Term Sheet Scam: Investment Agreements That Don't Deliver

A term sheet scam uses professionally drafted contracts to create the appearance of a legitimate investment engagement. The contracts contain escape clauses that allow the firm to withdraw while retaining all fees paid. The Corinth Group investigation documents this pattern in detail.

How Term Sheet Scams Work

In a legitimate private equity or corporate finance engagement, a term sheet outlines the commercial terms of a proposed investment. In a term sheet scam, the document serves a different purpose: it creates a contractual obligation for the client to pay fees, while embedding clauses that allow the firm to avoid delivering any service. The result is a one-way transfer of funds.

The Corinth Contract Suite

Complainants describe a standard contract suite used by Corinth Group entities. The central document is a "Letter of Engagement" (LEF) that establishes the relationship and payment obligations. Key contractual features identified by complainants include: Article 6 and Article 30, which describe Corinth entities as "regulated and licensed" — a representation contradicted by the CySEC AIFM license revocation of October 2022 (AIFM48/56/2013) [CySEC AIFM register]; Article 26, a refund clause promising fee return if transactions are not completed; and multiple termination clauses (5.6 "whatever reason," 6.1 "beyond control," 6.6 "material changes") that allow the firm to exit at will.

The Escape Clause Architecture

The combination of clauses creates what complainants describe as a "contract trap." The client pays substantial fees (EUR 50,000–80,000+) based on contractual promises. If the client later demands a refund, the firm can invoke termination clauses to argue the engagement was lawfully concluded, while the refund clause (Article 26) is not honoured. Multiple complainants report receiving identical explanations for why their specific transaction could not proceed — including references to market conditions and regulatory changes — suggesting scripted responses rather than deal-specific analysis.

Verify Before You Sign

Before signing any term sheet or letter of engagement with an unfamiliar investment firm: verify the entity's regulatory status with FINMA, the FCA, or the relevant national authority; check the directors' records at Companies House or the Swiss commercial register (Zefix); search for complaints under all current and previous entity names; and have the contract reviewed by an independent lawyer, paying particular attention to termination and refund provisions. The Corinth network has operated under at least five names — APAHML, Arcis Consortium, Curatio Capital, Corinth Group, and Three Tuns — making historical complaint searches essential.

Key Facts

• Corinth contracts contain Articles 5.6, 6.1, and 6.6 — three separate termination escape routes
• Article 26 refund clause consistently not honoured according to complainants
• Articles 6/30 describe entities as 'regulated and licensed' — contradicted by CySEC revocation
• Multiple complainants report receiving identical scripted excuses for deal failure
• 5 sequential corporate identities make complaint history harder to trace

Complaint Reports

People Involved

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