The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Liquidators for an alleged $340 million Ponzi scheme are planning to apply to the Supreme Court for permission to gain control over six accounts they have been denied access to by a BISX-listed firm’s broker/dealer affiliate.

The latest report to the US courts on the winding-up of Nikolai Battoo’s BC Capital Group, filed on December 4, discloses that Brick Kane, together with two PricewaterhouseCoopers (Bahamas) accountants, is seeking to gain control of accounts held by Benchmark Bahamas’ subsidiary, Alliance Investment Management.

Mr Kane, who is working with PwC duo Kevin Cambridge and Kevin Seymour, alleged in his report: “The receiver learned from the other joint liquidators in the Bahamas that Alliance maintained at least six other accounts for Battoo [in addition to the ones they control].

“Alliance refused to turn over any information about these accounts to the joint official liquidators. At least one of these other Battoo-owned accounts, Aquarius Holdings Ltd, also received contributions from participants who intended to invest in Battoo- operated/controlled funds through Alliance.”

Mr Kane alleged that Alliance and its principals had refused to provide the liquidators with details on Aquarius Holdings, even though a participant in Battoo’s scheme claimed he had instructed to pay money to the Bahamian broker/dealer for that company’s benefit.

Given that there were indications that Battoo owned Aquarius Holdings, Mr Kane said: “The receiver is working on an application to be presented to the Bahamas Supreme Court for recognition over the Battoo-related accounts [where] Alliance refused to provide access to the joint official liquidators.”

Alliance’s alleged role was to act as custodian for investor monies and securities in the BC Capital Group scheme, setting up 66 investor portfolios and five Battoo-owned accounts.

But, of the $217.1 million investor funds received by Alliance, just $83 million - some 38.2 per cent - was invested in a series of eight British Virgin Islands (BVI) domiciled hedge funds controlled by Battoo.

“Battoo misappropriated approximately $45.7 million (21.1 per cent) for his personal use and paid approximately $18.3 million (8.4 per cent) to parties related to him,” the liquidator’s report alleged.

“For every $100 received from the investors, just $38.23 was invested in Battoo-operated/controlled funds, $21.05 was paid to or for Battoo, $8.43 was paid to parties related to Battoo, and $7.37 was spent for other purposes.”

Referring to the five Alliance accounts belonging to the BC Capital principal, the document added:

“Battoo diverted to these accounts investor funds, proceeds from the sale of Battoo-operated/controlled funds, proceeds from sale of third-party securities, and other receipts, all of which totalled approximately $90 million.

“Battoo then directed payments totalling approximately $123.3 million, including $45.7 million to himself or for his benefit, and $18 million to parties related to him, creating a total overdraft in the five accounts of $33.3 million.”

That $33.3 million Battoo overdraft, the liquidator alleged, virtually wiped out the positive $33.8 balance held in client portfolios with Alliance, reducing this to just $500,000.

And that latter sum was paid to BC Capital Group’s original liquidator, Bahamian accountant James Gomez, to cover his costs prior to being replaced by Mr Kane and the PwC duo.