HFA Holdings Limited and Bernie Madoff

HFA Holdings Limited (HFA.AX) is a revaluation fraud with a long sordid history, including involvement with Bernie Madoff through its US subsidiary. HFA was listed by fraudulent investment scheme MFS Limited (later rebranded as Octaviar), that collapsed in 2008 owing more than $2.7bn, having destroyed the lives of thousands of granny investors. Later the carcass of the fraudulent "cornerstone investor" provided a feeding frenzy for maggot liquidators. The HFA criminals then blamed their woes on "bad publicity".

In 2011, the trustees of Bernie Madoff's defunct business launched lawsuits to claw back funds from investors in feeder funds to the Madoff ponzi. HFA subsidiary Lighthouse Investment Partners LLC was sued for $11,162,251, as shown in this complaint. Having learned their lesson about the dangers of "bad publicity", the HFA criminals suppressed this information from being reported in mainstream Australian media. Australian media just pretended this did not happen, despite it being highly pertinent information for any reasonable person attempting to form a view of the HFA business. In Australia, the criminals decide what information you are allowed to access.

The top 20 shareholders control 90% of HFA and manipulate its share price. Being a listed securities fraud, HFA exhibits the standard pattern of long-term catastrophic shareholder value destruction, interspersed with sharp engineered ramps to benefit insiders. In January 2014, Apollo Global Management announced it was looking to exit its convertible note investment in HFA. HFA was then ramped 30% by the investment cartel, as part of a prearranged deal.

According to ASIC, none of this is market manipulation because market manipulation simply does not exist. ASIC need do nothing about share ramps, because share ramps do not exist.

Section 17.6 on page 35 of the 2013 HFA annual report describes the "relationship between remuneration policy and company performance" with inadvertent humor. The company performance justifying payment of USD$4.6m to its criminal management, taken directly from the remuneration report, is shown below.

But operational performance is entirely irrelevant to HFA's utility as a vehicle for securities fraud. HFA is yet again being used in revaluation fraud targeting granny investors. After the prearranged January 2014 ramp, investment cartel associate IOOF Holdings Limited (IFL.AX) immediately started buying millions of HFA shares at around $0.95. To pay back Apollo, HFA raised $16m at $0.90 by issuing shares to the investment cartel. Since the "market" price of HFA now has been brought to $1.12, millions of dollars in fraudulent unrealized profits have been manufactured, creating vast fees for the fund manager investment cartel controlling HFA's share price. The deliberately pumped HFA shares have been dumped on granny investors, packaged in products issued by IOOF Holdings and other cartel associates.

IOOF Holdings and the rest of the HFA investment cartel are engaged in premeditated securities fraud. What is the real difference between Bernie Madoff and the HFA investment cartel? There is but one: Bernie Madoff is in prison.

Hill End Gold Limited to join LionGold and Blumont cartel

Hill End Gold Limited (HEG.AX) is a related party revaluation fraud masquerading as a gold explorer. Like other manipulated shares, Hill End Gold features long-term shareholder value destruction interrupted by sharp manufactured ramps designed to benefit insiders.

After burning through millions in shareholder funds, the Hill End Gold criminals were seemingly approaching the end of the line, with ASX querying the company's ability to continue operating. As part of its response, Hill End Gold cited a "liquid" holding in related party Bassari Resources Limited (BSR.AX). In March, Hill End Gold had announced it was increasing its stake in related party Bassari by converting a loan at $0.008, bringing its total holding in the company to 14.7%. Starting in June, Bassari was then ramped to $0.021.

According to ASIC, this was not a ramp because market manipulation does not exist, and therefore ASIC will do exactly nothing about it. As always. Bassari of course follows the standard pattern of manipulated shares, namely catastrophic long-term shareholder value destruction interspersed with short-term ramps designed to benefit insiders.

In June, the bellends at Hill End then announced they were selling their gold projects to LionGold Corp Ltd (A78.SI), part of the Blumont investment cartel, naturally with the consideration mainly in the form of LionGold scrip. The Blumont cartel uses crossholdings, revaluations and share ramping beyond NTA to create tremendous synthetic leverage, as first described by this blog post. Assume Company A and Company B each has $50 of real assets and a 50% shareholding in each other. Moving price-to-book from 0.75 to 1.5 quintuples the share price of both companies.

