An investment scheme that promised healthy returns has left people in Donegal out of pocket and anxious. Now the director of the scheme has vanished, and almost nobody wants to talk about it
IN A MOMENT of frustration and anger Alison Carter wipes clean one of her restaurant’s menu boards and writes a message to display outside her Letterkenny premises. Once home to the daily specials, the blackboard was instead dominated by the following message: “Donegal Ponzi scheme victim!!!” it read. “I lost $65,000 to François De Dietrich which was my family estate nest egg from the USA to start this restaurant.”
The name on the specials board was that of the main director behind an investment scheme called Etic Solutions, into which Carter, and possibly hundreds of people on either side of the Border, have put money.
De Dietrich has since had a European arrest warrant issued for him in the North following an investigation into Etic’s activities by the Financial Services Authority in the UK. In the Republic the Garda is carrying out two separate investigations into the company’s activities. To date, between the authorities in the North and the Republic, €25 million of the French businessman’s assets have been frozen.
Today Carter, the American owner of the Cafe Magnolia restaurant in Letterkenny, Co Donegal, believes she is a victim of a Ponzi scheme, an allegation that De Dietrich has strenuously denied.
Carter was first approached about the investment scheme in early 2009, by somebody who, she claims, worked for de Dietrich. By the end of March of that year she had written a cheque for $100,000 (€74,000), money she had inherited from her grandmother. “It’s kind of frightening how quickly I was taken in by all of this,” she says.
The scheme, which purported to provide short-term, high-profit returns through buying out liquidated companies, seemed genuine, as there were reports of people having made tidy profits. Carter, who claims to have met De Dietrich in relation to her investment, says she believed it was a safe bet because he had a number of businesses around Co Donegal and was, as such, respected in the area. “He was very charismatic,” she adds.
After her original investment Carter approached De Dietrich as she wished to take money out of the scheme to move her business to new premises in Letterkenny. She claims that De Dietrich reacted angrily but let her remove €27,000, which she subsequently put into her business. Since then she has seen no return on her investment. She became increasingly worried when, late last year, reports began to circulate that Etic was being investigated by the both the PSNI and the Garda fraud squad in relation to matters potentially affecting hundreds of investors on both sides of the Border.
But despite the number of people involved and the fact that Carter has drawn attention to her misgivings about the scheme, she has not been approached by any other investors. “It seems I’m a lone duck,” she says.
Although Carter is far from being the only Co Donegal-based investor in the Etic scheme, finding people who will admit to putting their money in it is not easy. Although everyone seems to know someone who has invested money, no one else who is purported to have done so will admit to it – at least not on the record.
Part of the reason behind the silence is that, in hiring two high-profile former footballers as agents for Etic, the investment scheme tapped into the tight-knit Donegal GAA community. Acting for De Dietrich were members of the 1992 All-Ireland-winning team on the only occasion that Donegal have captured the elusive Sam Maguire: captain Anthony Molloy and the highest-scoring player in that season’s Ulster championship, Tommy Ryan.
As a result many people involved with the Donegal GAA put money into the investment scheme “out of trust” in the two men, as one investor and GAA stalwart puts it. “A lot of people involved in the GAA would have put money in . . . The fact that the two boys were involved, it was purely on a who-you-know basis,” the investor says. He insists, though, having known both Molloy and Ryan for decades, that neither would have deliberately sold on a product they did not believe to be “100 per cent”.
The Irish Timessought comments from both Tommy Ryan and Anthony Molloy, but Ryan did not reply and Molloy declined to make a public statement at this time.
One source who watched the scheme closely for more than a year noted that word of the investment, which cited high returns of between 15 per cent and 40 per cent in a short time, spread quickly.
“It looked kosher,” the source says, adding that the scheme appeared to work well for about two years and that many people saw returns on their initial investments. Those who had seen other investors receive returns joined the scheme, while those who had already put in money often let their investment roll over. “Like any good thing it wasn’t hard to sell.”
In Co Donegal, despite the fact that only a small number of investors have complained to the Garda, the frustration among investors is growing. De Dietrich is thought to be neither in the Republic nor in the North, and other businesses with which he was involved in Co Donegal have subsequently closed. Investors’ fears have not been allayed by the fact that a Belfast judge last month ordered the imprisonment of the Frenchman for 18 months for failing to comply with a series of court orders to reveal details of his worldwide assets. This judgment resulted in the issuing of the European arrest warrant.
De Dietrich, however, says he has done nothing wrong. “I strenuously deny all of these allegations,” he said in a statement released through his solicitors, Madden Finucane, on January 21st. His solicitor, who appeared on his behalf in court in Northern Ireland last month, said he would be appealing the Belfast court’s ruling.
Earlier this week, following the actions of two Co Donegal businessmen who invested in the Etic scheme, the High Court in the Republic extended an order restraining the company from reducing an Irish bank account below €1.7 million. It is anticipated that other investors may yet apply for similar orders to freeze de Dietrich’s assets.
As one source close to the investment scheme puts it, the current impasse has left “all in the dark”. In the meantime fears continue to grow in Co Donegal about the legitimacy of the investment scheme, which has affected not just investors but also the Etic agents who are understood to have brought friends, family and GAA contacts into the scheme. “People just can’t understand why he’s not coming forward to speak to the regulatory bodies, so people can go about getting their money back,” the source says.
Many investors are still hopeful that they will get their money back, but the timing could not be worse in what are already hard times. “A lot of people would have put their last pennies into this,” says the source.
Back in Letterkenny Alison Carter says she is now living day to day, as she does not know if she will ever see her money and says she is struggling to make ends meet. “I am working 55 to 60 hours a week now as a chef, and I’m just barely making it,” she says.
Although she says she has heard of some investors who put untaxed money into the scheme, she says many more are innocent victims. “Normal middle-class, working-class people were brought into this and lost their shirt.”
Profits or Ponzi? De Dietrich's scheme
The investment scheme, run through a company called Etic Solutions, which had offices on either side of the Border, promised investors high returns, ranging between 15 and 40 per cent in some cases, on liquidated companies. Investors understood that François de Dietrich was using the money to buy liquidated companies at rock-bottom prices, then either selling them on or breaking them up into assets to be sold on for a big profit.
The fear among investors in Co Donegal is that they may have put their money into a Ponzi, or pyramid, scheme, a fraudulent investment venture whereby investors, for a while, receive unusually high or consistent “profits” that mainly only come out of money put in by subsequent investors. The hierarchical payment structure eventually collapses, leaving many participants out of pocket.
De Dietrich says his business interests are all legitimate. In a statement released through his solicitors, Madden Finucane, on January 21st, de Dietrich said: “I strenuously deny all of these allegations. My businesses are legitimate and as a consequence of the actions of the FSA various business bank accounts have been frozen. This has resulted in the forced closure of my businesses. The FSA action has left me unable to trade, which led to the loss of many jobs. Despite the FSA action we are committed to working with our customers regarding full return of outstanding monies.”
