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Another twist in Belgian real estate fund investigation

LFP I Sicav has filed a civil complaint in the Luxembourg Commercial Court, on behalf of sub-fund Equity Power Fund (EPF), against fund administration specialist Alter Domus Management Company (ADMC).

The complaint from LFP I directors David Mapley and Tudor Fedeles was formally lodged this week.

They claim that, since ADMC acquired Luxembourg Fund Partners SA in December 2017, the real estate fund specialist saw assets under management double to more than €80m in EPF before ‘being terminated with cause’ by the LFP I directors in February 2019.

ADMC rejects this speculation given it resigned its position as alternative investment fund manager (AIFM) on its own accord and was not ‘terminated with cause’.

Mapley and Fedeles insist their subsequent investigation and title checks show multiple assets were stolen or never acquired by EPF despite significant cash transfers.

They also claim to have discovered multiple service provider and auditor failings.

According to Mapley; upon assuming investment management responsibility in December 2017 of EPF, the biggest LFP 1 sub-fund; ADMC never visited the nearby EPF assets nor requisitioned a title search of all EPF’s assets while new subscriptions flowed in.

A spokesperson for ADMC told Expert Investor that the company rejects the entire factual basis of Mapley’s claims within his ‘news release’.

“Upon receipt of written representations to substantiate the civil complaint, ADMC will defend itself vigorously.”

The source also stressed that the complaint is yet to be heard in the court and its claims refer to a period prior to Alter Domus’ ownership of LFP, a service provider to LFP 1 Sicav.

Risk management

Civil complaints have also been filed on behalf of EPF.

A further demonstration of lack of investment monitoring and risk management, according to Mapley, was that no AIFM representative had visited the investments in Belgium since 2015, leaving the assets under the control of the Belgian advisory team of Urban Capital Group (UCG).

Notably, half of the period in question predates ADMC’s acquisition of LFP.

Over recent months Expert Investor has documented the war of words between UCG and Mapley. UCG was 99.4%-owned by EPF, and Equity Power Fund assets were invested in UCG real estate projects.

Mapley maintains that the majority of the fund’s real estate projects were sold or transferred out without the fund receiving any proceeds.

Levi Dewaegenaere, director at UCG recently told EI that Mapley should never have been appointed as a director of LFP in the first place as he does not comply with the Luxembourg regulator’s (CSSF) criteria for such a position.

Dewaegenaere also accused Mapley of threats and intimidation over payments – with Mapley countering that the threats made came from the other side.

In the headlines

What is certain is that both parties have suffered bad press in recent months.

In May, Mapley was suspended from his duties by the Luxembourg regulator, which stated that he “no longer satisfies the requirement of good repute”.

Mapley’s response was to immediately appeal the decision through the administrative court.

Dewaegenaere, on the other hand, was handed a 30-month sentence – half suspended – in June relating to a case brought by an unnamed technology group that invested in another entity he owned.

This case was not linked in any way to the ongoing LFP I sub-fund Equity Power Fund investigation.

Dewaegenaere confirmed he has lodged an appeal against this verdict to the supreme court in Belgium – which he says he is confident of winning.

David Burrows

For more than 25 years, Dave has written for a wide range of newspapers and broadcasters including The Times, The Financial Times, The Independent, The Wall Street Journal, The Mail on Sunday, Reuters...

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