The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

A PRINCIPAL behind the Long Island cruise port project is demanding that a Bahamian law firm refund him $2m sent for a separate investment deal in the Exumas that “never took place”.

Sherif Assal, one of the two investors spearheading the Calypso Cove development, has launched legal action against King & Company seeking the return of funds that were transferred to it over a “proposed development” on Elizabeth Island being spearheaded by two of its clients.

He is alleging that he was offered a 30 percent interest in the project, which was to feature a mixed-use resort development over 33.1 acres at the island’s western end, by Steve Harrington and Eric Kim in return for a $3m investment in a property valued at $10m.

Two-thirds of that sum was purportedly paid through King & Co, but Mr Assal is claiming that the transaction involving his investment was never properly consummated and completed, and that he never agreed his $3m “would be used to purchase” the 33.1-acre site on August 4, 2021.

A provider of security services to the global cruise industry for 22 years, he is alleging that it is “unconscionable” for the Bahamian law firm to have either retained his monies or allowed its clients to finance their Exumas real estate purchase “without my permission or knowledge in the circumstances” where he has no confirmed equity ownership or other interest in the deal.

Mr Assal’s action is also asserting that King & Co breached the Financial Transactions Reporting Act by “failing to obtain” the required Know Your Customer (KYC) information on him prior to accepting the $2m that he wired to it.

But Mr King, in an e-mailed message to Tribune Business, denied his firm had violated the Financial Transactions Reporting Act’s (FTRA) customer due diligence requirements or any other Bahamian law. He branded the allegations, and legal claim, as “total nonsense” and “fabricated”, and hinted he may pursue Mr Assal for damages for “trying to besmirch” his and the company’s reputation.

“The firm and the firm’s client did not commit any violation of any Bahamian law,” Mr King told this newspaper, also defending Mr Harrington and Mr Kim. “The matter is presently before the Supreme Court and the firm has engaged King’s Counsel (KC) to represent its interest and to vigorously defend the suit. This claim is total nonsense, lacks merit, substance and is fabricated.

“I trust that the complainant understands that by trying to besmirch the firm’s reputation [he] exposes himself to damages. I have been practicing for 27 years, and no client or third party has ever made any such scandalous accusations against myself or the firm.We will see this matter to its end, and I am confident the firm will be vindicated and this case dismissed as lacking any merit.

“However, due to the fact that the matter is before the Supreme Court we are not at liberty to disclose pertinent facts. The case cannot and will not be tried in the public domain. Any further comments on the matter will be made by our attorneys.” Mr Harrington is also an existing investor in The Bahamas as a member of the consortium that acquired Exuma’s Peace & Plenty resort in 2017.

Documents filed with the Supreme Court reveal that Mr King had e-mailed Mr Assal’s attorneys, Delaney Partners, on January 17, 2024, to confirm his clients had informed him they will “attempt” to raise $3m by May 1 this year to buy out his interest in the Elizabeth Island project.

However, the e-mail trail also reveals that the purchase of Elizabeth Island’s 33.1 acres remained unrecorded and unsecured almost two-and-a-half years after the $3.85m deal was closed on August 4, 2021, because the necessary VAT has yet to be paid on the transaction to the Public Treasury.

The outstanding tax would be $385,000 at the current rate, but the deal would have occurred at a time when the former Minnis administration had raised the VAT rate on conveyances worth $2m or more to 12 percent, so the unpaid liability could be as high as $462,000.

Mr King, in a January 15, 2024, e-mail to Edward Mar- shall at Delaney Partners, argued that Mr Assal’s fight was with his clients - Mr Harrington and Mr Kim - rather than with himself and his law firm as he confirmed that the Elizabeth Island purchase was not stamped or recorded in the Registry of Records due to the unpaid VAT.

“I fail to see what King & Co has done wrong,” Mr King wrote. “Perhaps an initial inquiry as opposed to a demand letter would have been more appropriate. Your client’s relationship is with Steve Harrington. Your client arranged with Steve Harrington to send funds directly to King & Co.

“Money was sent to King & Co for closing on the Elizabeth Island deal as per e-mail and wire details from your client. Such monies were not sent in escrow to your client’s order (or any contingency for that matter) and were transferred to Higgs & Johnson at closing.”

Two days later, Mr King provided correspondence which he said showed Mr Assal’s acknowledgement of his 35 percent interest in the Elizabeth Island project and “his involvement some 14 months after closing with the land planning aspect of the deal as per the actions of an economically interested party in the deal”.

“Clearly he was aware we closed in 2021 as he spent 2022 working on land planning,” Mr King told Mr Marshall. “What is also bemusing is that this is the first I have heard from your client in two-and-a-half years and then only through your good self.”

