The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

A Canadian receiver has hit out at the Bahamian “legal hurdles” complicating his efforts to recover assets from two Paradise Island residents, who have been accused of perpetrating a $22.6 million fraud.

The KPMG accounting firm, in its latest report to the Ontario Superior Court of Justice, warned that it faced significant obstacles in attempting to seize the Ocean Club Estates condo belonging to Jeffrey Pogachar and Paola Lombardi.

It said the Court of Appeal action, initiated by the duo in a bid to overturn the September 2014 summary judgment obtained against them by KPMG, had gone cold for almost a year.

And the receivers warned that there were “no funds available” to pay the $200,000-$300,000 legal bill that a Bahamian attorney would likely charge to defend the couple’s appeal.

With Pogachar and Lombardi also rejecting KPMG’s offer to sell the Ocean Club condo, and transfer the net proceeds into escrow until the Court of Appeal action is determined, the receiver has effectively been stymied in realising Bahamian assets vital to settling outstanding bills.

KPMG, in its 12th report to the Ontario court, warned: “The only potential future asset recoveries are from the Bahamian assets.

“However, future realisations from these assets are highly uncertain given the legal hurdles that have been placed in front of the receiver.

“If the receiver is successful, it is anticipated that the net recoveries will be less than the outstanding current fees.”

The receivership estate owes $1.9 million to a combination of KPMG, the accounting firm’s Canadian and Bahamian attorneys (McKinney, Bancroft & Hughes), and ‘representative counsel’. The first three are owed $475,000 or more.

Pogachar and Lombardi, who are well known on the Nassau social scene, have been accused of defrauding investors of $22.6 million via their New Life Capital scheme.

New Life’s business was in the viatical and life insurance settlement industry, and it raised the funds to finance policy purchases, pledging that 80-85 per cent of the investor monies would be used for this purpose.

However, Canadian regulators alleged that Pogachar and Lombardi misappropriated investor monies for their own personal gain and use, transferring $7.093 million to Bahamas bank accounts they controlled.

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.

The latest KPMG report said that apart from the condo, the duo’s Bahamas-based assets also include funds in a Commonwealth Bank account, plus luxury watches “which the receiver understands are in the possession of the defendants’ former legal counsel”, Davis & Co.

Despite obtaining a summary judgment from the Supreme Court permitting it to seize the condo, KPMG was prevented from taking possession when Pogachar and Lombardi filed an appeal against that decision on October 8, 2014.

However, the receiver’s latest report complains that there has been no progress towards hearing the substantive appeal for almost one year, effectively leaving it - and the recovery process - in limbo.

“We are advised by Bahamian counsel that the appeal was filed out of time,” KPMG reported. “However, the defendants were successful on obtaining an Order dated November 12, 2014, from the Bahamian court validating the appeal.

“The registrar of the Bahamian [appeals court] issued a summons to settle the record, which hearing occurred on July 14, 2015. However, no date for the appeal was set.

“The court gave [Pogachar and Lombardi] 45 days to complete the record and settle the bond of $2,500 to pay for the costs of prosecuting the appeal. The receiver and its Bahamian counsel have heard nothing further on this matter since the hearing.”

Adding to KPMG’s obvious frustration is the receivership estate’s current lack of funds to pay a Bahamian attorney to defend that appeal, and failed efforts to strike a deal with the couple.

“There are no funds available to pay Bahamian counsel to defend the appeal which, we are advised, could be as much as $200,000 to $300,000,” KPMG added. “Accordingly, the receiver is exploring proceeding on a contingency fee basis.

“In early 2015, the receiver made an offer to the Bahamian defendants to sell the Bahamian condo and put the net proceeds in escrow pending a determination as to who is entitled to the funds.

“The receiver made the offer on the basis of discussions between respective counsel that the defendants may be interested in such an arrangement. However, the offer was refused.

“Given the existence of the stay, the receiver has not yet taken any action to take possession of the Bahamian assets.”

Legal documents show that Pogachar and Lombardi were being represented in the appeal by attorneys Maurice Glinton and Rionda Godet, the latter of the Deleveaux, Godet & Co law firm.

The October 8, 2014, notice of appeal alleged that then-Chief Justice Sir Michael Barnett was wrong to grant summary judgment while refusing to give the couple leave to file a defence and counterclaim.

It also questioned whether the receiver had the ability to bring the legal action seeking to seize the Canadian couple’s Bahamian assets.

The Supreme Court’s summary judgment has now been stayed for 20 months, with the attorneys for Pogachar and Lombardi having argued they would suffer “certain hardship” if forced to give up the Ocean Club condo.

“In the financial circumstances which [they] have faced since being denied access to money from which to pay for their upkeep, they have had to depend on the financial support of their parents and other close relatives to meet legal expenses they are incurring in defending the litigation in both the Bahamas and in Canada,” their attorneys alleged.