We are currently defending ourselves and 78 private investors against a massive fraud case. A Swiss trading company for electrical supplies has sold allegedly open accounts receivable invoices worth approximately 2.4 million Swiss Francs to investors via our online marketplace. According to the current state of knowledge, these were largely falsified, as were the bank statements and numerous emails on behalf of renowned debtors about allegedly provided services and goods. “Transparency is one of our core values. That’s why we decided to go public immediately and proactively,” says our CEO and founder Phil Lojacono. As a consequence, we will soon only allow institutional investors on the platform. We aim to decrease the individual investor’s risk with this shift in strategy.
Referring company possibly involved in fraud case
“The fraudster acted with a lot of criminal energy and high level of criminal perfection – from building the client relationship to the meticulousness with which he faked the documents,” Lojacono says. “Once we realized something was wrong, we immediately collected evidence and handed it over to the prosecution.” At the same time, we informed FINMA and all affected investors. “We regret that we could not protect our investors involved from this crime, although we have always complied with our duty of care and acted with due diligence in brokering the transactions. We will undertake everything in our power to ensure that the injured parties get their rights.”
The accused SME got in contact with Advanon by recommendation of another financial services provider. The company had confirmed in writing that there had never been any payment delays or other difficulties with this customer. Whether and to what extent the company is also involved in the fraud case cannot yet be determined. “There are indications that make us think in this direction,” confirms Lojacono. “If the suspicion is confirmed, we will of course also take legal action here. We are currently gathering further evidence.”
Strategy change as a consequence: focus on institutional investors
“We founded Advanon with the mission to help SMEs meet the ever-increasing payment deadlines and thus have a positive impact on the SME economy and its growth. It is frustrating and intolerable that this was being exploited by fraudsters with great criminal energy. We are mobilising all our efforts to fight for our investors and to recover the money they have invested.” Several lawyers and the entire management are working on the case. “We will adjust our strategic direction,” says Lojacono. As a consequence, only institutional investors will soon be admitted to the platform. Advanon has always emphasized that investing in a high-risk asset class like factoring should only be considered as part of a diversified portfolio.
The accused trading company had used Silent Factoring for its fraudulent activities. With this factoring variant, debtors are not informed about the invoice sale. “This naturally carries higher risks than with Open Factoring and is reflected in a more attractive return for investors. We have noticed that not all investors are aware of this. This is why in the future, we will only offer a diversified portfolio in which the risks are more widely spread across several invoices instead of all risk on single ones,” explains Lojacono. “Being a young and upcoming company, this is a serious setback for us. However, we are confident that our agility, rapid learning curve and our good customer relationships, will make us emerge stronger from this experience.