Home    ›    News & Opinions    ›    Danger Lies Around Every Corner

Danger Lies Around Every Corner

Nov 30, 2023 | Financial Planning, General | 0 comments

Estimated time to read:

As an investor, you no doubt have emails landing in your inbox almost daily, trying to dupe you into parting with your bank details or otherwise trying to lure you into an unbeatable investment opportunity promising stellar returns.

Our working week is no different, but in our case, the threat comes from within the investment industry itself. Aside from emails, we continually decline meetings with overeager product pushers.

We are trained to identify the red herrings, which at the most basic level, is that any investment offering that is too good to be true, literally IS too good to be true!  Apart from the obvious red flags, alarm bells go off when the providers coax us with guarantees of generous commission payments.

The latest scam attracted investors into what is known as the BHI Trust – ironically named remarkably similar to Warren Buffet’s Berkshire Hathaway Investment Trust. This, as with other Ponzi schemes, pays “returns” to earlier investors with money stolen from those who invest later.

Given the extensive worldwide publicity around the United States fraudster Bernie Madoff’s Ponzi scheme some years ago, many of the investors in the BHI Trust and other schemes before it, should have been more discerning.

For those inexperienced investors who were bullied into investing by unscrupulous “salesmen” who bring the financial industry into disrepute, it’s an absolute tragedy.

While we have never had any dealings or communication with BHI Trust (or others like them), in the past month alone, Veritas Wealth has been approached with many “investment opportunities”. These included property syndications, structured private banking products, crypto currency offerings, guaranteed and currency trading investments and foreign pensions which miraculously make money disappear from your estate.

Many of these opportunities were legitimate, but every offering requires in-depth and time-consuming research into the fine print, analysis of the tax and estate consequences, fee structures and the underlying investments.

Our clients also often approach us for help with understanding complex and opaque product offerings.

The Veritas due diligence process

This latest Ponzi-style scam certainly gave us pause for self-reflection.

  • Have we exposed our clients to any schemes or potential frauds over the past 19 years?
  • Have we carried out thorough due diligence on any structure or investment that we have recommended to our clients to minimise the risks to them?
  • Have we minimised the risk of our clients’ money being stolen when being transferred into an investment?

In response to the first two questions, we have always done extensive due diligence, or partnered with other companies to do this work for us, before making a recommendation to a client.

On the last point, we have stringent security protocols in place to prevent your money from ending up in the wrong bank account. Unlike unregulated scamsters, we will never ask you to pay money for a chosen investment to us. We always ask clients to make payment from their own bank accounts directly to one of the selected administrative providers. All these administrators are reputable firms, have external client custodians and are strictly regulated.

As industry professionals we are naturally suspicious of any company wanting to do business with us. Many of the so-called investment opportunities that come across our path are rejected outright, with the red flags so obvious that any further investigation is unwarranted.

With others, we go on to investigate broadly if the product makes sense and could be worthy of consideration for our clients’ money.

In these investigations, we firstly look at the investment structure. Is it safe or can someone access and steal the money? It is our duty as your adviser to make sure the structure is robust.

Then we look into the investment case. If the specific offering makes it through a list of non-negotiables, we compare it with products we are currently recommending to our clients.

We may also engage with independent research specialists for a more in-depth analysis of liquidity concerns, potential counterparty risk and other issues before considering an investment offering worthy of recommendation.

The financial services industry is constantly coming up with shiny, new offerings to attract clients and it is easy to be distracted by what is in vogue. It takes discipline and resilience to stick with tried-and-tested traditional investments, and sometimes we may even look foolish for not climbing on the latest bandwagon.

It is worth noting that the unit trust industry, which has been in existence since 1969, has not had any instances like this. The reason is that there are trustees, custodians and auditors who are all separate from each other and from the underlying asset manager, thereby protecting investors.

Dire consequence for scammed investors

But back to the BHI Trust, which was anything BUT trustworthy.

One of its trustees, Craig Warriner, allegedly ran the investment as a Ponzi scheme for around 15 years! He would have set this up with the clear knowledge that such a scheme is unsustainable and that it would eventually collapse.

So what is likely to happen to the parties involved with the BHI Trust?

Many investors have lost just about everything AND the investors who exited at some point will likely have to pay back their ill-gotten gains.

The trustees who grossly neglected their fiduciary responsibilities will be held personally liable, as they should be, but Craig Warriner was only one of two trustees. He is now broke and in jail. His co-trustee allegedly lost his own savings and was the person who reported Warriner to the authorities.

The auditors will have to be held accountable for grossly failing in their responsibilities.

The financial services watchdog and regulator of the financial services industry, the Financial Sector Conduct Authority (FSCA), has confirmed that the BHI Trust and its trustees were not authorised to advise on, or manage client investments.

Consequently, the advisers, lawyers and accountants who advised their clients to invest in this unregulated fund will also be held accountable and stand to lose their licenses to operate.


Veritas Wealth’s role is to continue to seek better ways to implement our advice. We continually meet with investment service providers across the market to see if we can implement our financial plans better and more cost effectively for you.

We will always do our utmost to ensure that the structures and underlying investments we recommend are prudent, easy to understand and most importantly, are regulated.



Submit a Comment

Your email address will not be published. Required fields are marked *

Get The Latest News

Sign up to receive regular news updates

You have successfully subscribed