London’s CWM FX scandal develops: Further Ponzi scheme suspected in Cayman Islands a year after Police raid

In April 2016, under a very rare set of circumstances, the City of London Police raided the offices of retail FX brokerage CWM FX at its corporate head office in the prestigious Heron Tower, resulting in the arrest of 14 employees including CEO Anthony Constantinou on suspicion of fraud and money laundering.

Mr Constantinou’s overtly flamboyant  stature and gregarious approach to operating his company created a series of litigation and police censuring which ranged from the method by which he treated operating capital and client funds, to the method by which he treated his staff.

Today, a year and a quarter on, CWM FX is back in the legal spotlight, this time being the center of a suspected Ponzi scheme which the company may well have been operating.

During the course of the past two days, the City of London Police have made confirmations that they have been working with the authorities in the Cayman Islands on an investigation into the now defunct CWM FX.

The Cayman Islands Police Financial Crime Unit said in June that it had questioned local resident Jazeb Jones in connection with the case, which it considers to be a possible Ponzi scheme.

Following the company’s raid in April last year, litigation ensued as Mr Constantinou, son of fashion tycon Aristos Constantinou who was shot dead in 1985, was found guilty of two counts of sexual assault and faced a jail sentence which he is now serving, after being found guilty at a trial at the Old Bailey in September 2016.

Mr. Constantinou at that time was in serious trouble with the Police for molesting two women during after-work drinks at or near his firm’s high-rise headquarters in the City of London’s Heron Tower.

During this time, Mr Constantinou was convicted of two counts of sexual assault and cleared of one count relating to a third woman following a retrial at the Old Bailey.

According to a report from the Old Bailey, Mr Constantinou wiped his brow and appeared distressed as the jury delivered guilty verdicts by a majority after deliberating for 14 hours.

The verdicts in September last year could not be reported until the prosecution announced it would not be seeking another retrial on three more charges of indecent assault on two of the three women on which the jury could not decide, and upon publication, a lawyer representing CWM and Mr Constantinou attempted some very heavy-handed (but fruitless) tactics toward FinanceFeeds in attempts to silence the situation.

The court heard that in February 2015, Mr. Constantinou assaulted another female member of staff after a business meeting, having physically shown aggression toward her and shouted “Don’t use phones in my meeting” before allegedly force-feeding her wasabi paste and then subjecting her to a tirade of foul language before following her and assaulting her.

Mr Constantinou, who lives in Barnet, north London, denied all the accusations against him and also declined to give evidence.

His legal team put the wasabi incident put down to brash behaviour and said it had been exaggerated by the woman and currently he remains on bail ahead of his sentencing on November 11.

Mr Constantinou was locked up in December last year and is now at Her Majesty’s Pleasure, dining on a diet of porridge.

In terms of the operation of Ponzi schemes, the suspected Cayman Islands scheme is not the first concerning CWM FX to have been brought to the attention of authorities.

As an example of a square peg in a round hole among London’s otherwise sophisticated FX and CFD firms, as CWM FX became suspected of preying on one of the British Army’s most renowned specialist units, the Gurkhas in a case investigated by British police in February 2016.

The Gurkhas were traditionally a regiment within the British East India Company Army during the days of British India, and are of Nepalese origin, notably the foothills of the Himalayan mountain range.

In addition to keeping peace in India, Gurkhas fought in Syria, North Africa, Italy, Greece and against the Japanese in the jungles of Burma, northeast India and also Singapore. They did so with considerable distinction, earning 2,734 bravery awards in the process and suffering around 32,000 casualties in all theatres.

At the beginning of 2016, City of London Police began to suspect that CWM has ripped off hundreds of hero Gurkha soldiers in a £50million Ponzi scam.

Detective Chief Insp Dave Manley at the time made a public statement on the matter:

“The evidence suggests that representatives of CWM targeted hundreds of members of the Gurkha and Nepalese community and exploited them to defraud millions of pounds.”

As part of the proposal which CWM made to its customers, the firm offered 5% a month interest from currency dealings.

Police said that by February 2016 they had not found any money which was genuinely invested and believed the scheme was a Ponzi fraud, in which investors get small dividends before their money is stolen.

Detective Chief Inspector Manley continued:

“The harm caused to individuals, their families, their pension pots and life savings – at the moment is not being represented within the case. The story of how this has impacted and affected people needs to be told in the judicial process. It would be a shame for us to get to the next stage, and the level of harm that’s been caused to the community is not measured or part of the case.”

The Gurkha Welfare Trust began encouraging those who consider that they may have fallen victim to this scheme, to contact the Police, with a spokeseman from the Gurkha Welfare Trust having stated that this is the first time that it has been recorded that the Gurkhas and the Nepalese community has fallen victim to such a scheme.

Unfortunately, the newly discovered scheme appears to have been orchestrated along similar lines and the upright nature of Britain’s authorities should be commended for rooting out this individual and his accomplices and ensuring that he is behind bars, where he is unable to damage the high quality reputation of London’s retail electronic trading sector.