Showing posts with label Money Managers. Show all posts
Showing posts with label Money Managers. Show all posts

Sunday, January 25, 2009

The "New" Money Manager's Investment Vehicle still tainted by its past

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...

And:

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!

How clever.

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.

Current Chief Executive, Derek Young seems like a thoroughly appropriate person to be heading up a change of direction for Money Managers but you cannot expect an ailing leopard to change its spots overnight when there is a shadow of a hyena lurking in the background.

Come clean Dougy.

Related Share Investor reading

Don't forget Money Managers
Money Managers First Step gives investors the middle finger
Money Managers First Step saga: 3 Story wrap


Related Amazon Reading

Need and Greed: The True Story of the Largest Ponzi Scheme in American History
Need and Greed: The True Story of the Largest Ponzi Scheme in American History by Stewart L. Weisman
Buy new: $29.95 / Used from: $4.50
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You Can't Cheat an Honest Man: How Ponzi Schemes and Pyramid Frauds Work...And Why They're More Common Than Ever
You Can't Cheat an Honest Man: How Ponzi Schemes and Pyramid Frauds Work...And Why They're More Common Than Ever by James Walsh
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c Share Investor 2009

Wednesday, August 20, 2008

Orange Finance collapse should turn investors red, with rage


Orange Finance, which is 100% owned by Money Managers founder Doug Somers-Edgar, is no longer issuing debentures because of its suspect lending practices.

Doug has apparently sold his interest in Money Managers and has "stepped down" from it in June 2008 but still has manifold financial interests in companies that MM lend money to. Money Managers pushed Orange Finance to its investors.

Money invested with Orange Finance has been lent to some other Money Managers or Doug Somers-Edgar vehicles that have crashed and burned and lost investors money, Money Manager's First Step and its Totara Fund have both lost investors tens of millions so far.

Interrelated financial musical chairs have also been played to pay out investors from these various financial failures and it makes one wonder which investors will truly lose out in the end.

It is unclear at this stage whether investors in Orange Finance will eventually get their money back, considering the large amount of bad loans made by the investment vehicle and money outstanding from debtor borrowers, but the company says it can repay investors on their expected maturity date.

I would advise investors in Orange Finance to keep on the tail of Orange directors and or their adviser from Money Managers who advised them to put their money into the finance company in the first place.

Don't be put in the same position as this fellow:

One investor contacted by the Sunday Star-Times said he had been impoverished by a combination of dealing with Blue Chip, then putting what he had left of his life savings - some $50,000 - into First Step.

When he received $20,000 back (he's still waiting for the rest), he followed Money Managers' advice and put it into Totara.

Relying only on NZ Super, he is now facing $1700 a month mortgage payments he can't afford because of the Blue Chip deal, and has no access to the money he has with Money Managers.

Businessday.co.nz 2008


Doug Somers-Edgar, his part or fully owned companies or their subsidiaries and Money Managers cannot be trusted when it comes to your money.

Get it out now if you can.


Related Share Investor reading

The "New" Money Manager's Investment Vehicle still tainted by its past
Don't forget Money Managers
Money Managers First Step gives investors the middle finger
Money Managers First Step saga: 3 Story wrap

Related Amazon Reading

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Madoff: Corruption, Deceit, and the Making of the World's Most Notorious Ponzi Scheme by Peter Sander
Buy new: $10.17


c Share Investor 2008 & 2009

Tuesday, July 29, 2008

Don't forget Money Managers

In the wake of big coverage of late over the collapse of Hanover Finance last week and 25 other finance companies going to the wall, I thought I might revisit a subject that I have covered since I started writing on the Internet.

Doug Somers Edgar, his Money Managers (MM) company and the myriad of companies within that structure-some of them second rate finance companies-that "lend" money to each other have a host of similarities to some of the finance companies that have collapsed over the last 2 years.

Inter-company lending is just one factor that Money Managers uses to not only clip the ticket but to finance risky lending for dubious projects, to companies closely affiliated or part owned by MM interests. Many projects have fallen over, just do a Google search of Doug's full name and you will find a long list, he does when searching for individuals to sue and has landed on Share Investor.

That is where we get to the crux of my column today. We have seen alot of ballyhoo and publicity over the Eric Watsons and Rod Petricevics of this world and their part played in finance company losses, and rightly so, but our friend Doug Somers seems to have been largely lost in the sheer number of collapses.