This is yet one more example of the Singapore-based criminal investment cartel making inroads on the Australian "market", while regulators in both countries twiddle themselves. The disastrous losses already suffered by victims of the Blumont cartel lie squarely at the feet of the complicit regulators, as do any further losses created by allowing these criminals to continue operating.

The Macquarie Atlas Roads Group revaluation fraud

Macquarie Atlas Roads Group (MQA.AX) is an ASX-listed revaluation fraud masquerading as a toll road operator. An investment cartel headed by Macquarie controls the "market" price of MQA, and has ramped the stapled security in order to fraudulently obtain inflated management fees. The top 20 shareholders own 91% of MQA and control its share price. This revaluation fraud is the true purpose of MQA, the real reason for its creation and existence. At heart, MQA is no different from Fifth Element Resources.

Like other such scams, MQA is structured in a Byzantine maze of related parties, crossholdings, loans and sham transactions. MQA's annual report is deliberately deceptive, packed with accounting fraud designed to obscure a very simple business model. MQA's assets generate $49m of cash flows, of which the criminal managers absorb a base fee of $18m. After this 37% fee, the remaining $31m is available for distribution to victim investors. If MQA's share price was not openly controlled by a cartel, it would have collapsed. Instead it was ramped to a $1.6bn market cap, packaged in financial "products" and dumped on granny investors.

As a result of the ramp, the criminal managers entitled themselves to a staggering $58m "performance fee". No magical unicorns or leprechauns need be presumed to explain this straightline ramp. The explanation to this mystery is depressingly simple. A small group of criminals had the power to move the share price, and would benefit handsomely from doing so. So they did.

It is highly likely that the investment cartel that ramped MQA during the past year explicitly discussed their fraud in company emails and on recorded telephone lines, including the exact endpoint of their ramp. Macquarie is a criminal organization that considers itself above the law. But since ASIC operates a zero enforcement policy, this will never be investigated and the criminals will die as free rich men.

The Fifth Element Resources Limited revaluation fraud

Fifth Element Resources Limited (FTH.AX) is a newly ASX-listed revaluation fraud masquerading as a gold explorer, as noted by this blog three weeks ago. The share price of FTH is openly manipulated, having been ramped from $0.20 to $2.30 in a month on no news. Prior to the ramp, an insider purchased 20m shares at $0.01 and the company conducted a sham related party capital raising of 20m shares at $0.20.

FTH has not fallen in price a single day of its existence, a track record as "perfect" as that of the Democratic Front for the Reunification of the Fatherland. According to ASIC and the mainstream media, this is not the result of a blatant market manipulation, but rather a marvellous but inexplicable magic market mystery. ASIC does nothing about market manipulation, allowing FTH to continue "trading" and attracting new victims, because according to ASIC market manipulation does not exist.

A revaluation fraud can be based on any type of business, or indeed an empty shell, as the real point of the scam is the manipulation of "market" prices. The purported underlying business is irrelevant. After manipulating purported "market" prices higher, ramped shares can be dumped on granny investors using fund manager associates. Alternatively, the ramped ASX-listed asset can be used to borrow against, with the proceeds then used for further manipulation. Throughout this, the operators and associates of such schemes collect real cash fees based on unrealized paper profits generated by themselves.

The problem for ASIC is that it has allowed this fraud to fester unchecked for decades, the cancer spreading to the point where its removal may not even be possible. It is not that the stock market tail is wagging the dog, the dog has been completely consumed, leaving nothing but a twitching rotting tail. The ASX is not a market with some elements of fraud, it is a fraud with some elements of market. There is no categorical difference between Fifth Element Resources or Intueri Group Limited (IQE.AX) or Veda Group Limited (VED.AX), they are on the same brownscale of fraud.

Most new Australian IPOs are now revaluation frauds, with investment cartels controlling the "market" outcome according to prearranged deals. Most IPOs in Australia are explicitly performed to create a controllable "market" price, not to raise money furthering an actual productive business with utility for society. Such scams commonly have the top 20 shareholders holding 95% of the shares outstanding.