Fraud trial captivates local Swedish community
Published: 30 Sep 2010 12:41 GMT+02:00
Updated: 30 Sep 2010 12:41 GMT+02:00
Disgruntled savers from a small Swedish community flooded into a Jönköping court on Thursday to follow the case of Habo Finans, an investment firm which folded taking the savings of almost 780 people with it.
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Launched in 1995 by former welder Peter Rosendahl, Habo Finans later ran into difficulties in 2006 before filing for bankruptcy in 2008. Rosendahl now faces charges of serious fraud and serious accounting fraud, while the remaining five board members are accused of serious accounting fraud.
The case has attracted a great deal of interest in the small Swedish community of Habo, which was voted the "best place to live in Sweden" by Fokus magazine in 2010, as many local residents had invested with Rosendahl and Habo Finans in the hope of high returns.
A total of 780 savers are claiming 90 million kronor ($13.4 million) from the bankrupt firm, which is reported to have only 30 million kronor in assets.
Many of the savers had invested their life savings in the firm, which was shown to lack sufficient bank guarantees, or a licence from the Financial Supervisory Authority (Finansinspektionen - FI) to conduct trading in shares.
"I invested because acquaintances had done so and had earned dividends of 25-30 percent," said local Habo resident Bernt Olof Berntsson.
"Unfortunately it was at the cost of the later savers that they made money."
Shortly after the firm ran into difficulties, Peter Rosendahl turned himself in to Gothenburg police. Since the bankruptcy, Rosendahl has been in hiding from the former friends, neighbours and clients who had trusted his judgement on the stock market.
Until he was was tracked down recently by TV4's Kalla Fakta investigative news programme.
”The worst is when I go to bed at night, I can't relax. But that is something I will have to live with it for the rest of my life,” Rosendahl told TV4.
"It doesn't help the customers affected, but it is a way to work through it. I go through the client list again and again."
Rosendahl was working as a welder in a local Habo company in the 1990s when he developed a name for himself as something of a successful amateur share trader and decided in the mid-1990s to start a financial services firm.
”Despite the fact that I was just an ordinary metalworker, the men from the office, and everybody started to talk shares with me. It was a nice time," he said.
Habo Finans was set up with the initial intention to invest in Ericsson stock, Rosendahl said, and within a year the firm had proven popular with local residents.
”When I arrived in the morning, and people stood queuing, when I looked at the diary there were so many customers who wanted to become new investors, it was not so easy to put a stop to it,” he said, reflecting on the firm's rapid growth.
Another local investor Roger Moll told TV4 that for several years everyone in the community was talking about the firm.
"A lot of friends recommended it - it was not quite a sect, but it was very big," he told TV4.
But when some more risky investments turned sour, and clients began to withdraw their savings, the firm used new client funds to fill the hole in the accounts, ultimately forcing the firm's closure.
Bernt Olof Berntsson heads a group of investors who, aside from their demands on the bankrupted firm, are claiming damages from Habo Finans's accountants, who they claim had not fulfilled their obligations.
The case is one of the largest of its kind in Swedish history and 18 investors are scheduled to testify in the month-long trial in Jönköping District Court. Interest in the trial is so great that the court has hired a nearby cinema in order to broadcast the proceedings live.
If convicted, Peter Rosendahl is facing a prison sentence of up to 12 years, but told TV4 that he welcomes the trial in order to clear the air.
”It can't be any worse than it is now. To live in secret, to hardly be able to go out during the day..." he said.