LCR Honda Sponsor CWMFX Subject Of Fraud Enquiry By London Police

LCR Honda's title sponsor, foreign exchange trading firm CWMFX, is the subject of a police investigation by the City of London police and Financial Conduct Authority, the UK body charged with regulating the financial services industry. Police raided the firm on 3rd March this year, arresting thirteen people for a range of fraud charges. Since last night, the CWMFX website has been offline, with only a contact form on the site.

The arrests come as part of a wider investigation into an offshore Ponzi scheme allegedly being run by Belvedere Management Limited. Research by independent financial advisors deVere Group, as well as the investigative financial services publisher OffshoreAlert revealed that $16 billion of investor funds was involved in the Belvedere scheme, which was based in Mauritius. Major investors such as hedge funds, life insurance, investment management and much more had started withdrawing their investments from the firm, bringing Belvedere to the brink of bankruptcy. CWM is believed have $130 million of investor's fund committed to one of the Ponzi schemes allegedly operated by Belvedere, and run out of the Cayman Islands. It is this involvement which has caused the City of London police to make the arrests and charge CWM staff with various fraud offences.

CWMFX acknowledged the arrests to London newspaper City A.M. last night, but said the arrests came as "a result of allegations for which we believe there is no sustainable basis". The loss of the CWMFX website was due to the partnership with trading platform Leverate ending, CWM said. The company claims that this partnership came to an end due to contracts expiring. Leverate is a Forex trading platform based in Cyprus, and therefore falling under Cypriot law, and subject to compliance and oversight by the Cypriot financial services authority.

This is not the first brush with the Financial Conduct Authority which CWMFX boss Anthony Constantinou has had. Constantinou was previously CEO of Aixia Limited, a financial services firm which was wound up after the FCA issued a warning that it was trading without authorization in the UK.

Whether the arrests at CWM affect the LCR Honda team's 2015 MotoGP project remains to be seen. MotoMatters.com has learned that both Honda and LCR studied the company closely before signing the sponsorship deal with the firm. It is customary in such cases to ensure that funding for the deal is secure before the start of the season, with payments made in advance, or at least spread over the season. Even if there were to be some kind of shortfall in sponsorship from CWM, the team should be able to manage for the rest of the year. The LCR Honda team still has a strong portfolio of secondary sponsors behind it, and with Cal Crutchlow and Jack Miller, two high-profile riders. Crutchlow is popular with British and American fans, and Jack Miller has a rapidly growing fanbase in Australia. Both riders are key assets for Dorna in helping to sell TV rights, and Miller has a three-year contract with HRC.

MotoGP was not the only sponsorship interest the firm had. CWMFX had been announced as a partner to English soccer club Chelsea FC in January, and also sponsored the London Boat Show earlier this year.

 

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Comments

The sponsorship is definitely done! Speedweek just reported that LCR already removed all CWM logos from their bikes.
Apparently, they are safe financially for the first few races, but they will be in deep trouble if Cecchinello can't find a replacement.
Apparently, the team invested most of the money they received so far in additional mechanics, a bigger hospitality unit and Crutchlow's bike (leasing rates).

http://www.speedweek.com/motogp/news/72373/LCR-Honda-Es-werden-bereits-a...

Total votes: 136

Apparently Honda and LCR (and maybe Dorna ?) had studied CWM closely before the deal was signed... Pretty sloppy work, in my opinion. This piece, published march 1st by Speedweek on the CWM/LCR launch in London, provides for interesting reading. The reporter quotes a LCR rider saying: "I hope this does not go horribly wrong in the middle of the season".
I feel sorry for the guys, and for the small investors whose money is washed away in this scheme.

http://www.speedweek.com/motogp/news/71245/CWM-LCR-Ein-Londoner-Grieche-...

Total votes: 145

I received a call from a friend tonight to say that I predicted the outcome to him back when the original deal was announced last year.

All I did was to visit their website and question what's in it for them.

With any form of money passing from a business to marketing spend the savvy Finance Director will want to know the ROI (return on investment). Now if the CEO loves GP racing and the company is making good numbers it's the share holders who miss out not the CEO if there is no ROI. How does a business working in the Forex market appeal to the average MotoGP fan, I didn't even know what 4x was.

I would not like to comment on any money laundering accusations in this case but I would like to pose a question. I am a CEO who loves MotoGP, I am prepared to fund a team with £10 million from the PLC I run providing my personal company Fred Blogs Marketing receives it's 50% share of the money in management fees. Would this be considered as defrauding the company I am CEO of and the share holders or is it just business? How many teams sign up to these deals and what does the tax man think?

Our beloved sport can only honestly sell motorcycle related bits giving those in the motorcycle industry a decent ROI. We need to be honest and look at the likes of Drive and other sponsors that I had no idea what the product was they were selling. I don't hear our commentators mentioning the sponsors product at all on the TV.

What I do remember is Fred Clark (long time British race meeting commentator) at a Silverstone GP saying 'King Kenny has enough time to look over his shoulder and take a long drag on his Marlboro cigarette!'

Total votes: 128