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Envestio News
Envestio News
My correspondence with Envestio regarding recent changes

Update 31/1/20

It’s been clear for a few days now that Envestio is a full-fledged scam.

Very sad time for Baltic crowdfunding.

Update 22/1/20

Yesterday morning Envestio declared that it was under a hacker attack. Shortly after this declaration their website went down, and hasn’t been restored since. Eugene Kukin has either deleted or hid his social media profiles. Other team members are not responding to messages.

The common belief in the community is that this is Envestio’s “exit scam” – a guise to cover their decision to abandon a sinking ship. Personally my last shreds of hope were evaporating throughout yesterday, as no further communication was made to clarify the situation.

If I felt that Envestio was always meant as a scam (as is most likely the case with Kuetzal), I would not have been surprised. But I still believe that Envestio started out as a legitimate business, lending money to tens of legitimate borrowers (some of them were contacted yesterday and confirmed it). I simply cannot wrap my head around the fact that a legit business appears to be winding down operations in such a bizarre and careless way.

Update 16/1/20

I cannot recommend Envestio until the current liquidity crisis calms down, and until newly-arising suspicions are cleared out. I do not have the details of these suspicions, only rumours, and hope that they will be disproven.

Update 13/1/20

This post now reflects an ongoing correspondence. Every message addresses additional topics, rendering my previous remarks less relevant. Therefore I have edited out my remarks and wrote new ones at the end.

Table of contents

  1. Ido to Envestio – 23/12/19
  2. Envestio to Ido – 30/12/19
  3. Ido to Envestio – 31/12/19
  4. Envestio to Ido – 9/1/20
  5. Ido to Envestio – 13/1/20
  6. Envestio to Ido – 13/1/20
  7. My most recent comments – 13/1/20

Ido to Envestio – 23/12/19

Dear Envestio

I have been a faithful and enthusiastic investor on your platform for the past 15 months. I have blogged about Envestio and referred some new investors. Whenever there was doubt about anything related to your operations, I have always encouraged other investors to wait for your official response, which always proved to be detailed, professional and honest – on par with Envestio’s official values.

But recent developments have left me concerned, like many of your other users. You may not be aware of the severity of the concerns, as you are only observing a few buyback requests at the moment. But judging by social media activity and personal messages that I receive from other investors on a daily basis, I can tell you that panic is starting to build up. If it develops into a massive sell-of, it can prove deadly for Envestio.

For my peace of mind, and hopefully that of other investors, I would like to ask you for an in-depth clarification of the following topics:

1. Who were Envestio’s previous shareholders, and why have they decided to sell this profitable and praised business? Even if Envestio needed a strategic investor to expand, a buyout seems unnecessary: Usually a strategic investor only receives part of the shares.

2. The replacement of a well-performing and respected COO is also alarming. Surely Mr Ritsmann could be introduced as a Chief Marketing/Development Officer while keeping the current COO in place. Even if a change of roles was necessary, the move of Mr Kukin to an advisory role hints at a temporary transition period leading to his eventual departure from the team. This would be seen by investors as another bad sign.

3. Some online resources claim that some of the business operations where Mr Ritsmann has been involved are fraudulent. When asked about these allegations, Mr Ritsmann’s response was far from satisfactory. The allegations clearly came from well-informed and well-established sources, and belittling them as “online spam” did not serve to reassure worried investors.

The following points need to be addressed:

A) What was Mr Ritsmann’s role in those operations: shareholder, board member, management, consultation, employment? Why is this work experience absent from his LinkedIn résumé? In fact, his previous place of employment is listed as “PMD Baltic OÜ”, which looks like a largely inactive single-person company.

B) Is Mr Ritsmann still affiliated in any way with Rosch, the kinetic power plant, or Roy Club? What about Mr Ganzin?

C) Has there ever been, or will there ever be, any affiliation whatsoever between Envestio or the projects listed on the platform, to Mr Ritmanss’s or Mr Ganzin’s other businesses and operations?

D) Is Envestio, as a small company, prepared for a scenario where its COO, CEO or shareholders become unable to perform their roles in light of legal issues?

Please note: Mr Kukin and Ms Meldere were tagged in a Facebook post regarding these issues and failed to respond. As far as I’m aware, ever since the change of management, there has been no word to the community from any of the previous staff, only Mr Ritsmann. We would also like to hear from the old managerial staff please.

