The frauds in TCCF resulted in both TCCF and CIF collapsing -
let's examine how Pignatti & co. defrauded the investors via this Ponzi scheme!!

CIF was launched on 19/8/2013, with a stated investment objective :-

"The fund seeks growth and conservation of capital, income is a secondary investment objectlve.
Under normal circumstances, the fund invests most of its assets in equity securities. The fund invests primarily in com- mon stock or securities convertible into common stock of companies in industries the asset manager believes have the po- tential to grow at a faster rate than the economy as a whole and that appear to have above-average earnings and dividend growth potential. The fund emphasises investment in stocks with large capitalizations, but the fund also invests in stocks with small and medium capitalizations.
The fund may invest in securities of emerging market issuers, the fund may invest up to 20% of its assets in fixed income securities, some or all of which may be high yield, lower quality securities rated below investment grade by a recognized rating agency or unrated securities determined by the asset manager to be of equivalent quality.
The fund may invest in fixed income securities."

CIF REALITY
As CIF started to fail in 2015, and with no new subscriptions, the investment manager liquidated all securities investments and transferred proceeds into sister fund TCCF. In particular Euro 400,000 was transferred into TCCF just before the illegal, ultra-vires Bernecker loan of Euro 450,000 was made by TCCF in March 2017. Afterwards, further liquidations of investments in CIF were transferred into TCCF, on falsely inflated share prices valuations, in order to preserve TCCF and allow it to pay fees to the directors/investment manager and administrator.

Neue Helvetische Bank in Switzerland, the Custodian bank and also representing 58.9% of the shareholding in TCCF, was a party to the transfer of CIF cash into TCCF, and knowingly facilitated the destruction of CIF and subsequent total losses to CIF shareholders. Such actions by the bank are a total opposite to the actual custodial role expected for an investment fund, and effectively constituted complicit support of Pignatti’s money-laundering through TCCF.

By January 2018, 97% of CIF assets were invested in TCCF. The investment manager was charging full fees to both funds. This concentration of investment and lack of diversification is a direct breach of the investment policy as defined in the Offering Memoranda (last updated 15 January 2020).

When the Bernecker loan defaulted in March 2018, both TCCF and CIF collapsed. CIF represented 71% of the investors in TCCF, discounting the Bernecker loan falsely portrayed as an investment in kind.

KEY FINDINGS

The Classic Car Fund ("TCCF") was launched in SVG on 3/6/2011, with a stated investment objective :-

"The Classic Car Fund is designed to be liquid in a market that can be very illiquid. To achieve that, it keeps a mixture of classic cars at different value points. It's easier to sell a Euro 250,000 car than it is to sell a Euro 2.5 million car. Maintaining this mix means the fund is active and agile, allowing it to maximise returns in terms of timings and fund requirements."

A liquid fund, in Pignatti's own words....
"The Classic Car Fund is designed to be liquid in a market that can be very illiquid. To achieve that, it keeps a mixture of classic cars at different value points. It's easier to sell a Euro 250,000 car than it is to sell a €2.5million car. Maintaining this mix means the fund is active and agile, allowing it to maximise returns in terms of timings and fund requirements."
"Quote from Pignatti's 30/6/2018 marketing presentation, 1 year after a 3% loan was made to Bernecker of Euro 450,000, that quickly defaulted..."

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TCCF REALITY
Pignatti commenced the fund's activites by purchasing cars from 2013 onwards, which by 2018 numbered 15 cars. Annually the values of the cars "appreciated", with the share price rising by 25-30% over 6 years. for I and P shares.
Pignatti actually just sold cars where profit could be realised, and carried loss-making cars and marked up values until the Ponzi scheme could go no further - in 2019 Bonhams sold 7 cars at auction for less than 50% of 2017 valuations.

