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'Rife With Fraud': Developer Sounds Crowdfunding Alarm

By NATARIO McKENZIE

Tribune Business Reporter

nmckenzie@tribunemedia.net

A prominent real estate financier yesterday warned against crowdfunding as a means to finance Bahamian entrepreneurs because it could be "rife with fraud".

David Kosoy, Sterling Global Financial's chairman, while addressing capital raising challenges and opportunities at a Securities Commission public companies forum, said he was opposed to this financing mechanism being widely used in The Bahamas.

"I'm against crowdfunding here. I think it would be rife with fraud," he argued. "Where are the source of funds coming from? There is so much that you would have to do with the AML/KYC. (anti-money laundering/Know Your Customer due diligence). I think crowdfunding could be an issue in this small market."

Crowdfunding is a popular financing method through which funds are solicited for a project or venture from a large group of individuals. The Securities Commission of The Bahamas, which regulates and governs the capital markets, has developed legislation to allow for crowdfunding.

Exploring alternatives, Mr Kosoy added: "I think what we have to contemplate is that there are entrepreneurs who may not be experienced enough to put together a game plan and a budget, but have great ideas and are willing to work.

"I think what this country needs is something like shark tank. I think what it needs is a corporate group of people that aren't restricted by the Central Bank. There are a lot of people here that can only lend or invest with US dollars, with US persons, or non-Bahamians. That restricts a lot of capital right there.

"There is a lot of money here sitting in different places where a lot of people would love to help. I think there should be a corporate group of people, it could be ten different corporations putting up a certain amount of money, and maybe once a month have people be vetted to come in and pitch their ideas."

James Gomez, managing partner of the Baker Tilly Gomez accounting firm, said the Bahamas Entrepreneurial Venture Fund provides funding to local entrepreneurs, pointing to Bahamas Striping and Sunryse Shredding Services as two companies that have benefited from the fund.

Mr Gomez added that not having proper financial information has adversely impacted many persons in their efforts to secure funding for their businesses.

Comments

Well_mudda_take_sic 3 days, 8 hours ago

Dis foreigner obviously know nuttin' bout how asu does work. LMAO

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ThisIsOurs 1 day, 4 hours ago

The guy Trump nominated for AG was investigated for a fraud that took millions from budding entrepreneurs. When lots of people looking for something and willing to lay out money there are guaranteed to be some piranhas around

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