A Turkish Fund Reported 15,000%. Then It Froze.

Transcript

2.5 million lira. His wedding money. Mehmed Kervanci hit sell again and again. Nothing processed. About 51,000 dollars, in one of Turkey’s hot funds, and it had stopped paying people out. The biggest of them had reported a return of more than 15,000 percent, on paper. Then Turkey’s regulator froze it, along with 130 others, locking in nearly 456,000 savers. How does a return like that keep climbing, long after prosecutors flagged unusual trading? Why did one chairman reportedly leave his phone behind and sail out of Marmaris? And who got their money out before the door shut?

Mehmed Kervanci was 28, unemployed, and two weeks into a trade he hoped would grow his savings. A relative had passed him the tip. “When the order to sell wasn’t processed, we panicked,” he said. “Deposits weren’t providing good returns, so we were looking to invest somewhere else. We are devastated.”

He was not alone at that screen. A 30-year-old trader called Cem had 2.3 million lira across two funds run by a company called Tera, money meant for a home, part of it from gold he was given at his own wedding. “Now all the shares are plummeting every day,” he said. “Who in his right mind would buy those stocks so we can be repaid?”

Understand why they were there at all. Inflation in Turkey had averaged near 50 percent a year over the previous three years, so savers went looking for returns that could outpace it. Chasing a fund that beat inflation was not greed, it was defence. “These were all regulator-approved funds,” said Latif Ersoy, an entrepreneur in Istanbul, Turkey, who had put around 300,000 lira into three funds run by a manager called Pusula earlier that year. His holdings fell by 90 percent. “It really doesn’t matter now whether I’ll be repaid,” he said.

The thing that broke was not the lira and it was not a bank. On the sixteenth of September, Tera’s fund arm said out loud that it could not meet the payout requests of clients trying to get out. Turkish shares took their biggest one-day fall in more than a year. Earlier that month, Tera had announced it was buying Pusula, even as people asked whether the funds could pay everyone out. Now they had the answer.

The run had already been under way for weeks. Between the last day of August and the twenty-third of September, savers pulled roughly 600 billion lira out of Turkish investment funds. The day after Tera’s announcement, the state stepped in front of the stampede. On the seventeenth of September the Capital Markets Board, Turkey’s securities regulator, ordered the liquidation of 131 funds run by seven management companies, with reported assets of about 18.3 billion dollars. That was the funds’ reported value on the day, not what savers had paid in, and not what they would get back. Liquidation meant the funds’ holdings would be sold off and savers paid from what they fetched, and until then, 455,758 of them were locked in.

How much comes back, and how long it takes, nobody could say. Weeks earlier, savers had run to these funds to protect their money, so where had all that cash actually gone?

Officials say it went round in a loop, and to see it, start with one fund and one number. In January 2025, a fund called TLY, run by Tera Portfoy, had fewer than 200 investors on its books. Seven months later it was reporting a return of 747 percent in lira terms. A number like that does not stay in a small room.

Here is the loop, as officials describe it. The managers bought shares that almost nobody traded, including stakes in affiliated companies, which pushed those valuations up. Higher prices lifted the funds’ reported value, that drew in fresh money, and the fresh money bought more of the same thin shares. Justice Minister Akin Gurlek had a word for the structure: Ponzi-like. Orkun Saka, a lecturer at City St George’s, University of London, put it more plainly, calling the returns mostly artificial. When only a tiny slice of a company’s shares is available to trade, he said, a fund’s own buying can become the price signal that marks up its own portfolio. Tera and Pusula did not respond to Reuters’ requests for comment.

Now watch the money arrive. Over the year to August 2026, the money Tera managed rose more than tenfold, to 14.3 billion dollars. Pusula Portfoy’s rose thirteenfold, to 13.2 billion dollars. By the end of August, each handled more than 4 percent of all the money managed in Turkey, making them the biggest fund managers outside the banks.

Turkey’s portfolio management sector grew to 329 billion dollars from 246 billion dollars in a single year. Tera and Pusula added roughly 25 billion dollars of that between them, about 30 percent of the whole industry’s growth. Some of the funds were concentrated in a single stock. Some had only a handful of investors.

Then the doors swung open. TLY was opened up to a far wider investor base, and by the time the funds froze, its cumulative return read more than 15,000 percent in lira terms, on paper. It took in 102,616 investors and reported 5 billion dollars in assets, the largest of all the funds now being wound up.

