After the insolvency of the allegedly fraudulent gold trader PIM, investors feel betrayed. Has their gold ownership been lost?
- Snowball system suspected at PIM Gold
- Thousands of retail investors affected
- Damaged parties have various options
The Hessian PIM offered its customers gold savings plans and promised them a kind of monthly interest in gold – so-called bonus gold – if they did not have the precious metal handed over to them but stored it with PIM. But how these bonus payments should be financed is opaque.
In addition, customers were promised a deposit in gold as security for their investments. However, the public prosecutor’s office in Darmstadt suspects that a large part of the gold does not exist at all and that PIM has operated a snowball system.
At the beginning of September, PIM business premises were searched and Managing Director Mesut P. was taken into custody on suspicion of fraud. In addition, the public prosecutor’s office has frozen the PIM gold accounts and confiscated gold. As a result, PIM filed for bankruptcy.
Initial investigations by the public prosecutor’s office had revealed that at least 1.9 tons of gold worth about 80 million euros were missing. Meanwhile, the temporary insolvency administrator, lawyer Renald Metoja, was able to record half a ton of seized gold and other precious metal stocks, including gold bars, coins and jewellery.
According to the public prosecutor’s office, it will be some time before we know exactly how much gold is missing. But as things stand to date, the gold discoveries will probably not be enough to satisfy the obligations to the customers.
According to insolvency administrator Metoja, investors will also have to prepare for a long period of uncertainty. After he had started evaluating the PIM payment flows, he had to find out that the bookkeeping was not up to date and in some cases incomplete. He pointed out that the review of the electronic data “is a diligent job that will probably take weeks”.
It is estimated that at least 10,000 investors, mostly small investors, are affected by the alleged fraud. But they will have to wait until insolvency proceedings are opened before they can file their claims. According to Metoja, this should continue until the beginning of December.
Will investors get their money back?
“As the creditors’ representative, my primary objective is to ensure that investors get as much of their assets back as possible,” Metoja explained. But given the lack of gold, they are likely to receive only a quota. And it could take “a few years” for them to be paid out. Metoja justifies this with the high number of creditors and the “necessary measures for mass realization”.
Only at the creditors’ meeting that follows the insolvency report will investors learn exactly how the remaining assets are distributed among the creditors. “The investors must place themselves with all other creditors in the same row , quotes the trade paper in addition Marc Gericke, investor lawyer with the Kanzlei Göddecke from Siegburg.
Investors could have luck however in the rather improbable case that they can prove the property at certain bars and these are then also still found. “These bars could then be taken out and not fall into the insolvency mass , explained Stephan Greger, expert for capital market right with the Kanzlei Greger & Collegen in Munich, opposite the trade paper .
Further legal options
Sommerberg LLP, a law firm for capital investment law, has further tips. According to this, those affected not only have a direct claim against PIM Gold for repayment of the money invested in the contracts. In addition, those responsible who knew about the machinations at PIM Gold and promoted this also have a claim for damages due to violation of the protective law. The prerequisite is that the allegations of fraud are confirmed.
In addition, a capital refund could possibly be asserted against the intermediary companies which distributed the PIM gold contracts. Under certain conditions, depending on the individual case, there is a claim to liability as an intermediary. According to Sommerberg LLP’s investigations, these companies are in a position to replace the money invested by their clients.