Sunday, June 13, 2010
The SEC announced Friday that it filed an emergency civil enforcement action to halt a fraudulent bridge loan scheme orchestrated by New York-based Chimay Capital Management, Inc. (Chimay Capital) and its chairman, Guy Albert de Chimay. The Commission's action also seeks emergency relief, including a freeze of the defendants' assets and the repatriation of any fraudulently-obtained assets held overseas.
The Commission alleges that Chimay and Chimay Capital, which marketed itself as the U.S. investment arm of the Chimay royal family of Belgium, solicited investments in a vehicle known as the Bridge Loan Facility (BLF) where investor funds were to be pooled with Chimay family money to make short-term loans. Investors were told that the BLF had been established as the private cash management vehicle for the Chimay royal family, and had a solid track record of safe and profitable returns. Investors were promised fixed annual returns of 12%, and were guaranteed the return of their principal and interest regardless of the actual performance of the loans.
The Commission alleges that the defendants successfully obtained at least $6 million dollars in BLF investments in 2008 and 2009. According to the Commission's complaint, the defendants did not use these funds to make short-term loans but rather misappropriated them for a host of improper purposes, including to bankroll Chimay's personal and business expenses, and to pay other investors. Among other things, the Commission alleges that nearly $600,000 in investor funds were diverted to pay Chimay's divorce lawyers, and that additional funds were misappropriated to pay Chimay's mortgage and credit card bills.