While other financial collapses have made top of the bulletin news casts and front page mainstream coverage, Doug's MM gets coverage in blogs and weighty financial tomes such as the National Business Review.

I dont fully understand mainstream medias hands off attitude to Money Managers and their money magician former svengali and now minor shareholder, Doug Somers Edgar.

Lets correct the balance here then.

Just this last Sunday 27 July, in the wake of the Hanover collapse, NZ$ 60 million has been put at risk from Money Manager's Totara First Mortgage becoming insolvent and repayments to investors suspended

At the beginning of June 2008, the latest in the massive First Step losses reveals a slowdown in promised repayments to out of pocket investors. There is NZ $38 million lost and $108 million of investors money at risk in the wound down First Step vehicle. Some of the money at risk is owed by a MM owned company Club Finance.

As the economy moves deeper into recession and individuals and companies who have lent money off finance companies and related party lenders, some of them within the Money Managers fold, have trouble paying back money, there will be further losses incurred by investors in Money Managers.

Keep it tuned here.

Related Share Investor reading

Money Managers First Step gives investors the middle finger
Money Managers First Step saga: 3 Story wrap

c Share Investor 2008

Monday, February 25, 2008

Money Managers Saga- 3 story wrap

Since I have been following this evil genius for years now and reporting on him, I see it only prudent to re-post here 3 stories out over the same weekend.

Incidentally the 2nd story from the Sunday Star Times is about Dougie selling up the company.

A smooth transition of clients money to his back pocket then out the door huh Doug?

You should be in the slammer mate.

c Share Investor 2008



Out of step?

The Dominion Post | Saturday, 23 February 2008


Investors in First Step are getting worried about their money, says Jon Hoyle.


After a year with their savings locked up, investors in Money Managers' former flagship - the Australian unit trusts scheme First Step - are becoming increasingly worried they won't get all their money back.

Some argue Money Managers owner and founder Doug Somers-Edgar should cover any investor losses in the scheme.

The company admits the global credit crunch has affected the cashing-up of First Step's assets.

First Step's trusts were closed in November 2006 with $457 million of 7000 investors' money on the books. Of this amount, $330 million was investor capital and $127 million was in effect accrued interest. By December 2007, $186.5 million had been returned to investors in dribs and drabs, based on how much money, how long and in which trusts they had invested.

Another payment was made last week, but The Dominion Post understands it was $8 million less than the expected $25 million. A Money Managers spokesman said he did not know the latest payout's amount but "could" find out. Follow-up calls were unanswered by press-time.

First Step was launched in 2000, taking advantage of a loophole in Australian and New Zealand tax law. Investors began withdrawing in increasing numbers after Finance Minister Michael Cullen changed tax legislation in 2004.

The Dominion Post has spoken to nine mainly elderly First Step investors either considering or planning to take court action against those involved in the scheme to recover claimed losses. One says he had $15,000 written off in December and predicts he is at risk of losing a further $65,000, the way the funds' liquidation is going.

He said he had tried to get his money out before the funds closed, but after three months of delays, the money was locked in till liquidation could be completed.

David Peach, owner of a public relations company representing Mr Somers-Edgar, said when originally asked about investor losses: "What's been lost? No one knows if there will be losses or not." Long-time First Step critic Chris Lee, a Kapiti Coast financial adviser, was unconvinced. "Read the last accounts. You can't argue that nobody has lost money - that's just horse manure," he said.

In December, the funds' trustee Calibre Asset Services warned that $38 million was unlikely to be returned to investors and a further $109 million was classified as being under "fundamental uncertainty".

In the fundamental uncertainty basket was $79 million owed by Geotherm Group (now in receivership) for the development of a geothermal power plant near Taupo.

Mr Peach said stress on credit markets had had a negative impact on cashing up the trusts' assets as it was more difficult for potential buyers to get capital.

The lawyer for one group of investors, James MacFarlane, said the global credit squeeze or any other "adjusted macroeconomic events are not an effective defence". The money invested in First Step passed through several entities owned or controlled by Mr Somers-Edgar and Aucklanders Russell Tills and Gerald Sidall. Mr Tills and Mr Sidall resigned from companies related to the funds in the months after their closure.

Both Mr Lee and Mr MacFarlane said the profit made on these transactions should be used to cover any investor losses.