The quieter fund caught even more people. TP2, Tera’s money market fund, held 4.6 billion dollars for around 167,000 investors. Its return over the same stretch was 123 percent, while inflation was running at 60 percent. That was double the inflation rate, on money that ordinary people and companies treated as cash in a drawer. And prosecutors had put a warning in writing long before any of it froze.

Go back more than a year and a half, to a letter that only came to light this September. In February 2025, Istanbul prosecutors wrote to Turkey’s Capital Markets Board and asked it to investigate unusual share transactions linked to a man named Muhammed Yariz. That request arrived more than eighteen months before the regulator finally ordered the funds wound up.

So who was the name in that letter? Muhammed Yariz was 28 when the funds froze, the same age as Mehmed Kervanci, and he was the chairman of Pusula Portfoy. His file was already thick. Since 2020 he had picked up, every single year, either a fine or a trading ban for breaching Turkey’s rules on market-disrupting conduct, according to the Turkish newspaper Sozcu. Some of those penalties were handed to him alongside his father, Celal. A record like that, and he was still waved through into the chairman’s seat at a licensed fund manager.

Then came the warning that was not private at all. It came from Finance Minister Mehmet Simsek, at a capital markets congress on the fourth of November 2025. “We know that these manipulations are being carried out particularly through certain funds,” he said, adding that the gaps in the rules would be addressed. Omer Gonul, then the chairman of the Capital Markets Board, said his people were monitoring funds used to get around the rules, and that managers could lose their licences. Sozcu’s verdict on what followed is one short line: they did not intervene.

The regulator’s own timeline admits more than that. It says it observed fund-driven price moves in late 2025 that company fundamentals could not explain. That December the matter went to the Financial Stability Committee, chaired by Simsek, and a working group was formed the following day. A working group.

Outsiders could see the shape of it too. In its June 2026 market classification review, the index provider MSCI flagged possible coordinated trading involving fund holdings closely affiliated with smaller listed Turkish companies. It warned that without credible progress by its November review, it could open a consultation on how it treats Turkey.

On the fourteenth of July, Istanbul prosecutors from the bureau that handles money laundering took over the case and called Yariz in to give a statement as a suspect. His lawyer said later that he was expecting the file to be closed with no action, and kept checking the state’s online portal for the news. It was not closed. On the nineteenth of August, Istanbul prosecutors sent the Capital Markets Board another letter, as part of an investigation they were keeping confidential. It set out unusual trades in Istanbul-listed shares that investigators believed were being run through funds, and asked for information. Then it went somewhere it was never meant to go. It reached Pusula Finans Holding, Turkish media reported, and after it arrived, the holding’s chairman Serdar Turhan and Yariz are said to have moved money out of Turkey.

After changing settlement and valuation practices earlier in the year, the regulator made its big move on the twenty-eighth of August. It announced a rewritten investment fund framework, tightening the limits on concentrated holdings and on exposure to affiliated companies, with a transition period to comply. According to Sozcu, the firm hit hardest by the change was Pusula Portfoy, and the man hit hardest was its chairman. Then the cure set off a run. Funds began selling to get under the new cap on how much of a single company they could hold, and investors rushed to pull their money out. On the second of September, Yariz and his father were banned from leaving the country. His lawyer says the notice only reached them three or four days later. That same week, Pusula and the Tera group shook hands on the takeover.

Ten days after that travel ban, where was the man named in that first letter?

By then, nobody could reach him.

On the twelfth of September a contact in the business world messaged the journalist Ismail Saymaz with one line: Yariz had boarded a boat in Marmaris and left the country. Saymaz checked with his own sources, and they told him it was true. Yariz, they said, had left his phone behind in his office. They said he had been traced to Greece, and that measures had already been placed on his villa, his home, his car and his accounts. That evening Saymaz posted all of it on X, and within hours the post had nine million views.

At 8:35 that evening, Yariz rang him. He had not left the country, he said. He was in Antalya, down on Turkey’s southern coast, and he would be in Istanbul in the morning to give his statement. He knew about the travel ban, he said, but not about the rest of the measures. “I’ve been isolated for three days,” he said. Saymaz was sure he was lying. Saymaz asked him to prove he was in Antalya. “My father is calling,” Yariz said, and hung up.

