CL-2020-000117 - [2025] EWHC 1620 (Comm)

On 15 December 2015, Falcon invested €15.4m into Fixed Rate Notes issued by Luxembourg-based company Reditum SA (“Reditum”), split between the Cautious Fund, which acquired 1,500 bonds and the Balance Fund, which acquired 13,500 bonds. This was an entirely fraudulent investment which inferentially was engineered by Mr Serwin for the benefit of himself and others interested in Werel. I reach that conclusion for the following reasons.

First the bond was illiquid and was entirely unsecured even though the business of Reditum was that of real estate investment. Secondly, it was not in truth an investment in Reditum at all but was a mechanism for using money belonging to Swedish pension savers to acquire shares in Werel for the ultimate benefit of Mr Serwin and its other shareholders. Reditum lent €12.9m of the proceeds to a Dutch company within the same group, Larmag Real Estate 2 BV, and on 9 December 2015, another Larmag company, Larmag Energy Group BV (“Larmag” or “LEG”), bought €3.1m of Werel shares from Boardwalk (which it will be recalled was at all times ultimately beneficially owned by Mr Gergeo). On 18 December 2015 Larmag subscribed for a further €4.4m of shares from Werel directly.

In November 2018, Reditum’s Maltese lawyers, GVZH wrote to Falcon and KPMG Malta (in its capacity as Competent Person of Falcon and/or its sub funds) on behalf of Reditum and the Larmag entities. In that letter, Reditum states that:

“As you may or may not be aware of, Falcon Fund purchased €15 million in Reditum bonds and during the negotiations, the broker who introduced the bond investment also presented an opportunity for Larmag Group to invest in Werel AB and connected the two transactions. Shortly after the Falcon Fund invested in Reditum bonds LEG invested approx. €7,5 million in Werel AB which resulted in a minority shareholder position. LEG also later in mid-2016 invested and additional approx. €2.5 million in Werel AB shares. LEG is part of the Larmag Group. The €10 million investment in Werel AB shares that LEG undertook became worthless because the majority shareholder in Werel was taking funds out of the company in form of unwarranted management (and other) fees. Werel AB, as your client well knows, has no residual value and is in a bankrupt state causing LEG to write down its investment to zero. Larmag Group has not profited in any way shape or form from its investment in Werel, it has in fact likely lost more than any other single party that has suffered damages from the actions of the persons controlling Falcon Fund and Werel AB.”

The Larmag Group was at all material times controlled and ultimately beneficially owned by Mr Lars-Erik Magnusson (“Mr Magnusson”). He was interviewed in relation to Larmag Group's investment in Werel by the Swedish Economic Crime Authority on 18 September 2019. In the course of that interview, Mr Magnusson stated that initial contact was made with Reditium in relation to Falcon by Avalon Capital, a Zurich based brokerage that had acted on behalf of the Larmag Group in the past, the principals of which were Messrs Patrik Sternek and Christer Andersson. In the course of that conversation, Mr Magnusson was asked why Falcon wished to invest in Reditum to which he responded:

“Christer said that they are interested in buying up to 15 million. He said that it may facilitate the deal if Larmag wants to buy into a company called Werel. Larmag was interested in the energy sector. Had it been another sector, they would not have done so.”

Werel’s ostensible business was the retail sale of electricity. According to Mr Magnusson, it was access to Werel’s 40,000 customer list that was attractive. He added that “… Andersson said it could facilitate the deal if they entered Werel. Werel fitted Larmag. They went into Werel after they got the money.”

From the €15.4m paid by Falcon to Reditum, €3.1m was transferred to Boardwalk for 638 Werel shares. As Ms Hall states in para. 6.2.16 of her report, based on this transaction the 100% pro-rated value of Werel’s shares would have been €51.6m. 11 days later a further €4.4m was paid to Werel for the issue of 862 shares, which as Ms Hall says in para. 6.2.17 of her report implies that the 100% pro-rated value of Werel’s shares would have been SEK 546.3 million or €58.8m. For the reasons explained earlier that cannot be justified on any identified objective basis applying any conventional company valuation methodology. As Ms Hall also observes in para. 6.2.18 of her report, “… within a period of 11 days the pro-rated value of Werel’s shares increased from EUR 52.7 million to EUR 58.8 million, an increase of approximately 11.5%. I have not seen any evidence to support such an increase in Werel’s value and in my view, an increase in value of this magnitude would not be easy to explain without significant changes in the fundamental operations of the Company in the same short time frame.” These points (for which there is no answer) lead me to conclude that the sum paid to Reditum is likely to have been grossly inflated for the purpose of enabling the Werel shares to be acquired at a grossly inflated price with Reditum having no interest in the price paid because it was not its money and its complicity having been bought by the part of the payment it kept, which it would not have received but for its agreement to make the onward payment for the Werel shares. I consider this conclusion is amply supported by the absence of any attempt by or on behalf of Reditum to carry out any due diligence in relation to Werel of any substance or any discussion of any sort concerning the increase in cost over the 11-day period. Whilst I accept that Mr Serwin is clearly liable in respect of this transaction, it is less clear how Mr Ökten could be said to have been since there is no obvious involvement of TAM in any aspect of this transaction.