We invested in Cauta Capital bonds, but interest payments stopped: TONY HETHERINGTON

Tony Hetherington is the Financial Mail on Sunday’s top researcher, taking on readers’ corners, uncovering the truth that lies behind closed doors and delivering victories for those left out of their own pockets. Below you can read how you can contact him.

Ms YG writes: We have invested savings in loan bonds from Cauta Capital.

We have been in regular contact with the owner of the company, William Abundes, for a few years now since interest payments stopped.

He promised dates for the repayment of the bonds, but these have passed without our money being returned.

Tony Hetherington replies: Cauta Capital has made many promises. It would invest your money only in real estate projects where the developers had pledged their own assets as security.

It would only put your money into a real estate fund if the plan’s assets were far greater than the amount Cauta put in.

And it would give an independent accountant legal fees on more than £28 million of his own assets as a safety net. Yet all these promises were broken.

When complaints started coming from investors, who told me that Cauta had failed to pay the interest owed and then failed to repay the loan bonds when they matured, I contacted the company’s boss, William Abundes.

He is a 70-year-old American living in Luxembourg, and he is a major figure in the campaign for Donald Trump among American voters living in Europe.

I reported last April that he told me his company had made failed real estate investments and so had used the remaining money to buy uncut emeralds – something that was never mentioned when he offered his loan bonds with the sales pitch that the money would be in safe real estate would be well invested. developments.

He described this as ‘a strategic decision made in response to unexpected losses suffered by the company’. And when I pressed him to explain what allowed him to make such a dramatic change in the way your money was used, he pointed out a vague section of the investment terms that allowed for “secured joint ventures.”

You and any other investor may have interpreted this as a reference to real estate transactions secured by land and buildings. However, it is clear that Abundes saw this as a way to invest in almost everything he enjoyed.

Cauta Capital has almost been forcibly suspended twice for failing to file accounts with Companies House.

The 2023 bills – submitted late, in May this year – were nothing more than an absurd cut-and-paste copy of the 2022 figures.

They valued the company’s assets at £19.4 million, but did not take into account the interest owed to investors.

Even worse has followed. In July, Cauta Capital fell under administration. The administrators took action with impressive speed to investigate what went wrong.

They discovered that Cauta first invested in an apartment complex on the site of Copenhagen’s historic Tuborg Brewery.

The developer went bankrupt in 2019. Abundes then supported a second Danish development, but this too collapsed.

In 2020, Cauta put your money in uncut emeralds. The accountant appointed to safeguard the interests of investors told me that he had not even been informed of this.

And late last year – again without any announcement – ​​Cauta exchanged his emeralds for an investment in a Luxembourg fund that will not mature until at least next August.

There is great uncertainty about this, but the administrators say the investment had a ‘nominal value’ of around $3 million (about £2.3 million).

This is in stark contrast to Cauta’s most recent accounts which show it to be worth £19 million. The uncertainty is not alleviated by the difficulties that managers have encountered in obtaining company data.

Apparently Cauta didn’t even have his own bank account.

The bottom line is that bondholders owe more than £11 million plus interest of around £1.5 million.

It is impossible to predict the value of the Luxembourg fund when it matures, but managers say the likely outcome is that Cauta Capital will have to be put into liquidation, with a possible return to unsecured creditors of just over 12 cents per £ 1.

This whole affair has reinforced the lack of investor protection surrounding loan bonds. They are just IOUs, but they are often marketed as stocks with shaky claims that they are guaranteed or backed.

The last government did nothing to change this, and I have no hope for the current group.

In this country, investors are all too often on their own. Investor protection has been the abandoned child of successive ministers and regulators.

If you believe you have been a victim of financial misconduct, please write to Tony Hetherington at Financial Mail, 9 Derry Street, London W8 5HY or email tony.hetherington@mailonsunday.co.uk. Due to the large number of questions, personal answers cannot be given. Only send copies of original documents. Unfortunately, these cannot be returned.