Then the messages came. The talks with Tera had run for a month, Yariz wrote, they had closed a week earlier, and there was no longer any need for him to serve as a manager. It had been a stressful time, he wrote, so he had gone on holiday. Saymaz asked for one thing: a photograph and a live location proving he was in Antalya. Yariz replied that he would give his statement from where he was, not Istanbul, and said he would be very glad if the reporter wrote that up. What he wanted in print, Saymaz writes, was that he was still inside Turkey. Saymaz asked again for the photo and the location, and nothing came.

Then Yariz surfaced in Bodrum, further up Turkey’s Aegean coast, saying he had gone to the prosecutor there to give a statement. According to Saymaz, he came in on the same boat that had taken him from Marmaris to Greece. At the prosecutor’s office there, he said he had been off the coast of Marmaris, not in Antalya as he had told Saymaz. His lawyer said they had made no plans to flee, that Yariz could not be reached on the boat, and that they went to prosecutors once the reports came out. Brought to Istanbul under police escort, he went before a judge on a request to jail him pending trial, on suspicion of breaching Turkey’s capital markets law, and he rejected the accusations. “I think there is a similarity of names,” he said. The court ordered him held pending trial anyway, citing information indicating he had left the country by unofficial routes, a suspicion he could tamper with evidence, and a risk he would flee abroad.

Then Turkish newspapers began listing what he was said to own. There was a luxury yacht named Loretta, valued at 14.5 million dollars and said to be the boat he used to leave the country. Sozcu reported a private jet too, a Bombardier Global 5000 bought for 19.5 million dollars and moved onto the Turkish register the previous November. The jet carried the Pusula logo, and he is alleged to have run a pilgrimage tour on it. Investigators, for their part, seized seven of his properties, his bank accounts, his crypto holdings, his shares and his safe deposit boxes.

Go back to that night, and the last message he sent the reporter. He wrote: “We’ve done nothing wrong. Everything came down on us at once.”

The statement came out late on a Saturday, at the end of September. Fatma Betul Sayan Kaya, a deputy chair of President Recep Tayyip Erdogan’s ruling AKP and a former family minister, said she was giving up her party posts. It followed a set of numbers read out by the main opposition, the Yeni Parti. Its spokesman, Gokhan Gunaydin, said Kaya put 63 million lira, about 1.3 million dollars, into shares in April and sold them in September, shortly before the collapse. The profit, he said, was around 1.3 billion lira, about 26.5 million dollars. Reuters reported that the shares, in a company called Ozata Denizcilik, are part of the wider manipulation investigation.

Her husband, Ilyas Kaya, the party alleged, put in 100 million lira and got back 826 million. Together, the party put the couple’s alleged profit at nearly 2.2 billion lira, about 45 million dollars. Gunaydin said it was clear she had received insider information, and promised more names that week. Kaya admitted nothing. She said she was taking “political responsibility” so that any investigation could be conducted “independently, impartially”. Several Turkish media sites reported that she had handed the money back and had not been detained. Three days later, prosecutors said they had sent a letter to all relevant institutions freezing every asset the couple owned.

Erdogan had already answered his critics by defending his party’s record. “The AK Party is a clean party, just as its name suggests,” he told party cadres. Of his opponents, he said: “Get lost, I tell them.” On the Wednesday, Ozgur Ozel, who leads the Yeni Parti, called the whole affair “the robbery of the century”. “This name is the tip of the iceberg,” he told a party meeting. The same day, Ozel hit back at Erdogan: “In the AK Party’s crooked system, neither your freedom, nor the money in your bank account, nor your right to information is safe.” The next day, he took it to reporters at parliament in Ankara, Turkey, before the legislative year opened. Either the alleged fraud happened under Erdogan’s patronage, Ozel argued, or Erdogan no longer had the power to stop it. “The first requires his immediate resignation, and the second requires an immediate election and handing the job to those qualified,” he said. In parliament, Erdogan promised to protect investors’ rights, so that nobody walked off with money somebody else was owed. “We are quickly resolving this matter,” he said.