One investor noted the NBR Rich List had estimated Mr Somers-Edgar's personal wealth had doubled to $120 million between 2006 and 2007.

All investors spoken to asked that their names not be published, citing fears over possible litigation.

Money Managers has been quick to hit back at critics. In 2005, it and Mr Somers-Edgar sought $500,000 in damages from Mr Lee for articles on his website. The claim was discontinued.

The same year, the Consumers Institute published a report critical of Money Managers and First Step. The institute's then chief executive, David Russell, said Mr Somers-Edgar called for his resignation and then wrote to the institute's board demanding he be sacked.

Lawyers for Money Managers and First Step's (Mauritius-registered) trustee Calibre Asset Services have said they are considering a complaint to the Press Council over a Dominion Post report published this month.

Money Managers has described Mr MacFarlane's talking to the paper about his plans to sue the Money Managers and other parties on behalf of investors in First Step as having a "sinister implication".

Mr Somers-Edgar would not comment when contacted earlier this month. But a statement from Mr Peach attacked Mr MacFarlane for not revealing the identities of those he is acting for, what the claims of action are and when papers will be filed with the court.

Mr Peach said: "If his implication here is some impropriety over management of the funds, then he should employ a lawyer capable of sifting fact from fiction and speculation." He compared Mr MacFarlane's approach to an "American-style touting strategy".

Mr MacFarlane said he would not provide details on causes of action as it would help Money Managers' lawyers prepare their defence, but his clients' cases had been fully analysed and the causes of action clearly identified.

He alleges that Money Managers had run "an elaborate funding, marketing and fiduciary and sales structure to raise funds from non-low-risk investments", which included lending money to companies associated with Mr Somers-Edgar and other principals in First Step. "This operated outside the continuous disclosure and insider trading regimes imposed by the Securities Markets Act," he claims.

He has also suggested Australian regulators have an interest in First Step, though Money Managers has dismissed this.

Mr Peach said all practices relating to First Step had been in accordance with the law and that the majority of investors had made "very good" returns.

A key concern of First Step investors was the degree of related-party lending.

First Step accounts for the 2007 financial year showed significant losses attributed to related-party lending, whereby loans are made between groups and companies that are closely linked. During 2007, the trusts wrote off advances and loans worth $400,000 to Quadrent Finance and $394,000 to CTT Finance Holdings (in receivership).

In 2006, $1.375 million of Quadrent loans were written off.

More than $60 million of loans were made to Club Finance, a used-car loan company. It is half owned by Mr Somers-Edgar.

Last year, Club Finance settled out of court with the Commerce Commission, agreeing to refund $788,000 of redundancy insurance premiums it charged 1500 unemployed borrowers.

Jonathan Glass, an adviser for Gareth Morgan Investments, said related-party lending was considered a high-risk game. It should generally be a red flag for investors looking at investing with any company.


Change afoot at Money Managers

By ROB STOCK - Sunday Star Times | Sunday, 24 February 2008

Money Managers founder Doug Somers-Edgar is selling up, releasing the iron grip he has held over the firm since it was launched in 1986.

The Star-Times understands Somers-Edgar is selling stakes in the financial planning business to Money Managers' chief executive Alasdair Scott, franchisees, and NZ Funds Management owned by long-time Somers-Edgar business associates Gerald Siddall and Russell Tills.

Money Managers' franchisees are telling clients the Money Managers model, involving the marketing of products from related parties, will be watered down, with the firm recommending more products from unrelated companies.

Related parties currently providing products and services to Money Managers include Orange Insurance, Orange Finance, Heritage Trustee Company, Dominion Funds and Matrix Funding Group, all ultimately 100% owned by Somers-Edgar.

Some of these products involved multiple layers of related party connections, such as the First Step products which are now being wound up with some Money Managers' clients facing losses. Money in the trusts was lent to various businesses, including Club Finance (now in receivership), a used-car dealer in South Auckland which Somers-Edgar half-owns.

Because Money Managers is such an effective sales channel, the unrated Orange Finance can offer investors a two-year rate of 8.55%, just 0.1 percentage point higher than a similar investment at the safest New Zealand bank, and 1.45 points less than South Canterbury Finance.

Scott would not confirm details of the deal, which is due to be signed in early March, or whether Somers- Edgar would retain a stake in the business. He said an announcement would be made when it was concluded.

