The hunt was launched last October when fears were first raised that Astarra Strategic may have been a Ponzi scheme.
The money in Astarra Strategic was invested through the Albury fund manager Trio Capital, in an international transfer of funds that reveals weaknesses in Australia’s superannuation regulation.
The colourful record of Mr Bell’s appearances before the US broking industry’s independent regulatory body raises the likelihood investors may have been fleeced, despite continuing uncertainty about where the funds have ended up.
The fund’s appointed administrator, PPB, issued a letter last week that telegraphs the likely fate of the $125 million, which is mostly held in a complicated contractual relationship known as a ”deferred purchase agreement”.
The administrator wrote succinctly: ”The value of the deferred purchase agreements is uncertain.”
The administrator, Neil Singleton, said the funds had been placed into five hedge funds: Exploration, Tailwind, SBS Dynamic Opportunities, Pacific Capital Markets Cayman and Atlantis Capital Markets Cayman.
Mr Bell operates the Exploration Fund, which administrators say is the destination for most of Astarra’s $125 million in investments.
To date PPB has only found rats and mice from Astarra Strategic’s investments: $US100,000 out of a bank account in Hong Kong and evidence about $1.2 million may sit in Tailwind.
Then there is $1.4 million in a bank account of the custodian, National Australia Trustee, and $550,000 in application money submitted by investors.
Astarra Strategic was supposed to have entered a contract with a British Virgin Islands company, EMA International, which then invested the money in five hedge funds.
The placement of the money was supposed to have been checked by a Hong Kong company, Global Consultants and Services Ltd (GCSL), in its formal role as company secretary of EMA and as custodian for four of the hedge funds. The chief executive of GCSL, Jack Flader, is a subject of investigators’ inquiries because of his company’s central role in placing Astarra Strategic’s money in the offshore hedge funds.
When BusinessDay met Mr Flader in Hong Kong recently, it encountered a middle-aged man who looked very stressed.
BusinessDay sought an explanation for the missing money, but was politely refused. ”I can’t talk about this. It’s a shame, I would love to talk about this … there is probably another side to the story but I can’t talk about it,” he said.
The former investment manager of Astarra Strategic, Shawn Richard, has said he is confident the money still exists, and he has documentary evidence to support this assertion.
But he said Mr Flader, his former business partner, is no longer returning his calls.
BusinessDay is making no suggestions of involvement in money becoming missing by Mr Richard or his offsider, Eugene Liu, who acted as investment managers for the fund. Nor is there any suggestion of such involvement by Trio Capital.
Problems in the recovery of any money are illustrated by an examination of Mr Bell’s broking record.
He has an extensive record of being fined by the US broking industry’s self-regulation body, originally known as the National Association of Securities Dealers but now called the Financial Industry Regulatory Authority (FINRA).
Mr Bell was suspended in 2008 after failing to pay two arbitration payouts awarded against him.
In a 2008 ruling, New World Financial and several staff, including Mr Bell, were ordered to pay $378,000 for breaches of fiduciary duties and securities laws.
In a 2004 ruling, Mr Bell, acting for World Financial Capital Markets, and Pacific Continental Securities, were ordered to pay $US67,000.
And in a separate finding in November 2003, he was ordered to pay $US40,000 and barred for eight months for World Financial issuing research reports that exaggerated company performances in return for issues of their shares.
His previous employment history includes a stint as compliance officer with Pacific Continental Securities, which appears to be a common former employer among those close to Astarra Strategic.
Mr Richard and Mr Liu were both employed by Pacific Continental Securities. Mr Flader was previously general counsel for its Hong Kong owner, Zetland Financial Group. Pacific Continental Securities UK failed in 2007 after operating as a boiler room, selling nearly worthless US shares to unsuspecting investors.
Mr Bell also worked for broker New World Financial, which has been the subject of regulators’ warnings.