Securities Law Prof Blog

Editor: Eric C. Chaffee
Univ. of Toledo College of Law

Sunday, June 13, 2010

SEC Charges Money Manger with Alleged Ties to Belgian Royal Family with Fraud

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.

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