Scott told the Star-Times in August 2006 that he was championing change in the business, although sources within the company say franchisees frustrated by stalled growth at Money Managers have been agitating for change.

On its website, Money Managers claims to have 35,000 clients and $2 billion under advice. They are the same figures Money Managers was giving in mid-2004.

Currently four of the 100 shares in Money Managers are owned by Somers-Edgar in his own name. The other 96 are owned by Edgar Holdings, a company with 30,000 shares, all owned by Somers-Edgar and his wife Anne.

In recent years Somers-Edgar has taken a low-profile role at Money Managers.

He is a polarising figure who grew to fame through tirelessly fronting seminars around the country and self-promotion on radio.

Discussions around the future of the firm include operating a flat-fee model where all commissions on products are rebated entirely to clients.



National Business Review

First Step: Where did the money go?

by Helen Malmgren

NBR Doug Somers-Edgar
NBR
Doug Somers-Edgar
NBR
Late last year, a strange thing happened at Money Managers, the financial advisory company owned by Doug Somers-Edgar. One of the company’s franchisees – someone whose entire business consisted of selling Money Manager’s investment products – suddenly went on a campaign against them.

This franchisee was particularly critical about what he called “Money Manager’s latest failure,” the First Step trusts, which have been closed and winding down since December 2006.

He began his campaign by texting at least one reporter at a major newspaper, anonymously. Then he sent letters to media and finance outlets, again anonymously. Then he sent out copies of First Step’s financial statements for 2007 – and that’s when he got a reaction.

A number of news outlets, including NBR , ran stories about how First Step expected to lose about $38 million of investors’ money because of bad debts. About a third of its investors’ original capital, $108 million, was in loans and advances that couldn’t be evaluated because of a “fundamental uncertainty.” About $63 million of investors’ money was in a used-car loan company that was being investigated for possible illegal activities.

The articles all ran in the same week in mid-December, just after investors received a letter from First Step’s trustee confirming the expected loss of the $38 million and the questions about the car loan company.

According to First Step, the franchisee who sent the information to the media has since sold his Money Managers business and moved on. But the revelations about the trusts’ accounts continue to infuriate investors.

“I told them to get stuffed,” said 79-year-old Lindsay Taylor, who together with his wife invested about $270,000 in First Step. Mr Taylor said he’d always thought their money was being invested in property mortgages.

“And they put our money into a finance company lending to unemployed people to buy second-hand cars?” he said. “How many other companies associated with this scheme are screwball?”

Write your own rules

Go to Money Manager’s website and you’ll find a dreamy-looking picture featuring what appears to be the company’s motto: “write your own rules.”

And that’s just about what Mr Somers-Edgar did when he started the First Step trusts.

Unlike most financial investments which advertise their independence and objectivity, First Step was built on a series of inter-related companies and related-party deals which the trusts’ promoters not only disclosed, but used as a selling point to investors.

According to First Step, related-party deals are a means by which the trusts can control projects they’ve lent money to.

The man who would appear to have the most control over First Step’s projects is Mr Somers-Edgar. He’s the sole director and shareholder of Money Managers, the exclusive promoter of the First Step trusts. He’s the sole director and shareholder of Financial Trust Ltd, which administers the trusts and makes decisions about what loans to make with investors’ money. He’s the sole director and shareholder of Matrix Funding Group, which manages the First Step loans.

And, through a series of related-party transactions, he’s a director and shareholder at several businesses that have gotten some of First Step’s biggest loans.

It was a surprise, then, when NBR asked for an interview with Mr Somers-Edgar and was told that “he’s simply not involved in the winding down of the First Step trusts.”

With all of those directorships, shouldn’t Mr Somers-Edgar be involved in the winding down of the First Step trusts? Shouldn’t he be involved in his own companies that owe money to the First Step trusts?

Yes he should be, according to Rob Rendle, senior solicitor at the Companies Office.

Under section 128 of the companies act , Mr Rendle said, “you can’t just walk away and say you don’t know anything about [your company.]” A director “can’t delegate the overarching management function” to someone else.

But it’s easy to see how Mr Somers-Edgar might be tempted to delegate some of his many directors’ roles to someone else. Because at this point, some of the related-party deals he made during First Step’s early days have become sore points for investors during its wind-down.

