By NEIL HARTNELL
Tribune Business Editor
One group of liquidators for an alleged multinational Ponzi fraud yesterday denied claims they would not recognise investors who placed $217 million into it via a Bahamian broker/dealer.
Hadley J. Chilton, the head of restructuring and insolvency at Baker Tilly’s British Virgin Islands’ (BVI) affiliate, told Tribune Business via e-mail that such assertions by the US receiver for Nikolai Battoo’s BC Capital Group scheme were incorrect.
While the US court-appointed receiver, Brick Kane of Robb Evans, is working with PricewaterhouseCoopers (PwC) Bahamas accountants, Kevin Cambridge and Kevin Seymour, on the Bahamian end of BC Capital Group’s liquidation, Mr Chilton is handling the liquidation of the BVI-domiciled investment funds into which Battoo placed investor monies.
Mr Kane and Robb Evans, in a recent report filed with the US courts, had alleged that Mr Chilton and his fellow liquidators would only recognise investors who had placed money directly with the BVI funds, and would disregard the investments that came were placed through Alliance Investment Management, the Bahamian broker/dealer that is an affiliate of BISX-listed Benchmark (Bahamas).
“The BVI liquidators have not announced that ‘they will only recognise those investors who placed money directly with EFG’ or that they would ‘disregard the investments that came through Alliance’, nor anything similar,” Mr Chilton said.
“The joint liquidators of the BVI Funds are carrying out their statutory duties for the benefit of all of their creditors and investors.
“Unfortunately, these duties have necessarily included defending the BVI Funds from the actions of the US receiver to usurp those assets belonging to the BVI funds over which they have been properly appointed. The [US] receiver is aware that the BVI liquidators have been attempting for over a year to discuss with him issues including precisely the issue of future distributions to all investors, and he has simply ignored correspondence.”
Robb Evans had launched a full frontal attack on the BVI liquidators in its December 9 filing with the US courts, alleging: “A distribution based upon their narrow view of the worldwide Ponzi scheme will favour a small portion of those victims who were defrauded, while leaving hundreds of investors with little or nothing in the way of recovery.”
It was seeking a US court order that all the BVI-domiciled funds’ assets, which are located at EFG Bank in Guernsey, be turned over to it.
“Favouring certain injured investors who were directed to transfer funds directly into the funds over those who were directed to transfer funds into Alliance would be unjust and inequitable,” Robb Evans claimed.
But Mr Chilton dismissed this as simply untrue, and claimed that Robb Evans was seeking to exclude all those who did not invest in BC Capital Group via Alliance Investment Management.
“While the BVI liquidators’ duties are equitably to all of their creditors and investors, ironically, the [US] receiver has sought to exclude any investors who did not invest via Alliance. The receiver has not made any claim in the BVI liquidations to any of the BVI Funds assets,” Mr Chilton said.
As previously reported by Tribune Business, 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,” Robb Evans had 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.”
But Mr Chilton yesterday alleged that Robb Evans had ignored his requests for cross-border co-operation, rather than litigation to determine who should liquidate which assets.