Your competitor platform Kuetzal is currently undergoing a large-scale crisis involving potentially fraudulent projects, a change of management, mysterious owners with a history of financial crime etc. There is very high likelihood that we are witnessing the first collapse of a Baltic crowdfunding platform right now. While the timing is coincidental, some investors are already drawing similarities between the severe issues on Kuetzal and some of the recent changes to Envestio.

If you are unable to convince investors that everything about Envestio, its management and its ownership is 100% legitimate and transparent –  the panic from Kuetzal will inevitably spread to Envestio, whether justified or not. This is a crucial time that requires heavy media presence, detailed and honest responses, and an increase in transparency.

With your permission, I will share your response with other investors.

Thank you.
Ido Shkedi

2. Envestio to Ido – 30/12/19

from: Eduard Ritsmann
cc: Alesia Nikalaichyk

Hi Ido,

It is nice to hear from you. On behalf of Envestio I would like to wish you the very best in upcoming 2020 and hope that our mutually beneficial cooperation will continue without any changes.

We do not face any massive buybacks or cash withdrawals at the moment, and all new projects collect the necessary financing fast enough. Although, I can not argue with the fact that certain crisis of trust is observed in the industry. It was triggered by serious concerns regarding recent changes in management of Kuetzal (separate investors even mix up Envestio and Kuetzal), several ambiguous projects, published by them as well as serious banking issues, faced by the platform. None of the aforementioned is observed in Envestio case, as:

1. Existing Envestio team stays with the company, it will only be strengthened by several back-office employees in order to ensure nice and smooth technical side of the operations as well as client support services.

2. Previous COO also stays with the company for at least one year as General Advisor.

3. Envestio cooperates with well-known in the region, trusted, and stable Baltic International Bank; our investors do not face any problems with money in/out operations.

4. In the beginning of 2020 the KYC procedure is going to become automatic, which will save a lot of time for everybody. Further interface and technical improvements are planned for the rest of 2020.

5. Recent investment projects are presented by serious and well-known European companies.

Now regarding the questions asked by you:

A) The previous shareholders were private persons, who launched the first version of the platform in the very end of 2017. Every start-up has a point at which it is sold partly or in full to other investors in order to continue the sustainable development of the business.

Since mid-2018 several purchase offers were received, however, due to several reasons (including the confirmed ability to continue the business without noticeable changes or keeping the whole team aboard) those were refused.

The present share purchase agreement (SPA) includes the paragraph that the new owner does not change the main conditions for both investment project owners and investors, does not initiate serious changes in Terms of Use, etc.

B) First of all, former COO stays with the company at least for one year as General Advisor according to the SPA. He will provide necessary support to the new COO, who is experienced and proficient enough to continue the process of sustainable development of the platform. In his turn, the new owner is capable of bringing a number of new investment project owners from his business network to the platform.

My previous full-time job was 5 years at PMD Baltic OÜ, which was an active company during this time period. Then I organized private technical consultations as a private person.

My role at Rosch or Roy Club is simply a personal interest, a hobby in the latest technology and service, as to change the world and save the planet. I am not a shareholder / member of the management team or sales manager at Rosch or Roy Club. That’s why it’s not worth mentioning this experience on LinkedIn, where only full official contract work hours are listed.

Also nor me, nor Mr. Ganzin are anyhow affiliated with Rosch or Roy Club.

C) No, such projects have never been/will not be published by Envestio. Such scenario is unlikely to take place.

D) As it is mentioned above, Mr. E.Kukin and Ms. L.Meldere stay with the company and do take part in preparing the publishings on behalf of Envestio. However, in order to become more familiar with the crowd, I am granted a mandate to answer the questions and spread other information regarding the changes in management and further plans of Envestio himself.

Hope this letter will provide sufficient clarity regarding the questions that were asked. However, please do not hesitate to ask further questions in case there are any.

Best regards, sincerely
Eduard Ritsmann

3. Ido to Envestio – 31/12/19

Thank you, I appreciate the detailed response.
Some of the information you provided is valuable, but some details are still vague or not entirely accurate.

1. “My previous full-time job was 5 years at PMD Baltic OÜ, which was an active company during this time period.”

You are the sole proprietor of said company. According to tax reports, the company had no sales activity for the past two years, and very little before then:

2016 – Net sales 939 EUR, Net profit 513 EUR
2017 – Net sales 9940 EUR, Net profit 797 EUR
2018 – No activity
2019 – No activity

So it is hard to imagine that you worked full-time under that capacity. May I ask what else you have been doing for the past few years?

2. The registered address of PMD Baltic is a house which was very recently listed for bailiff auction:
As far as I can understand, this means that your previous business was in such financial distress that your personal property had to be liquidated. You can understand how this information might cause concern for Envestio investors. Any comment on that topic?