In 2017 Pignatti organised a loan of Euro 450,000 to a Jens Bernecker, representing approximately 25% of the assets size of TCCF. This loan was at 3%, illiquid, and ultra vires, and took 2 cars from Bernecker as collateral. To disguise this loan, Pignatti booked the loan as an investment by Bernecker, who subsequently declared that he made no such investment and simply borrowed money. In March 2018 the loan defaulted, and in July 2018 Bernecker's company was declared bankrupt in Germany, and a German court subsequently judged that the collateral agreement made by Pignatti was defective - one of the cars was missing completely, and from the second car TCCF only recovered 50% of the value of the loan through its sale, given the entitlement of other creditors to share in this defective collateral. At the time of the Bernecker loan collapsing, CIF represented 71% of the shareholders in TCCF.

2 months after the bankruptcy of Bernecker, Pignatti met a representative of 9 investors and marketed the fund at 100% valuation and concealed the major loss due to Bernecker's bankruptcy. Shortly thereafter, Fortuna, the fund's administrator, changed the bank account, instructing new investors to send money to Pignatti's personal account at LLoyds Bank in the UK, not to the fund's account. As can be seen in the share register, 3 of these new investors were never even recorded as shareholders, and the money was effectively stolen by Pignatti.

The annual audit always listed the cars, and their valuation, with the audit from 2018, from a "Ukrainian" firm, showing healthy valuations. 2017 was the last audit conducted by TCCF (Glavbuchm a Ukrainian audit company!!). In 2019, Bonhams auction house in Zurich sold 7 cars at less than the 50% fund valuations in 2017, despite a healthy classic car market. 6 cars were missing and unaccounted for at the time, and one car held by TCCF.

In 2022 10 cars allegedly being TCCF assets were identified as being located in a garage in Zurich. In June 2022 5 cars were removed by Pignatti, and the remaining 5 cars were removed in August.

KEY FINDINGS
  • - Pre-2018, Pignatti generally sold cars for realised profit, falsely marking up the valuations of cars he could not sell, to increase the NAV.
    After 2017 the classic car portfolio valuation was severely underwater, and Pignatti knew TCCF's viability was effectively over..
    (A Ponzi scheme, securities fraud)
  • - In October 2019, 7 cars were sold by Bonhams in Switzerland, at less than 50% of fund valuation, to unidentified buyers. (A breach of fiduciary duty, false accounting valuations)
  • - Pignatti was using his German company BKL to buy and on-sell cars into TCCF. If these cars were on-sold at a profit, this was not declared to shareholders. (Potential fraud)
  • - There appear to be at least 12 cars unaccounted for - possibly 10 were being held in a garage in Zurich. 2 garages in the UK report Pignatti moving cars around in the UK
  • - Scarabaeus are intimately involved - ex-CEO as director, fund administrator, tax & legal advisor, auditor connected to Scarabaeus. (Potential fraud)
  • - TCCF "cut&paste" audit 2017, from ficitious Ukraine accounting firm.(Fraud)
  • - The Bernecker loan constituted all of TCCF's liquidity, despite the illiquid nature of the underlying assets. (A breach of fiduciary duty)
  • - Bernecker subscription/immediate refemption of shares to provide loan funds was a mechanism by Pignatti to inflate assets under management and thus his fees, as well as disguise the lending out of all the fund’s liquidity at that time, contrary to the funds' investment objectives and prudence. (Fraud)
  • - Title of the cars was rarely in the name of TCCF. (breach of investment objectives)
  • - CCFM/Pignatti earned substantial management and performance fees, based on NAV per share calculations (also the case for Classic Investment Fund Ltd.) 2016 onwards, CIFL's major investment was TCCF, so CCFM was essentially earning double fees from same investment activity.
  • - after the Bernecker loan had defaulted and the company declared insolvent in German courts, in July 2018, Pignatti continued to market the fund at full NAV value without declaring the major loss to NAV to new investors. (Securities fraud, misrepresentation)
  • - in late 2018 Pignatti notified new subscribers to send their money not to a TCCF bank account, but to the Lloyds bank account of his own personal company in the UK. This was done with assistance and support from the administrator, Fortuna Administration Limited. (embezzlement)
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