A wrong decision in 2008 spiralled out of control and led to Maltese Cross Financial Services Ltd facing a shortfall of €6.2 million, a company director told the police.
Police Inspector Ian Abdilla said former director Jean Claude Bugeja told him that the past few years had been like a prison sentence to him.
Mr Bugeja said he was so consumed by the mess he was in that he was unable to sleep or enjoy spending time with his family, who were oblivious to his worries.
Mr Abdilla was testifying, before Magistrate Antonio Micallef Trigona, in the compilation of evidence against Mr Bugeja, 42, from Għaxaq, who is pleading not guilty to misappropriation and defrauding two of his former colleagues and directors, Robert Cutajar and Stephen Spiteri, and about 220 clients out of some €4 million.
Ex-director was so consumed by the mess he was in that he was unable to sleep
Mr Bugeja told the police that, in 2004, he had been recruited as a financial adviser with Island Financial Services Ltd.
He eventually bought a 32 per cent stake and was made managing director.
In March 2008, Mr Bugeja sought to invest in a BNP Paribas fund that required a minimum investment of €1 million. The company only raised €700,000 from clients and Mr Bugeja decided to make unauthorised use of €300,000 belonging to other clients. The venture went well, resulting in a profit of €8,730, so he decided to invest in another BNP Paribas fund issued in May 2008.
This time, clients only raised €300,000 and Mr Bugeja again decided to cover the €700,000 shortfall through unauthorised transactions. However, this time things did not work out and Mr Bugeja lost €224,250, marking the beginning of his downfall.
In a desperate attempt to make up the lost money, he carried out more unauthorised investments.
This happened as a global financial crisis was emerging and the losses were close to €1 million by the end of 2008.
In 2011, he bought out the company, Mr Bugeja telling the police he felt he had no choice if he wanted to avoid revealing what was going on, in the hope he could rectify things.
He acquired an 85 per cent stake in the company – now named Maltese Cross Financial Services Ltd – and the rest was divided equally among his wife, Mr Cutajar and Mr Spiteri.
As losses continued to grow last August, Mr Bugeja decided to inform the other directors that although the company was supposed to be holding €6.7 million in clients’ fund, there was a shortfall of €6.2 million. The two directors informed the Malta Financial Services Authority and the police.
Mr Bugeja insisted to the police, Mr Abdilla said, he did not misappropriate funds for his personal gain. His ultimate aim was to turn the company’s fortunes around.
He even used the funds that he, his wife and his parents had personally invested through the company.
Mr Bugeja said that none of the directors involved in the company were aware of what was going on, nor was his family.