3. May I ask how you came to present the energy production project in the Roy Club conference if you are not officially affiliated with Roy Club or Rosch?

4. It would be very interesting to hear more about Mr Ganzin. His professional career mostly consists of working at banks. I would love to hear about his decision to become an entrepreneur, about how you came to know each other, and about his decision to buy Envestio and appoint you as COO. The human story behind the press releases.

Thank you once more for the cooperation.

4. Envestio to Ido – 9/1/20

from: Eduard Ritsmann

Eduard apologised for the delay and provided the following comments:

1. The company PMD Baltic OÜ was established with an aim to support my professional activity in the field of technical consulting and sales. In the majority of projects accomplished during this time period I was acting as a private person, with company option being available for cases when the client was willing/was supposed to cooperate with a legal entity only. Bearing in mind that a lot of aforementioned consulting was done in CIS countries, company option was not used so extensively. At the same moment it doesn’t stipulate full inactivity of PMD Baltic OÜ.

2. This auction and other related activities refer solely to the current owner of the property (my ex-wife with whom I got divorced in 2016). It does not anyhow illustrate financial stability of myself or any company, which I might be associated with.

3. As it was previously explained, this job was one-time contract work. I presented these cases, based on the project information provided to me by the responsible management of these companies without any long-lasting liabilities or financial interest. I want to repeatedly emphasize that I have never participated in creation of any scam project.

4. I guess it would be more convenient to tell you this story not in written, but in person. Bearing in mind your continuous and positive interest in Envestio and our projects we would like to offer you to be the first person we invite to meet in our new office in Riga, Latvia. You could meet the team as well as see some of the projects, which are financed by Envestio. It will open the sequence of blogger events we are going to conduct during this year in order to support the image of our company and the new members of the team.

5. Ido to Envestio – 13/1/20

Dear Eduard

I appreciate your additional answers, which make more sense than before. I also want to apologise for getting into personal matters. Although your personal affairs do not concern Envestio users, it’s important for us to know that communication with Envestio representatives is honest.

For that reason, I have to ask for a few clarifications about the previous questions, as well as some new topics:

1. Bailiff auction: The auction notice does not mention your ex-wife. You are listed as the sole owner of the property:
“Eduard Ritsmann (isikukood 37110300227) omandis oleva elamumaa 100%”

Also, the bailiff was first involved in 2012, before your divorce:
“Keelumärge käsutamise keelamiseks kohtutäitur Veiko Kaasik, Anatoly Tyagunovich (isikukood 36201250280) kasuks. 20.04.2012 kohtutäituri avalduse alusel sisse kantud 4.05.2012.”

Please clarify the reason for the bailiff auction and your own involvement. Again: Unpleasant truths are better than inaccuracies.

2. Renaming of sister companies: Envestio SI OÜ has two sister-companies: Envestio OÜ and Envestio Collateral Agent OÜ. These companies were renamed shortly before the announcement about Mr Ganzin buying Envestio. Investors were not informed of the change, so the move was not transparent, and gives the impression that someone is trying to hide the connection between Envestio and its sister-companies.

This is very worrying, as loan collateral was pledged to Envestio Collateral Agent. Even new loans still offer a “Commercial pledge in favor of Envestio Collateral Agent” – although the company name was changed.

Neither you nor Mr Ganzin are listed as board members on BNG MASTERS OÜ and BELENERGY OÜ. Does Envestio’s management still have control of those companies? Why were they renamed, what is their current function, how does it relate to Envestio’s corporate structure, and who holds the collateral pledges?

3. Aleksandr Novohatski is a board members on both BNG MASTERS OÜ and BELENERGY OÜ. He has a very problematic background with several bankrupt companies, for example:

Sundkustutatud Äriregistri poolt
Maksukogujale tekitati kahju
Võlausaldajatele tekitati kahju”
[[Forced extinction by the Commercial Registry
The tax collector was harmed
Creditors were harmed]]

What is Mr Novohatski’s role and why is a person with such problematic past involved with Envestio?

4. Buybacks: Investors are starting to panic, and buyback requests are adding up. Currently [[13/1/20 ~00:00 UTC]] over €374,000 worth of old loans are listed for sale. Even if everything else on Envestio is fine, the buybacks can still push Envestio into a fatal cashflow crisis. Therefore, I request to know the current amount left in Envestio’s reserves.

