesman said officers were investigating suspected money laundering and offences under the Financial Services and Markets Act. One source said: “This is a very fast-moving inquiry and we don’t expect the dust to settle for a few weeks. Only then will we have a clear picture of what has been going on.”
Police sources said they were investigating claims that GFX was running a Ponzi fund – a scam that appears to be succeeding wildly by paying supposed returns out of victims’ own capital. Bernard Madoff, the American investor facing criminal charges in New York, stands accused of running a similar scheme, but on a $50 billion scale.
Mr Freeman’s business ran into trouble last autumn and collapsed recently leaving investors with huge losses. GFX’s website carried a message telling clients to contact the police and stating that Mr Freeman was under investigation. Phone calls to the firm’s City offices were met with an answering machine. Detective Chief Superintendent Steve Head, of City of London police, said that his force had detected a marked rise in financial crime as the recession deepened. Mr Freeman, who is married to a Russian woman, was not at his home, where all the curtains were drawn, today. Neighbours said that he had not been seen for a number of days and frequently travelled abroad.Terry Freeman is understood to be the largest shareholder in the UK-based GFX Capital Markets – a licensed, but seperate, affiliate firm of the Swiss-based GFX Capital. The Swiss firm grants clients like Mr. Freeman limited power of attorney, enabling them to act as effective “money managers” and solicit their own clients to trade on the GFX platform. Investors in Mr Freeman’s outfit gave him the power to place trades, disburse money and pay fees in their name – though “critical account functions”, such as cash withdrawls, were supposed to remain with the investors.GFX’s trading platform is run by Saxo bank, a Danish bank specialising in providing currency speculation services for retail clients across Europe. According to a Saxo bank spokesman, GFX Capital were an “institutional partner”. Saxo and GFX clients may prove to be big losers in the affair and Saxo’s lawyers are said to be looking into the case as a matter of urgency.In fact, a bit of Googling shows that clients of Mr Freeman have been fearing for their money for some time. Shortly into the New Year, talk began circulating among GFX investors of large losses.Being a very web 2.0 outfit, GFX Capital – or, more specifically, Mr Terry Freeman – had a blog.And predictably, after turbulence in the markets at the end of last year, a sudden quiescence from GFX Capital UK, and a unexplained suspension of GFX Capital UK accounts over the Christmas holidays, it wasn’t long before rather concerned investors began to badger Freeman for answers – and seek to withdraw their cash.

Mr Freeman assured clients early in the new year that they had nothing to worry about. “I eagerly look forward to being able to report positive news shortly. I do hope and expect that the progress we are making will allay the fears of many”, he said, adding though, that the firm had seen a “large number of disproportionate withdrawls”.

Everything got a bit more heated ten days later when Terry announced on the blog that clients should no longer contact his office or his staff in Bromley, but instead, all enquiries should be directed to GFX’s London office. The rather curt message ended with a rather worrying payoff:
Good evening

Earlier today it was mutually agreed that our London office should take over all client contact and correspondence, particularly with regard to withdrawals, and reports. This was a constructive decision, professionally arrived at, and does not imply any criticism of any person or company, only a recognition that our London office should be communicating directly and more effectively with our clients. There is absolutely no negative connotation to be drawn from a constructive business decision, and we expect to retain a good and positive working relationship with all the staff at Bromley who have done a great job and have our heartfelt thanks.

All clients with current requirements may expect a call or email from our London office within the next 48 hours