Dairy cow investors lose €800,000 to fraudsters
Investing in dairy cows to help farmers build up their herds – one of the star alternative investments in France – has become a crooks’ paradise with more than €800,000 lost to fraudsters.
It begun in the 70s
The schemes, pioneered in the 1970s, and reaching public attention in the early 2000s, fitted into the French rural ideal. They worked on the principle that investors pay into a company that buys young heifers and loans them out to farmers. They receive in return both a share in profits from the milk the cow produces during the year and any future calves she might have.
Returns would vary, according to the price of milk, the quality of the beast and whether the calves were male or female. For a while, they seemed to offer a way of earning a couple of percentage points over rates offered by Livret A savings, plus the warm glow of knowing you were supporting farmers. Crooks, who use the internet for various fraudulent schemes offering wonderful returns for investing in diamonds, forests or even barrels of old whisky, began to pile into cow investment schemes in spring 2019.
Alerts have decreased
It peaked in late winter, according to regulator Autorité des Marchés Financiers (AMF). An AMF spokeswoman said: “Now, luckily, the numbers of people sending alerts to us has dropped significantly.” Investors who used the regulator’s AMF Epargne Info Service web platform detail how they were defrauded. They signalled a loss of €755,000 in 2019, representing 160 cases, most of them in May and June. This year, another five cases were flagged up, with losses of at least €61,000.
“The figures are only an indication because many people who are defrauded in this sort of case do not contact the authorities,” she said. The amount stolen is small compared to other fraudulent schemes – an estimated €30million has been lost to frauds involving cryptocurrencies such as Bitcoin.
False sites identified
AMF blacklisted the web addresses (URLs) of 70 sites offering false cow investments on its list of fraudulent sites, which contains around 1,000 references in all. Of those, a dozen were added this year. Sites are blacklisted when the “firms”, which use false addresses, do not respond to AMF requests for information.
The problem was so bad that genuine cow investment companies, which have been offering returns of 1.5% and 3% in the present low interest rate environment, had to move offline to avoid being copied by the crooks, who would often promise returns of 8%.
Some legitimate schemes are flourishing, and have investment waiting lists of up to two years. Elevage et Patrimoine, has been running since 1993 and has its origins in the 1970s. Its operational company, Gestel, has loaned 30,000 cows bought with investors’ money to 900 farmers. Managing director Sebastien Dumais said: “Even with no advertising or website, we have too many people wanting to put money in. Our herd number is stable so investors have to wait for people to leave before they can join.”
AMF also has a whitelist of investment companies which have registered with it, but no cow schemes are on it. In the biens divers section, there are six companies – five offering investments in wine and one in forests.
Because fraudulent cow companies are not regulated by the AMF, it has no power to impose fines or bans on operations, so complaints must be dealt with by a criminal inquiry. Most find the web addresses are untraceable. Banks in the EU which receive the money quickly receive instructions to move it on to tax havens or other countries which are not co-operative. The spokeswoman said: “What we can do in our role of a protector of people’s savings is to warn people about these fraudulent sites operating without authorisation.”