The Italian businessman responsible for investing millions of Vatican funds owned a stake in an online options trading company fined in 2016 by the Securities and Exchange Commission for misleading investors.
Raffaele Mincione, through whom the Vatican’s Secretariat of State has invested hundreds of millions of dollars in donations from the faithful, bought in 2015 a 5% stake in EZTD Ltd, an Israeli-based company known as EZTrader.
Through a privately arranged sale, instead of on the open market, Mincione paid only $.25 per share for his stake in the company, while the publicly listed share price was $5.10. For only $1.6 million, he acquired a stake in EZTD valued on the market at $32 million.
That investment lost 90% of its value after a 2016 SEC finding that the company had misled investors and violated both the Securities Act and the Securities and Exchanges Act. EZTD’s share price dropped to $0.001 after the SEC announced its findings and fined the company.
EZTD offered American investors a binary options platform, inviting customers to make an all-or-nothing bet on whether a stock would increase in value. The company did not explain the risks of its products, or register in the United States as a broker-dealer, the SEC found.
Fewer than three percent of the company’s 4,000 account holders made a profit investing through the company, according to the SEC.
“Not only did the firm fail to register the binary options or register as a broker-dealer to legally sell the investment to U.S. investors in the first place, but it failed to disclose on its trading platforms that there was significantly greater potential for investors to lose rather than earn money,” the SEC said in 2015
Because his stake in EZTD qualified him as a “beneficial owner,” Mincione was listed in the company’s 2015 SEC filing.
Mincione’s involvement in multiple Vatican investments has featured in a series of media reports in recent months.
In 2014 Mincione was managing $200 million for the Holy See’s Secretariat of State through his company Athena Capital, with 55% allocated to “speculative investments,” according to Corriere della Serra.
Among these, the Financial Times reported Oct. 17 that Mincione used Vatican funds to purchase unrated bonds in another of his holding companies, Time and Life SA, which financed his personal investments, while at the same time charging the Vatican millions of euros in performance and management fees.
That report raises the possibility that Vatican funds were used to finance Mincione’s stake in EZTD.
Also in 2014, Mincione’s Athena Capital was used to channel Vatican investment into a 45% share in another Mincione project - the luxury real estate development at 60 Sloane Avenue in London - at a price of 180 million euros, more than Mincione paid for his original investment in the whole building. CNA has reported that the Vatican’s funds for the purchase came from loans from two Swiss banks, and were concealed on Vatican balance sheets in breach of Vatican financial regulations.
While paying Mincione’s company, Athena, to manage the transaction, the Secretariat of State, under the authority of then sostituto Cardinal Angelo Becciu, decided to purchase the remaining 55% stake in the development from Mincione in 2016, allowing him to clear hundreds of millions of euros in profit on the sale of the second set of shares in the project.
Although it sold the Secretariat of State 30,000 of 31,000 shares in the project, Minicone’s holding company retained the 1,000 voting shares needed to control the holding company which owned the building. It offered to part with those at greatly inflated prices. That sale was eventually arranged through – according to Italian media – another businessman, Gianluigi Torzi.
Mincione’s estimated profit from managing the deal, excluding profit from selling the building itself, is 60 million euros, with Torzi making a further 10 million from his participation.
In early 2019, Becciu’s replacement as sostituto, Archbishop Edgar Peña Parra, became aware of the details of the deal and sought advice from Rene Brülhart, then the head of the Vatican’s Financial Information Authority.
Vatican Gendarmes executed a raid at the Secretariat of State and AIF offices on Oct. 1 as part of an investigation related to the investment. Five people were suspended as a result, including two Secretariat employees listed as directors of the Vatican’s UK holding company now managing the building investment, London 60 SA Ltd.
A director of London 60 SA Ltd charged with leading the development project is Luciano Capaldo, a UK resident and UK-Itallian citizen. Capaldo was originally registered with Companies House in London as a Vatican citizen, raising still-unanswered questions about why the Secretariat of State might have conferred Vatican citizenship on a layman living in London.
Capldo himself has several business links to Torzi. FEG International Assets, a Luxembourg based company formerly run by Torzi, is a major investor in Capaldo’s Italian architecture and development company, Imvest, which was raided by Italian financial authorities in May 2018 on charges of preparation and submission of false budgets.
FEG and Torzi were named recently in a commercial fraud suit in London’s High Court. Also named as respondents in the suit was Odikon Services PLC, of which Torzi and Capaldo were also directors. Odikon, currently suspended by the UK’s Financial Conduct Authority, is a major shareholder in Meti Capital, which is itself the major shareholder in Imvest.
During a recent in press conference, Pope Francis was asked about the London investment. While confirming that he had personally authorized the October raids, he emphasized that proof of corrupt or illegal activity was “not yet clear,” before concluding that “it passed what passed: a scandal,”
“They have done things that do not seem clean,” the pope said. Last week, the Holy See press office confirmed that several investments and funds used by the Secretariat of State were under investigation.
“Lines of enquiry which may help clarify the position of the Holy See with respect to the aforementioned funds and any others, are currently being examined by the Vatican judiciary, in collaboration with the competent authorities,” a statement said.