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Melissa is a mother of 2, lives in Utah, and writes for a multitude of sites. She is currently the EIC of HarcourtHealth.com and writes about health, wellness, and business topics.

It has now been 5 years since Fabien Gaglio, co-founder of Hottinger & Partners SA (HPSA) confessed to defrauding his clients of millions of dollars.

They believed having entrusted their wealth to a genius asset manager, who was in fact nothing more than a con artist. After years of carrying on with a jetset lifestyle and partying with the rich and famous at his clients’ expense, Gaglio was denounced early 2013 by his former business partner Jean-François de Clermont-Tonnerre, and in 2016, the Court of Luxembourg found Gaglio guilty of fraud and money laundering. He was sentenced to 4 years of prison.

In June 2018, a detailed update in the form of a report published by Tribune de Genève displays how Gaglio’s former business partner, Jean-François de Clermont-Tonnerre has been dedicated to recovering the stolen millions to help Hottinger victims recover from this Ponzi scheme.

As indicated by the Swiss newspaper, Gaglio’s fraud was exposed beginning of January 2013 when a US-based client contacted H CTG, the Luxembourgian subsidiary of Hottinger & Partners, to question a bank statement he had been sent. Fabien Gaglio being absent that day, an employee compared the statement with the information held by the financial establishment. Nothing matched, yet the difference was massive. Jean-François de Clermont-Tonnerre sounded the alarm and asked his teams to check for further anomalies. The task turned out to be gigantic as Hottinger & Partners managed 600 million Swiss francs in assets. In a matter of days, Hottinger & Partners employees discovered that other clients had also been victims of falsified statements.

Within days, Jean-François de Clermont-Tonnerre filed a criminal complaint. According to Tribune de Genève, de Clermont-Tonnerre had no suspicions until that phone call “started a saga-worthy of a novel”. Rapidly, de Clermont-Tonnerre brought in Deloitte to complete a forensic examination of Gaglio’s fraud, which stated that between 2005 and 2013 he had duped his customers of nearly 42 million Swiss francs. Gaglio has managed to carry on with his fraud for so long on the grounds that he was falsifying account statements and faking client signatures for money transfer authorizations.

The interview of Jean-Francois Clermont Tonnerre / Tribune de Genève is the first time de Clermont-Tonnerre has publicly spoken about the case. As an administrator of HPSA, he admits bearing his share of responsibility for what happened and feels entitled to setting things right for the extorted clients. “I was a director. I have my share of responsibility. There was a lack of vigilance. I should not have been so trusting. I have learned a lot”, confides the financier who has spent these past years tracking the embezzled money and understanding how Fabien Gaglio managed to steal from so many clients over such a long period of time. This detective work brought him to meet each of the wronged clients and to accept his responsibilities. As of today, he has managed to recover over 10 million Swiss francs and has bought Hottinger & Partners as soon as the scandal became public to demonstrate his honesty and integrity.

Tribune de Genève also reported that beginning 2014, the Luxembourgian justice cleared Jean-François de Clermont-Tonnerre’s name. He was found not guilty of fraud or of personal enrichment. By meticulously following all the money transactions, the investigators discovered that the 900,000 Swiss francs that Fabien Gaglio had paid to Jean-François de Clermont-Tonnerre corresponded to early treasury and credit card repayments. The proceedings initiated in Switzerland are not over, but fraud has been excluded.

This is a summary of the French Article https://www.tdg.ch/monde/europe/Un-financier-genevois-passe-5-ans-a-traquer-les-millions-detournes/story/15206010 – which you may read translated here:

A Genevan financier spends five years hunting down embezzled millions

Justice Jean-François de Clermont-Tonnerre has fought to clear his name after the downfall of Hottinger & Partners.

In 2013, revelations about the misappropriations of Fabien Gaglio, a wealth manager at Hottinger & Partners, owned by Swiss bank Hottinger, shook the Genevan financial centre. Just five years after the Madoff affair, clients of the con man, who believed they had entrusted their wealth to a genius asset manager, discovered the deception. Behind the promise for profitability was a fraudulent financial arrangement which consisted notably in paying clients’ investments with funds procured by newcomers and supporting it all with acts of fraud on trusted clients.