Noting that Mr Assal had sought to use his Elizabeth Island investment to try and obtain economic permanent residency in The Bahamas,

King & Co senior partner added: “Accordingly, it is disingenuous of your client to, one, argue that he was unaware of the use of the funds and, two, that he was not part of the deal.

“He is maybe dissatisfied that his investment has not come to fruition but to patch together an artificial ver- sion of events to establish an action against King & Co is completely unfair.” Mr King, though, said Mr Harrington and Mr Kim had advised they would both record the August 4, 2021, deal and pay the due VAT as well as provide evidence of Mr Assal’s 35 percent beneficial owner- ship in Elizabeth Island.

They also, he wrote, now plan to sell the property and “attempt to raise $3m by May 1 to purchase Sharif’s interest of 35 percent”. Clearly hoping this would be sufficient to head-off any legal action against his firm, Mr King wrote: “In the circumstances please withdraw your demand from King & Co.”

That has not happened. Mr Assal, in his legal filings, asserted that he was first approached about the Eliza- beth Island project by Mr Kim, co-founder and chief operating officer of Mr Harrington’s firm, in April 2021 when they were members of the same US country club.

He claimed that the project’s ultimate owner was a US-incorporated company, Exumar LLC, which was beneficially owned by Mr Harrington and Mr Kim.

Exumar LLC, in turned, owned a Bahamian entity, Exuma Elizabeth Ltd, which was to acquire the 33.1 acres.

Informed that the site was valued at $10m, Mr Assal alleged he was informed that he could acquire a 30 percent ownership interest with a $3m investment. He visited the island on April 26, 2021, but although presented with a draft operating agreement he claims this and other documents necessary to close the deal with him were never signed or executed.

However, the Calypso Cove principal did receive comparisons with a similar project that Mr Harrington and Mr Kim were said to be involved with on Exuma’s Stocking Island, with the land deal for that development said to involve a group featuring Bahamian ex-LA Laker, Rick Fox, and Kanye West, the singer and rapper formerly married to Kim Kardashian.

“The properties are almost identical in size, plus or minus 40 acres, and an argument can be made for either parcel to be more valuable than the others,” Mr Kim wrote. “One major positive with our parcel on Elizabeth Island is that we have the ability to build a deeper water marina where it was not feasible on the parcel on Stocking Island.

“Therefore, we would be able to project additional income from boat rentals and docking fees with our project which, in turn, would substantially increase the income from our property.” Mr Assal admitted that, “excited” by the Elizabeth Island prospects, he transferred $1m to a Florida account on May 18, 2021, in accordance with Mr Kim’s instructions as the first one- third of the requested $3m.

And, after “additional funds” became available to him, Mr Assal sent $500,000 and $1.5m to King & Co on June 7 and 8, 2021, to make up the $2m balance. He alleged that, as requested by Mr Kim, these funds were sent with the wire instructions “these funds are for Exuma LLX which is owned by Steve Harrington”.

However, Mr Assal alleged that he became concerned that no formal agreements had been executed to confirm his 30 percent interest in Exumar LLC. “Not knowing the processes in The Bahamas, I was totally unaware as to what documents they were working on getting to me or how long it would take to get such documents to me,” he alleged.

Eventually, more than two years later, on August 24, 2023, Mr Assal alleged he was sent the unrecorded conveyance plus documents showing Exumar LLC owned Exuma Elizabeth Harbour. Also included was a Bahamas Investment Authority (BIA) letter from November 25, 2019, which gave an approval for the real estate purchase that was valid for one year and required tax to be paid and Central Bank permission.

That approval will now have expired, and Mr Assal said his attempts to use his interest in Exumar to obtain Bahamian economic permanent residency failed because he “did not have any legal or equitable interest in the property to support such application” as the Elizabeth Island transaction had not closed. And Exumar’s corporate filings in Florida did not register his purported ownership interest.

Asserting that he had only made $3m available in anticipation of closing a deal, which had not been closed or consummated, Mr Assal alleged: “I certainly did not agree that my funds would be used by Exuma Elizabeth Harbour to purchase the property on August 4, 2021. I certainly did not agree that my funds could be used for that purpose.

“I only transferred my funds to [King & Co] so that they could be available to conclude the proposed trans- action once agreements for that purpose had been executed.. Also, it is not that I am ‘dissatisfied with the deal’ as Mr King has flippantly put it.

“It is that the proposed transaction did not take place, and it is unconscionable for the defendant to retain my funds or to have profited from them permitting Exuma Elizabeth Harbour to use them to purchase the property without my permission or knowledge in the circumstances where I have no interest whatsoever in Exuma Elizabeth Ltd or Exumar to-date.”