5. Crisis handling: All of the above concerns about Envestio are serious enough, but the collapse of Kuetzal has increased panic even further. I strongly recommend that Enevstio immediately starts a massive social media campaign, where each of the team members is seen and heard (preferably in video), to communicate Envestio’s status to investors and to honestly answer every concern.

Aside from Kuetzal’s core issues, the immediate reasons for Kuetzal’s collapse were dishonest communication, lack of communication, loss of trust, and panic leading to massive withdrawals. Please don’t let that happen to Envestio.

6. Invitation to meet: Thank you for the invitation to the new office. Unfortunately I live far away and don’t know when I’ll be able to visit the area. I am sure other bloggers and investors would love the opportunity to meet in person and discuss things as soon as possible: ideally this week, even if the new office is not yet ready.

As before, your comments will be appreciated.

6. Envestio to Ido – 13/1/20

from: Eugene Kukin
cc: Eduard Ritsmann, Arkadi Ganzin, Alesia Nikalaichyk

Hi Ido,

It is nice to hear from you as one of the most active Envestio supporters through the past years.

First of all, I would like to inform you that bearing in mind the panic on the market, caused by Kuetzal’s breakdown, I am currently conducting negotiations with the new owner of Envestio regarding my return to the position of COO with Eduard moving to the position of the Head of Sales. Negotiations are going quite well, and I hope that the respective announcement will be distributed later this week.

Regarding your questions:

1. Bailiff auction. Eduard is getting a bit upset about such interest to his private life, and I also believe that private matters of hired employee should not affect the business, except, of course, criminal incidents, which is definitely not the case. Currently this property is being sold by his ex-wife despite the nuances of its ownership.

2+3. Renaming of sister companies (actually not sister ones). These two companies were never active, and Envestio did not use them for its activity. Those were registered at the moment when everything only started and we considered another legal scheme (and we kept them in case of any changes in legislation).

As we found a legal way to have all mortgages and pledges registered to the name of Envestio SI OU, those two companies remained empty (no bank accounts, no activity that could be seen in Estonian company register), and eventually, as changes in legislation are unlikely, they were sold to a third person, who is not related to Envestio platform. There was no business connection between Envestio SI OU and these two companies except the name, which had to be changed after the sale.

It’s a good point regarding the texting, though. We know that Envestio still has a lot of things to improve, and I believe that this line remained in the system from the very beginning when we considered active use of Envestio Collateral Agent company. Our IT will change it, Alesia, please control.

4. Buybacks. Of course, uncontrolled panic can kill even a state-owned bank with billions on its accounts as none of the credit institutions can survive massive withdrawal of funds. Envestio plays only intermediary role between the investors and the borrowers that does not assume holding millions on its account. However, we feel safe at the moment as Envestio reserves are 2-2,5 times higher than the current level of buybacks requests.

5. Crisis handling. As I mentioned in the very beginning, the first step in order to cease the panics has been already done, namely, getting back the previous COO. The further steps will follow, as in situation, provoked by collapse of Kuetzal we cannot remain passive, and need to clarify any uncertainty we may face.

6. Invitation to meet. There is a number of blogger visits being appointed, so thank you for your answer.

Let’s keep in touch.
Kind regards,

My most recent comments – 13/1/20

With the previous emails, I was perhaps too quick to spread reassuring words. But this time I truly feel that Envestio’s response is excellent and extremely reassuring. Specifically:

I support the proposed role change, and believe it will restore peace to investors and stability to Envestio.

I fully agree that the personal lives of platform employees should not concern investors. I want to clarify that these topics only came up in the context of assessing Mr Ritsmann’s professional background. Therefore, his reluctance to reveal more personal details is understandable.

I believe that the information provided throughout the correspondence clarifies that Mr Ritsmann’s past has absolutely no bearing on Envestio – apart from the notion that he may be better qualified as head of sales than head of operations.

The story with the not-really-sister-companies was clearly a misunderstanding. The text on the loan pages was misleading, but I should not have jumped to conclusions. This is a non-issue.

I am very happy to see a change in tone from Envestio with regards to crisis management, and personally feel that the only immediate danger to Envestio right now is investor panic.

* I am aware of concerns regarding the Dolomite project. I have chosen not to bring up this topic in the same email where I discuss Envestio’s fate, because even if there is indeed an issue with a specific project (which is still unverified), I think it’s a huge mistake to tie the fate of a platform to that of any specific project.

This post is not meant as investment counselling. I am just a fellow investor sharing his personal thoughts and sentiments.
Header photo by Prasanth Inturi from Pexels.

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