Even though Money Managers-the former pyramid scheme seller or what the yanks call a Ponzi Scheme-headed by Doug Somers-Edgar (pictured inset), is trying to turn over a new leaf and reinvent itself the First Step trustee Edward Russell is still talking bullshit:
"While some of the shortfall is sadly an uncontrollable inevitability in the current economic climate, where we have seen and have experienced a period of unprecedented wealth destruction across all investment sectors...
Trying to put a brave face on the losses, Russell said: "This is nothing anyone here is expecting any recognition for, but the high proportion of capital returned to date does underline the correctness of the swift action we took with the First Step Trusts to close them early and liquidate in a controlled and managed fashion. "The effort in this has been huge and the result, despite the losses, has been significantly better for investors than if early action had not been taken." Stuff.co.nz, Jan 23, 2009
Now call me a thicko if you like but should investors have been told when initially putting their hard earned into Money Manager's First Step scheme that it was not only going towards lending for vehicles but the vehicle used (pun intended) to lend that money to punters was siphoned through a related party, Club Finance, where Doug Somers-Edgar was a director?
Of course they should have, because the vehicle financing business is very risky and it didn't fit the risk profile that First Step investors were informed about.
The extent of the "distancing" of the "new" Money Managers from Somers-Edgar is a little hazy.
Back in February 2008 the Sunday Star Times reported that the company was being sold to the Chief Executive at that time, Alasdair Scott, its franchisees, and NZ Funds Management, owned by Somers-Edgar business associates Gerald Siddall and Russell Tills.
At that point the majority ownership still lay in Somers-Edgars hands through trusts directly involved with him and his wife.
There was to be be an announcement regarding ownership but nowhere can it be found, either on the Internet or the Money Managers website.
When the new Chief Executive, Derek Young, was questioned in December about Somers-Edgar's current involvement in Money Managers readers got this answer:
Has Somers-Edgar entirely exited the business?
Yes... almost, is the answer, but his shadow is long. He still owns Heritage, a trustee company which administers the family trusts of thousands of Money Managers' clients. But that is a transitional arrangement, and it will change, Young says. Stuff.co.nz, December 21, 2008
This is pertinent to the issue of First Step and a number of other Doug Somers-Edgar owned related parties because they are being wound up, investors have lost their money and Doug is running for the hills with it because he is selling up!
So the issue over his current involvement in Money Managers is unclear as is the outcome for investors in its various related parties.
What is clear however is that the "New-Improved" version of Money Managers still cannot be fully trusted.
Many of the same people still work there, as franchisees and in management, either directly, through trusts or related parties.
Come clean Dougy.
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c Share Investor 2009