Take CTT Finance Holdings, the parent company of CTT Financial Services, CTT One, Paragon Factors and Dental Finance. Mr Somers-Edgar is a shareholder in all five of these companies and until 2002 he was also a director of all of them.

In 2004 they all failed, owing about $21 million to the First Step trusts.

By last December, CTT had only paid back about $9.5 million of those loans and appeared to be nearly out of assets.“There will be insufficient funds realized from the receivership to repay the secured debt in full,” wrote CTT’s receiver Murray Allot .

In a written comment, Phil Epps, CEO of the Edgar Family Trust and a key player at First Step, said that First Step investors didn’t lose any money when CTT failed to pay the remaining $11.5 million of its debt to the trusts. Instead, he said, that loss was mostly covered by “retained earnings” that First Step directors might otherwise have taken as dividends.

But that’s not the case with Club Finance, a company which First Step admits will probably cost investors millions.

It wouldn’t be the first scandal for Club Finance, a used-car loan company located in Mt Wellington, Auckland.

In September 2006, the company was the subject of a newspaper article entitled “Solo mum owes $35,260 on $9,000 car .” The article told the story of a young woman with a sick child who’d allegedly been tricked into signing an unfair contract with Club Finance.

In May 2007, the company got more unwanted attention when the Commerce Commission made it repay $788,000 worth of redundancy insurance which it had sold to unemployed car buyers.

One article about the repayments noted that more than half of Club Finance’s customers were unemployed.

Mr Somers-Edgar has been a director and 50 per cent shareholder of Club Finance since it started business in 2003. But when the story about the Commerce Commission broke, representatives of Money Managers told TV reporters he “had nothing to do with the running of the business .”

And today, when it looks like Club Finance won’t be able to repay the $63 million it owes First Step, Mr Somers-Edgar has all the more reason to distance himself from his car finance company.

In a written statement, Mr Somers-Edgar’s spokesman Phil Epps told NBR the accounting firm KordaMentha is now overseeing Club Finance.

He added that “we are in the process of providing further information to the appropriate [regulatory] bodies.”

He also pointed out, somewhat cryptically, that “following the appointment of KordaMentha, [Club Finance’s] managing director and CEO, Philip Markwick, relinquished stewardship” of the company.

Meanwhile, Mr Markwick says he can see which way the wind is blowing.

“They’re looking for someone to blame,” he told NBR, “but there was full disclosure at board meetings, governance meetings and regular meetings with Doug Somers-Edgar.

“I also met informally with Doug on a regular basis, and with Phil Epps.”

Mr Markwick blamed Club Finance’s problems on Mr Somers-Edgar’s decision to cut off its sole source of funding, the First Step trusts.

He also said he made Mr Somers-Edgar “fully aware of the ramifications” of that decision – namely, that it could potentially ruin Club Finance.

Sour deals

Mr Markwick isn’t the only one who’s accused Mr Somers-Edgar’s team of mismanagement.

“I’ve got to get these guys out of our business!” Alistair McLachlan shouted into the phone, when NBR called him about his company Geotherm.

In December 2006, Mr Somers-Edgar’s managing company, Matrix, put Geotherm into receivership after it defaulted on a First Step loan repayment. Two years later, the company still owes First Step investors about $76 million.

When it went into receivership, the company was working on a geothermal energy project near Taupo.

Last June, the receivers reported that while “the only asset realized to date is a motor vehicle sold,” they were “actively pursuing a recapitalization or sale of the company.”

But Mr McLachlan, who was the founder and driving force behind Geotherm, insisted the project had only been “held back” by Matrix.

“Once I can get them out of here, then it’ll go ahead,” he said.

Levels of Risk

According to Mr Epps, the problems with Geotherm and Club Finance are what forced First Step to set aside $38 million for expected losses.

But the question many investors say they want answered is how their money ever got into those deals in the first place.

The First Step trusts were designed and marketed on a graduated-risk model. According to First Step’s investment statement, the highest level of the four trusts would invest in mezzanine finance and subordinated debt projects, “suitable for investors who accept a high degree of credit risk to enhance returns.”

But the statement describes the lowest level trust – the Secured Mortgage Trust – simply as an investment that “include[s] property development loans supported by a first or second mortgage over the development site.”

So why did all four levels of trusts invest in Club Finance’s car loans, Geotherm’s energy project and CTT’s financial services?

