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Poor Regulation for a poor protection for clients

Last year, on 15 May 2008, the Commission de Surveillance du Secteur Financier warned the public of the activities of a certain Mr Thomas Martin acting notably under the name “Thomas Martin Investment Club” and “TMI Club” (address: 34, parc Syrdall, L-5365 Munsbach).
According to the information available to the CSSF, the above-mentioned person offered services of the financial sector.
The Commission de Surveillance du Secteur Financier informed the public that neither Mr Thomas Martin, nor “Thomas Martin Investment Club”, respectively “TMI Club” had been granted the required authorisation to offer such services in or from Luxembourg.

The information was circulated as well by the Centre Européen des Consommateurs. But only the CSSF and the Centre Européen des Consommateurs circulated the information.

A couple of days before the warning Thomas Martin was interviewed and he presented himself. The conversation took place online NOT face to face.

1.) Hi Admin, where do you come from?
I am a retired man from Western Europe, I am more precisely French but lived in Switzerland and Luxembourg most of my life. I am what people call a self-made-man, didn’t study a lot as I had to work quickly, so I had many and various jobs. Finally I ran a small HR Cabinet in Switzerland, where I met a lot of high executives in the financial world. They opened my eyes and my mind to finance, and all began really.

2.) Why did you decided to start an online investing program?
Well to be frank I didn’t decide by myself to go online. In 1990 I opened a very small and very private Club, where a few friends and I invested our hard earned money. Years after years the Club grew, without any other advertising than private conversations.
Then a few years ago my son Stan joined me, it was if I remember around the year 2000. As he is from another – younger! – generation, he was very opened on the internet world, and began to say “why not go online”! I wasn’t very happy of this as our success was, in my opinion, due to our private and confidential status. But years after years he convinced me and in 2007 we decided to offer our online program.
The rule is simple: Higher is the amount of our funds, more we invest and more we make profit. So, why not coming online, despite I must confess that after what I saw on the internet, I was not very enthusiast to open a website. The danger for him was the Club to be mixed with all “ponzi” that are around.
Finally so we hired a programmer to write our software, and came online!

3.) So how long has your program started?
So, our program – the Club – was launched in 1990, and we came online in 2007. It will soon be one year we are online.

4.) What type of payment processors do you accept and do you plan to accept more payment processors in the future?
Most of our business is made through bank wires. But we understood that coming online, we will need to accept e-currencies. According to Stan, the most popular was e-gold, the most serious e-bullion, so we decided to accept them.
Later we added Libertyreserve, but we will probably remove it if they do not fix their problems really quickly, I suppose you know their situation!
We are opened to new processors, but as far as I can see, there is nothing serious now! Let’s wait, maybe something really new and great will come? Nevertheless once more, the best way to work with us is using bank wires.

5.) How confident are you with your site security level?
Sorry we do not communicate about this topic.

6.) What are your plans for the future and how long do you think you will stay online?
We have no plans to not stay online! Do you think that any company can think “when will we close?”? Our program works, and worked since 1990!
We turned into a registered company last month. We are expecting to receive a bank license next year; we will emit our payment cards (OUR cards and not third party cards), offer certificates of deposit and other bank services. As you see, our plans for the future look fine!

7.) Do you have any phone support other than email support?
Yes we have but only on a case by case basis, as Stan (he cares of the Support) has really no time to return phone calls. Support is now done through a “ticket center” that allow our Investors and us to keep a trace of all exchanges.
I add that I sometimes meet some Investors or potential serious Investors, but as I am very often travelling it isn’t that easy. Our commercial director, Alain Martel, meets more frequently people, especially in Europe.

8.) Can you explain on how you calculate the ROI of your plan?
We offer 10.25% by month. This is an average return we can pay, we of course do not exactly make 10.25% every month. We can for example make 50% one month (we made even more some times!), then a month in loss, etc. Globally with paying 10.25% to our Investors, believe me we still have some nice profit for us!

9.) Do you have a physical office/address for your program/company?
We have a small office in Luxembourg but we do not disclose the place, anyway we will close it as we have now no more link with Luxembourg. When we need to meet people, we find a place: At home sometimes, or we rent an office in a business center, or in a good restaurant!

10.) How many percentage of the funds received from investor will go to admin, staff profit?
None. We invest 100% of the funds we receive. We make our living on the profit we generate, not on the funds we receive.

11.) Lastly in less than 50 words, briefly describe what can your program give to your investors?
A High, Regular and Honest Income! High as 10.25% is really high, Regular as we pay this rate or just about this rate since 1990 without any break, Honest because we do not invest in illegal activities, AND we do not pay Investors with the investments of others!

Thomas Martin’s website does not exit anymore and many investors are saying he left with their money and have filed a complaint.

This story raises one question: Why it was so long for the Luxembourg regulator to warn clients: the business was created as of 1990 and the warning was published 18 years later?

Luxembourg is a small jurisdiction where everybody knows everyone and what the others are doing.

The activity should have been detected earlier. Information on the business had circulated on the internet at least since October 2007.

There were many red flags:

In the 2000s there is no business in the investment activity that does not have a website.

Additionaly, the address was a PO Box. The so-called phone number +1.8318506188 that seems from California is from Pac-West Telecom California. PacWest provides notably VoIP services.

Finally, Thomas Martins seems to be located now in the Seychelles. The telephone is still the one of Luxembourg and the fax is the so-called phone number from California.

In the context of the Luxalpha affair, this story that is not circulated in Luxembourg (the Keydata affair is not circulated either), demonstrates that the regulation is at the very least perfectible.

08:38 Posted in Luxembourg | Permalink | Comments (0)

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