By NEIL HARTNELL
Tribune Business Editor
The Bahamian attorney at the centre of the Oceania Heights debacle has been ordered to repay almost $80,000 in unpaid real estate tax monies to a Canadian investor group, after he failed to make the necessary payment to the Public Treasury.
Supreme Court documents obtained by Tribune Business allege that Anthony Thompson ultimately claimed that his law firm’s accounts department had mistakenly applied the funds, intended to pay Stamp Duty due on another Exuma real estate purchase, to a “development project” that he owned.
While that “project” is not identified, there is every likelihood that it is the controversy-torn Oceania Heights development, where the remaining homeowners are still struggling to realise their Bahamian dream some three years after wresting control from Mr Thompson and his Canadian partner, Howard Obront.
In the current case, a 10-strong Canadian investor group alleged that Mr Thompson failed to secure their own purchase by not paying due Stamp Duty or ensuring the conveyance was Stamped and recorded.
The group, trading as 1530289 Ontario Inc, claimed that Mr Thompson gave provided a multitude of excuses for why no conveyance or Bahamas Investment Authority (BIA) permit had been obtained, keeping them at bay for four months.
Their Canadian attorney ultimately confronted Mr Thompson at the Nassau offices of his law firm, Anthony Thompson & Company, where he was told that the conveyance had been “misplaced”.
The investors and their Bahamian subsidiary, Ontario Real Estate Inc, were forced to hire the Glinton, Sweeting & O’Brien law firm to investigate Mr Thompson’s actions and complete the transaction for them, leading to the action demanding that the latter return the unpaid Stamp Duty monies transferred to him.
This resulted in Justice Deborah Fraser making a December 11, 2015, Order that struck out Mr Thompson’s defence on the grounds that he had failed to comply with the terms of a previous November 17 Supreme Court Order.
A judgment was entered against Mr Thompson in the sum of $79,000, with interest running at 6 per cent from the date of April 1, 2011 - a more than four-year period.
This case represents the second time that Mr Thompson and his law firm have received money from clients to pay Stamp Duty on their behalf, yet failed to pay the money on to the Public Treasury and used the funds for a different purpose.
Tribune Business previously obtained, and published, a letter from Mr Thompson, in which he admits to using $400,000 in funds received from Oceania Heights clients, and intended to pay tax due on their real estate purchases, to instead pay the project’s expenses.
In a revealing May 3, 2013, letter to fellow Bahamian attorney, Michael Scott, Mr Thompson conceded that a key complaint from several homeowners - that they had paid him money to cover Stamp Duties, which were never passed to the Government - was accurate.
“Part of the conflict relates to the matter of certain sums paid to my firm, which were not applied to the payment of Stamp Duties but were used to pay for work done for Oceania which, at December 2012, was some $400,000,” Mr Thompson wrote.
The latest case means that Mr Thompson has effectively been responsible for receiving, but not paying, nearly $500,000 in Stamp Duty funds to the Public Treasury.
Both this and the Oceania Heights episodes again threaten the Bahamas’ reputation as a leading investment jurisdiction, while also exposing how the Public Treasury and Bahamian taxpayer are deprived of due revenues. Such actions are at least partly responsible for the introduction of Value-Added Tax (VAT) in the Bahamas.
Mr Thompson did not respond to Tribune Business’s requests for comment, despite numerous phone messages and e-mails being left for him describing the nature of the inquiry.
The office receptionist at Anthony Thompson & Company confirmed that Tribune Business’s message and contact details had been passed to Mr Thompson, who was said to be in a meeting when this newspaper tried to reach him late yesterday.
Arlen Mifflin, a financial adviser and 1530289 Ontario Inc’s president, alleged in a witness statement that it hired Mr Thompson in June 2010 to incorporate its Bahamian subsidiary, Ontario Real Estate Inc.
He was also engaged to represent the latter in the $240,000 purchase of Lot 161, Area 10, on Schooner Road in Exuma from the then-owner, Darren Steers.
Mr Thompson, in a September 15, 2010, letter requested that the Canadian investor group transfer a total $245,579 to his firm to finance completion of the purchase. Some $30,000 in real property tax owed by the seller were, according to Mr Thompson, to be deducted from the purchase price.
Some $216,170 was paid to the vendor soon afterwards, according to Mr Mifflin, with a conveyance passed to Mr Thompson.
“The precise amounts paid to the vendor’s attorneys and in satisfaction of the taxes are unknown to the plaintiff,” Mr Mifflin alleged, adding that the Canadians were informed by Mr Thompson on March 15, 2011, that the conveyance could not be Stamped with the $240,000 price.
This was because the Ministry of Finance’s Valuation Department had placed a $517,100 value on the property, and Mr Thompson advised that the Stamp Duty payment had increased to $62,052.
With $17,173 in the Bahamian attorney’s possession, the Canadians transferred a further $41,000 to him two weeks later to cover both the Stamp Duty and obtaining the necessary BIA permit.
“On the 1 of April 2011, Mr Thompson acknowledged receipt of the funds by e-mail and advised that he would proceed to pay the Stamp Duty and submit the application to the BIA on behalf of the plaintiff,” Mr Mifflin alleged.
“He further advised that the process would take approximately 30 days and that the plaintiff should therefore expect to hear from him again at the end of that month.”
That did not happen, and Mr Mifflin alleged: “Over the ensuing four months, the plaintiff repeatedly requested that Mr Thompson provide confirmation of the Stamping and filing of the conveyance and the obtaining of the permit from the BIA.
“Mr Thompson variously failed to respond to inquiries; advised that he had not had a response from the Foreign Investments Board; or advised that his office had temporarily misplaced the Stamped conveyance.”
The Canadian group undertook its own investigation in October 2011, and was told by the BIA’s director of investments via October 24 and 28, 2011, letters that no permit application had been submitted by Mr Thompson to it.
“In December of 2011, David Sandor [the Canadians’ attorney] attended at the offices of Mr Thompson to demand a copy of the Stamped conveyance and/or some proof that the applicable stamp duty had been paid. Mr Thompson told him at that time that the Stamped conveyance had been misplaced by his (Mr. Thompson’s) office,” Mr Mifflin claimed.
The Canadian investors then hired Yolande Julien, an attorney with Glinton, Sweeting & O’Brien, to investigate the situation and close the property purchase.
“Inquiries by Mrs Julien revealed that the conveyance had never been Stamped or recorded, and the Stamp Duty had not been paid,” Mr Mifflin alleged.
“The plaintiff then proceeded to pay the Stamp Duty at the applicable rate, including a penalty amount then due by operation of law due to the lateness of the payment.
“Under cover of a letter dated March 6, 2012, Mr Thompson forwarded copies of the title documents in his possession to Mrs Julien, including a copy of the conveyance from the vendor to the plaintiff, which had not been stamped.
“In a subsequent telephone conversation with me, Mr Thompson claimed that his accounts department had erroneously posted the plaintiff’s funds to a real estate development project which Mr Thompson owned, and the funds provided by the plaintiff for payment of Stamp Duty had thereafter been spent on that project.”
This led to the demand for Mr Thompson to return the unpaid Stamp Duty monies to the Canadians, the subject of Justice Fraser’s judgment.