Jean-François de Clermont-Tonnerre, who was Fabien Gaglio’s partner, was unsuspecting until he received a phone call which triggered a saga worthy of a novel. In early 2013, a Californian client sent in a bank statement asking for clarifications on certain items managed by H CTG, the Luxembourgian subsidiary of Hottinger & Partners. Fabien Gaglio being absent that day, an employee compared the statement with the information held by the financial establishment. Nothing matched, yet the difference was massive. Jean-François de Clermont-Tonnerre sounded the alarm and asked his teams to check for further anomalies. The task turned out to be gigantic as Hottinger & Partners managed 600 million Swiss francs in assets. In a matter of days, Hottinger & Partners employees discovered that other clients had also received falsified statements. Fabien Gaglio vanished at once. Later that week, Jean-François de Clermont-Tonnerre filed a criminal complaint to the Swiss authorities.

“The verification work was so important that I commissioned Deloitte Forensics to urgently send us a team of experts to comb through everything”, says Jean-François de Clermont-Tonnerre. Five years after the scandal was revealed, the Genevan consents to talking publicly about the case. Despite being the instigator of the complaint filed in Luxembourg, location of the head office of H CTG (the entity that manages development of the private client management business in Europe), the situation nearly turned against him by tarnishing his reputation. These doubts as to his probity were unbearable for this descendant of a family of aristocrats who have resided in Geneva since the 18th century and who, with his wife, is involved in many charity actions.

“I should not have been so trusting”

After turning himself in to the police, Fabien Gaglio tried to implicate Jean-François de Clermont-Tonnerre by claiming that he had also falsified documents. At the start of the following year, the Luxembourgian justice cleared his name. He was found not guilty of fraud or of personal enrichment. By meticulously following all the money transactions, the investigators discovered that the 900,000 Swiss francs that Fabien Gaglio had paid to Jean-François de Clermont-Tonnerre corresponded to early treasury and credit card repayments. The proceedings initiated in Switzerland are not over, but fraud is definitively excluded.

Yet, the interested party admits his share of responsibility. “I was a director. I have my share of responsibility. There was a lack of vigilance. I should not have been so trusting. I have learned a lot”, confides the financier who has spent these past years tracking the embezzled money and understanding how Fabien Gaglio managed to steal from so many clients over such a long period of time. This detective work brought him to meet each of the wronged clients and to accept his responsibilities. As of today, he has managed to locate approximately 10 million Swiss francs and has bought Hottinger & Partners as soon as the scandal became public.

As for the bank, which was already weakened by family rivalries and a lack of capital, the impact of the Gaglio affair on its sister entity, Hottinger & Partners, was the “coup de grace” leading to the FINMA refusing any new acquisition proposals. While some of the wronged customers have been able to recover a small part of their capital, others are waiting for the Swiss justice to recognise and make up for their loss. But after living the good life and having served a prison sentence, Fabien Gaglio is apparently now ruined. This insolvability further increases the feeling of frustration of some of his victims.

Crazy rumours

Today, after five years spent tracking the embezzled money, Jean-François de Clermont-Tonnerre is determined to set the record straight. The Fabien Gaglio affair fed the craziest rumours about possible large-scale money laundering circuits, with the shady asset manager depicted as the cog of a more sophisticated system. While the enquiry has shown that the fraud began whilst he was working at Rothschild, nothing has been found to substantiate this hypothesis. The Deloitte report demonstrated a sophisticated system, but one controlled by just one man and founded on the systematic faking of client statements. Caught up in a spiral, Fabien Gaglio went up in flames. “He lived like a pasha”, denounced the lawyers of the civil parties during the trial, which took place in Luxembourg. “It’s true that he spent a lot of money. But he told us he had a personal fortune”, explains Jean-François de Clermont-Tonnerre.

According to the Deloitte report, the schemes of Fabien Gaglio, spread out between 2005 and 2013, ended in a loss of 42 million Swiss francs for Hottinger & Partners, and not 100 million as was cited at the start of the affair. This last figure includes the frauds committed outside the scope of the company when the asset manager worked for a hedge fund held by Morgan Stanley in London and then for the Rothschild Bank. The fraud grew when the asset manager transferred his client portfolio to Hottinger & Partners. (TDG)