According to a public relations representative for First Step, the trusts’ managers invested in those projects to diversify the trusts. He pointed out that, until First Step closed, no investor ever lost money in the trusts.

As for Club Finance, he said, back in 2003 car loans were considered an excellent investment.

Which raises another, more difficult, issue for investors.

As First Step winds down the market is turning sour – and that makes it harder to recover their money.

Just take a look at the property development at 19 Birdwood Crescent in Parnell, which currently owes the First Step trusts about $19 million. The building is complete, the units in it are sold, and the project is simply awaiting paperwork from the council.

Nevertheless, First Step’s administrator has taken the developer to court . Why?

According to the trustee for the project, “the court case is hot wind…They’re taking action to be seen to be doing the right thing for investors.”

When it’s time to repay the loan, it will have to be renegotiated.

“Everyone’s going to get hurt a bit,” he said. “The whole market’s in the same position. It’s a mess.”


Related Share Investor Reading

The "New" Money Manager's Investment Vehicle still tainted by its past
Don't forget Money Managers
Orange Finance collapse should turn investors red, with rage



Related Amazon Reading

<span class=
Madoff: Corruption, Deceit, and the Making of the World's Most Notorious Ponzi Scheme by Peter Sander
Buy new: $10.17


Links c Share Investor 2007-2009

Friday, December 14, 2007

Money Manager's first step gives investors the middle finger

Today's column time warps back to 2002 when I started a thread on the financial forum Sharetrader. The thread was titled "Are Money Managers Dodgy? I cant find it on the site now as I suspect the owner of Sharetrader, Tarawera Publishing, has removed it due to the slagging off of Doug Somers-Edgar, the owner of MM, through a family trust.


The finance biz is very small in New Zealand and people don't like to step on toes, even though they should, should they want to continue to do business with each other.

Flick back to today and we find the on-going saga of Money Managers and their "First Step" product seems to have finally come to a soggy mess after being closed down in 2006.

Money Managers have told over 7000 investors they are unlikely to get all of their money back after First Step was liquidated, putting around $150 million of total funds invested at risk of being flushed away.


The NBR had this to say about First Step back in February 2002:

First Step's own financial statements showing related party lending at 29.58%.
There is still no information on where the money finally ends up, what the rate of return is for those related parties, and the level of risk to which First Step investors are exposed.


Among the questions Mr Somers-Edgar has refused to answer:

Could that expertise not be provided within First Step, thereby providing more transparent accounting for funds?


Are the returns in line with the level of risk investors are taking?

Why will Money Managers not open up to independent scrutiny?

What is the total "cost on funds" (how much money the investment is generating compared with how much investors are getting back)?

What are the total fees charged?

The National Business Review has revealed how the First Step structure puts walls between investors and their money, with no clear account of what happens behind the walls.

First Step has had a chequered disclosure history; the Securities Commission suspended its prospectus when it was first issued in February last year.

Presumably Money Managers didn't inform clients of the concerns of the likes of the NBR and myself and continued to take in client's funds in a dishonest, calculated and deceptive way.

This part of the NBR article is revealing:

First Step's own financial statements showing related party lending at 29.58%.

One would have to ask, if there is interrelated lending from First Step, as there is with every other "product" Money Managers peddle-Doug is known as "Mr Clip, Clip" for every time there is an inter-company loan or transfer he clips the ticket with a fee-why don't the more profitable areas of the business lend money back to First Step to bail out Money Managers 7000 clients?

I know it is a dumb question but it had to be said.

I urge anyone considering investing in any of Doug Somers-Edgar's companies to take a deep breath, Google his name and see what you come up with and then make your decision.

What has Somers-Edgar been up to lately?

Doug has mysteriously disappeared from his former high profile, since stepping down from Money Managers in 2006 but seems to have been busy suing people for critiquing his investment style.

From 27 June 2004, Somers-Edgar-related CTT companies in receivership (CTT Finance Holdings, CTT Financial Services, CTT One, Dental Finance, Paragon Factors and involved in numerous other liquidations of his own, related and other parties companies


Owning a dodgy Ginseng business.




Related Share Investor Reading

The "New" Money Manager's Investment Vehicle still tainted by its past
Don't forget Money Managers
Orange Finance collapse should turn investors red, with rage
Money Managers First Step saga: 3 Story wrap





c Share Investor 2007 & 2009