The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The receiver for an alleged $22.6 million fraud is waiting on the Supreme Court to authorise his seizure of an Ocean Club Estates condo belonging to two Paradise Island residents.

J. Bradley Butcher, a KPMG (Canada) vice-president, write in a July 2014 update that he was waiting for the Supreme Court to rule on his March 4, 2014, summary judgment motion against Jeffrey Pogachar and Paola Lombardi.

The two Canadian citizens are accused of defrauding investors of $22.6 million via their New Life Capital scheme, and Mr Butcher has been in a painstaking effort to recover these assets - many of which were spirited away to the Bahamas.

In his investor update, Mr Butcher said “scheduling delays” held up the hearing of his summary judgment motion until March 4.

His Bahamian attorney “advised that a decision has not yet been rendered by the court” - a vital step in taking possession of the couple’s Paradise Island condo, which will then likely be sold as it represents one of the bets investor recovery sources.

“The only assets remaining in the receivership estate are the condominium at Paradise Island in the Bahamas and two luxury watches, which are described in the receiver’s previous reports,” Mr Butcher said.

“The receiver is not in possession of the condominium or the watches, and has been advised by Bahamian counsel that it will not be in a position to obtain possession until the Bahamian court grants an Order for summary judgment.”

The Ocean Club Estates condo, acquired by Pogachar and Lombardi for $2.799 million, represents around 39.5 per cent of the total assets transferred to the Bahamas, making it a key recovery target for the receiver.

KPMG first obtained a Norwich Order, requiring CIBC FirstCaribbean International Bank (Bahamas) to hand over banking information on Pogachar and Lombardi’s companies, on October 27, 2009.

However, the two Bahamas residents were successful in persuading the Supreme Court, in a November 30, 2011, ruling to return their assets and property to them. And the original Supreme Court orders recognising the KPMG receivership were set aside.

The couple were also allowed to return to the Ocean Club Estates condo, and given “a reasonable monthly living allowance and reasonable conduct money”.

Prior to that, KPMG must have felt it was making progress. Pogachar and Lombardi had left the condo in April 2010 “without incident” after a bailiff was hired to evict them, and the property was listed for sale at $2.3 million with Bahamas Realty.

“The receiver understands that the real estate market for luxury properties in the Bahamas is currently depressed, and the receiver is considering leasing the Bahamian condo while it continues to list it for sale,” KPMG said optimistically in an earlier report.

“While the receiver has received two offers to purchase the Bahamian condo, which it pursued to the stage of preparation of formal agreements, neither agreement proceeded due to the purchasers’ concerns about the ability of the receiver to close and deliver possession within a reasonable time period.

Legal proceedings then moved to the Court of Appeal. Under an interim stay agreement, Pogachar and Lombardi were allowed to stay in the Ocean Club Estates condo for two months or until the appeal was heard; given an $8,000 living allowance for two months out of receivership funds; the receiver was to pay the condo’s carrying costs and premiums; and also provide a $50,000 ‘letter of credit’ to the couple’s attorneys, Davis & Company.

The Court of Appeal ruled in favour of KPMG, and overturned the Supreme Court verdict, but complications remained.

“While the letter of credit was returned and the living allowance terminated, the receiver, on the advice of Bahamian counsel, has permitted Lombardi to continue residing in the Bahamian condo, as the cost of trying to have her removed would likely be significant, especially in light of the limited funds available in the companies’ receivership estate,” the KPMG report said.

“The receiver has nonetheless continued to pay the utilities and maintenance fees related to the Bahamian condo pending a final determination of the Bahamian court that will permit the receiver to take possession of the Bahamian condo.”

Earlier this month, Tribune Business revealed that Canadian police wanted to track down Pogachar and Lombardi in relation to the alleged fraud, and were seeking to extradite them from the Bahamas.

The New Life group’s business was in the viatical and life insurance settlement industry.

The group purportedly acquired life policies from their holders by paying an amount greater than the cash surrender value, but lower than the face value. New Life took over as the policyholder, paying the premiums and receiving the full face value when the settlor passed.

It raised the $22 million from investors to finance policy purchases, and pledged that 80-85 per cent of the funds raised from selling the securities to them would be used for this purpose.