We are a US investment company that owns a collaterialized mortgage obligation (CMO). We were contacted in October by a Mr. Lon Chen and a Mr. Vincent DMetayer concerning our CMO and an investment opportunity to make the CMO work for our organization, which provides funding to humanitarian projects across the United States. We were told that if we placed our CMO in a blocked account with a major, top 25 bank, this bank would monetize our CMO and a trading platform that Mr. Chen and Mr. DMetayer represented would utilize a line of credit for investments in which our company would share in the profits. We were told that we would partner with William Kent Limited and CT Matrix (UK) Ltd, through a Mr. San Jik Han, in a Consortium Agreement to work on this trading platform. We were further told that the trading platform operated under the name of PW Bush, Inc. Through its financial director, Mr. Ken Tanaka.
Our agreement provided that our company would receive a $9 million advance from the Consortium upon transfer of the instrument from our account to either Deutche Bank or HSBC Bank in Europe. We signed the Consortium Agreement after which time Lon Chen, Debra Daniels, and Vincent DMetayer each told us that we would receive the advance payment within 3-5 days from the delivery of our CMO to the custodial bank. Subsequently, we were told that CT Matrix had set up a sub-account at HSBC Bank-Singapore in the name of our company and instructed us to transfer our CMO to this account. Once we received the advance payment, our company was to receive weekly payments on the profit of the trading program each week thereafter for 40 weeks and the return of our CMO within one year.
Mr. Chen and Mr. DMetayer repeatedly told us after numerous questions on the topic of control of our CMO due to our concern about the possible hijacking of the CMO, that our CMO would reside at all times reside in the custodial bank, HSBC-Singapore, within the D&S subaccount, unless our representative, authorized the CMO to be moved. We have never authorized the transfer or our CMO out of HSBC-Singapore. According to Mr. Chen, Mr. DMetayer, and Ms. Daniels, a European Bankthe hypothecating bank would hypothecate the CMO, but that this bank would only look at the locked account at the custodial bank, and was never to take possession of the CMO in the name of our name, CT Matrix, PW Bush, or anyone else.
Ms. Daniels was instrumental in the transfer of our CMO. She first provided DTC wiring instructions to UBS Bank in Singapore. That bank rejected our transfer and Ms. Daniels stated that it was because they had exhausted their credit line at that bank. She then instructed us to DTC the CMO to HSBC Bank-Singapore. We had to transfer the instrument three times before receiving confirmation that HSBC accepted our instrument into the blocked account. The final transfer was on November 20. Mr. Chen confirmed receipt of the CMO at HSBC Bank-Singapore on November 21 and confirmed the details of our payment agreement. On December 4, we received a Funds/Assets Management and Signatory Agreement from PW Bush outlining Mr. Tanakas responsibilities with our CMO and for payment from the trading platform. Although we were told that we would have our first payment 3-5 days from transfer of the CMO, we were now told that we would have our payment within 3-5 days of returning the Funds Agreement, with weekly payments thereafter. When D&S was not paid as agreed, Mr. Chen stated on December 24, that the trading platform would issue the payment directive detail document to their designated bank within this week or Friday due to tomorrow as the Christmas holiday. He further stated that all details about disbursement in this transaction would be self explanatory. We also requested the monthly coupon payments coming into our subaccount as these payments were not part of the agreement. Mr. Chen stated that due to little amount of coupon about some thousand US dollars, we will check the figure after Christmas, but we will also include it in the disbursement details. Mr. Chen apologized for the unforeseen delays on the Payment Directive Letter and the actual payments. He further stated that Friday is the date we have been given for our Investors including our company to receive the Payment Directive and that our payment would follow in 5 days after receipt of this Letter.
On December 23, Ms. Daniels communicated to us that our company would receive disbursement within 5 days. She reported that the Central Bank of Europe was requiring all banks to provide their annual Hypothecation Report before Christmas so no one's money will go out before Christmas, and that not even Mr. Chen or herself would receive any money before our company. She further stated that Mr. Tanaka and his Compliance Manager went to Switzerland to work through the issues, but that our company would receive its Disbursement letter within a day and could count 5 days after receipt of that letter for funds being in their account.
On December 27, Mr. Chen provided the Payment Directive Letter. This letter and the disbursement schedule attached did not provide for the advance payment and cut the payments from the platform due to our company under our agreements by 50%. We were told that this was due to the current economic crisis and the banks valuation of CMOs. Mr. Chen further stated that our CMO had been hypothecated, which was the originating event for payment under the agreements, and that our disbursements would begin under the Disbursement Schedule in early January.
In early January Mr. Chen informed us that he believed that the 4th quarter 2008 CMO pool transactions will receive one payout in January. However, it is unlikely to be Friday, January 16, because of the Chinese New Year and that we should expect our first payment on January 30. At this point, we were very concerned about the transaction. Mr. DMetayer informed us at this time that we were secure because our company had a consortium agreement with CT Matrix signed by Mr. Sang Jik Han, we had received the Fund Agreement, PW Bush and the Fund Manager added an additional 9% from their own assets to assist the platform, we were issued a Payment Directive and Disbursement Table Mr. Sang Jik Han signed, and that our first payment would arrive onJanuary30.