The harder blow came from inside Erdogan’s own party. Nihat Zeybekci, a former economy minister who now serves as an AKP deputy chair for economic affairs, told the newspaper Sozcu that four companies he co-owns had money trapped in Tera’s money market fund. He said the companies used it to hold cash ahead of short-term payments, and that the investments were made without his knowledge. Then he conceded that the state bore some of the blame. “Unfortunately, there is negligence on the state’s part,” Zeybekci said.

While the politicians traded quotes, the cells filled. By the first weekend of October, courts had jailed 85 people pending trial across the fund and stock manipulation cases. Among them were Tera’s chairman Emre Tezmen, Serdar Turhan, who had chaired Pusula Holding, and Erkan Kilimci, a former deputy governor of Turkey’s central bank. Investigators seized 24 properties belonging to Tezmen, along with his stakes in nine separate companies, and froze his bank accounts and other financial instruments. Before he was jailed, Kilimci wrote on LinkedIn that it was “unlucky” his name had been caught up in the allegations because of a senior Tera post he had held for three months. Liquidation was supposed to hand those savers their money back, but bigger savers could not be paid in full until somebody bought shares few people wanted.

On the first day of October, the regulator finally put a number on what a trapped saver could get back, for now. Interim payments of up to 1 million lira, about 20,400 dollars, for each investor in each fund set up by Tera, Pusula, Atlas or Hedef. If what you paid in, minus anything you took out, came to less than that, you get all of it back. If it came to more, you get the cap now and wait to see what the asset sales bring. Either way, the yardstick is the money people paid in, not the paper value their funds reported. Payments start with the money market funds, and the central securities depository does the counting. Everything handed over now comes off the final settlement, and the announcement set no payment date and guaranteed no full recovery.

Run that against the man whose sell order never processed. If Mehmed Kervanci’s fund qualifies, the cap would cover about two fifths of the wedding savings he put in. The limit applies fund by fund, so anyone spread across several eligible funds can collect more than one payment. That is the entire sum of the certainty on offer.

Behind the payments sits the hard part: selling what the funds hold. Isbank and the state-owned Ziraat Bank are overseeing those sales for the four managers’ funds. They have to find buyers for portfolios stuffed with shares in small companies, priced in a market the funds themselves dominated. The regulator doubled the wind-down period to six months, precisely so nobody would be forced to dump them cheap. “These stocks are now dropping like a stone; every day they go down,” said Emre Akcakmak, a portfolio adviser at East Capital in Dubai, United Arab Emirates.

Atilla Yesilada, a Turkey analyst at GlobalSource Partners, went further, and called those holdings essentially worthless. “There will be no buyers when the receivers try to sell them, because who would want to catch a falling sword?” he said. Two experts he trusts told him investors would be lucky to get back 20 cents on the dollar. His estimate rests on other people’s assessments, not on a finished valuation of what the funds actually hold. Akcakmak adds a different caution: because the prices were inflated, the fall in the funds’ reported value is not all real money lost.

The bill arrived for everyone else too. September closed with the main Istanbul index down 16.65 percent, its worst monthly performance since 2008. Back in late September, Finance Minister Mehmet Simsek had moved to hold the line, saying he did not expect the crisis to spread across the wider financial markets. “We have placed the problematic area under quarantine,” he said. On the third of October, in the southeastern province of Sanliurfa, Erdogan said his government had set its roadmap, and told citizens to rest assured that the economy could overcome the problem. “Anyone who has obtained unjust gains must answer to justice,” he said. His key ally, Devlet Bahceli, who leads the Nationalist Movement Party, put it differently in a written statement: “The lack of oversight and supervision lies at the heart of the issue.”

And for anyone who got out before the door shut, the state opened one more set of accounts. Turkey’s Savings Deposit Insurance Fund invited people who cashed out before the freeze to voluntarily hand back what authorities call excessive gains. Money returned to a fund must go to that fund’s own investors, and the offer carries no promise of immunity from prosecution. Turkey has started repaying its savers without knowing what the assets are worth.

Next, a board chaired by Vice President Cevdet Yilmaz is working on a payment timetable and changes to the capital markets law. The main opposition leader wants savers repaid from money recovered from those responsible, not by taxpayers, and recovery through the courts could take a year or more. In November, the index provider MSCI decides whether to open a consultation on how it treats Turkey. So how much did the savers lose? Nobody can say yet. Much of what their funds held was priced in a market the funds themselves dominated, and now it is worth only what a buyer will pay.