Customer. Hardcastle Capital, um Hedge fund In English, he invested in Universe FDIC, a Brazilian receivables fund. Universe had been a Factoring who became a third-party asset manager with capital of US$ 450 million. Hardcastle Capital, along with 15 other foreign investment funds and 02 Brazilian pension funds, acquired shares in the Universe FDIC.

Problem.Universe FDIC went bankrupt and investors lost over US$ 400 million. The fund's portfolio held more than 90% of the funds classified as overdue and unpaid.

Ponzi scheme (pyramid)

Investigation. The investigation found that Universe FDIC had all the characteristics of a Ponzi scheme. Instead of having a pulverized portfolio of commercial receivables, the fund's capital was comprised of a small number of bad loans. The entry of new investors was necessary to pay the older investors and thus keep the fund standing. The investigation also found that the largest investor in the Universe FDIC was Douglas Investment Arm (DIA), a pension fund owned by one of the largest international consulting firms. DIA had invested more than US$ 200 million without any due diligence process. The other investors invested out of trust in DIA. DIA, in turn, acquired 50% of each series of shares and thus, having a veto, blocked all attempts to recover assets and accused the fund managers of fraud, thus protecting the managers of the Universe FDIC. The investigation found negligence and dishonesty on the part of DIA executives and strong evidence of wrongful conduct and bribery.

The names of those involved were changed for reasons of secrecy. Investing in the Brazilian market? You need to know who you are doing business with and who will take care of your investment in Brazil. Wolfe Associates can survey the suitability of the managers of your proposed investment.

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