On January 15, Mr. Chen issued us a new disbursement schedule stating that our return on investment was cut again due to hypothecating banks loan for line of credit. We were told that if we signed the new schedule, we would be paid the following week. On January 31, Park Dong Kyu, a Director of William Kent Ltd. And CT Matrix (UK) Ltd.informed us that our initial disbursement would arrive on February 3. Mr. Chen communicated with us in early February and stated that our initial disbursement would go out on February 13. He further stated that our final disbursement, due the first week the 1st week of November would not change. Mr. Chen advised that Mr. Tanaka might adjust the 1st of 4 February payments to compensate among 3rd and 4th disbursement so that 2nd disbursement will be on target — February 13th. Mr. Chen stated that the probability of us receiving the first disbursement on February 7 was about five percent, but that there was a 90% probability that we would receive our first disbursement on February 13.
By the middle part of February we were informed in our communications about the percentage of the transaction that the hypothecating bank had completed each week. It was at this time that we learned that these entities allegedly were working with ABN AMRO for the hypothecation and line of credit. Mr. Chen informed us that ABN AMRO coordinated board of bankers in Hong Kong had unofficially and internally informed them that the final RBS-London board had no issue with our transactions because of all of the enhanced assets that CT Matrix brought to the bank to aid the transaction. Mr. Chen told us that the bank will notify the fund manager with the official approval in the next RBS board meeting, and after issuance of this official notification, the hypothecation banker will let the disbursement banker proceed in the final disbursement step that month.
On March 11, Mr. Chen informed us that we will be paid no later than the end of March. Later in March Mr. Chen communicated to us that the board of ABN AMRO or RBS headquarters London had officially sent notice regarding the approval of hypothecation transaction. The hypothecation bank operation department stated that March 27 completed the blocking of all assets in the CMO pool, and that hypothecation will be completed by the following week. After that, Mr. Chen assured us that the disbursement banker can specially and expeditiously disburse on every Friday for the remainder of our 40-week platform.
No payments were received by the end of March. After that time, we were told on multiple occasions that although the platform was trading, the bank was not making disbursements. This was in direct violation of the Funding Agreement. Then on May 23, Mr. DMetayer informs us there is yet another disbursement table that cuts our payments in half again, but that if we sign it and immediately return it, we will have our first payment the next day. From that day until November 6, Mr. Chen and Mr. DMetayer told us that the line of credit was extended to the trading platform and the trading platform was generating profits, but that the disbursement bank was not paying the funds to our company. At various times during the promised disbursements, both Mr. Chen and Mr. DMetayer personally guaranteed us that we would receive all of the monies due to our company. We were repeatedly assured, however, that the disbursement banker would distribute all of our funds no later than the end of our 40-week platform, or November 6. Mr. DMetayer even gave his personal guaranty that we would receive all of our funds by that date.
The Funding Agreement expired December 4.By that date, D&S was to have received all of the funds due it from the trading platform, and D&S CMO was to be back in its account at Penson Financial. CT Matrix, PWBush, William Kent Ltd., Mr. Chen, Mr. DMetayer, Ms. Daniels, Mr. Tanaka, Mr. Han, and Mr. Kyu failed to honor the terms and conditions of the Funding Agreement. They will not tell us where D&Ss CMO currently resides or when the disbursement bank will release our funds.
The CMO was to be returned free and clear of any liens. On December 8, D&S was presented with another agreement requiring it to leave the CMO in the hypothecating bank for another year. When D&S refused to sign this new agreement, it was told by Mr. Chen and Mr. DMetayer that D&S had no choice to sign the new agreement because they, through the trading platform, had already liened the CMO for another year. D&S signed no documents authorizing this additional hypothecation. Mr. Chen proceeded to read verbage from an alleged agreement, but it is an agreement that D&S never signed. It appears that CT Matrix, PWBush, William Kent Ltd., Mr. Chen, Mr. DMetayer, Ms. Daniels, Mr. Tanaka, Mr. Han, and Mr. Kyu have been forging documents in D&S name to allegedly keep the CMO tied up in some banking process and without any compensation to its rightful owner. When D&S refused to sign the new agreement, Mr. Chen proceeded to make strong-arm threats to D&S if it took any actions to recover its CMO or lodged complaints against all of the actors involved in this fraud.
This is surely a scam. We have pretty good information that our CMO no longer is lodged in our subaccount at HSBC-Singapore, as the agreement required. Mr. Chen, Mr. DMetayer, Ms. Daniels, Mr. Tanaka, Mr. Han, and Mr. Kyu refuse to return the CMO to our United States brokerage account. This fraud has been going on for over a year with so many written and oral communications that one would think the agreements must be genuine. At the end of the day, however, they are not. We are now utilizing all powers, both nationally and internationally, to find and retrieve our CMO. Be careful if contacted by any of these people.
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