Irish investors among those who lost millions in US firm
Published 22/01/2016 | 02:30
Irish investors are among clients who claim to have lost millions of dollars after investing in a US biofuel firm and who are now battling to recoup their massive losses.
Those individuals and firms that took part in the private placements undertaken by Delaware-based 11 Good Energy included Mullingar Pewter Ltd, which invested over $570,000 (€527,000) in the US energy company.
Neil Browne, a director of Dundalk-based Browne Logistics, invested $15,000 in Good Energy in 2009, while Browne Logistics invested $33,000. Mr Browne is resident in Newry, Co Down.
Investors from Ireland, Northern Ireland, England and Wales who are seeking recompense ploughed a total of more than $8m (€7.4m) into Good Energy in 2009. Irish backers provided $1.8m of that.
The US company had billed itself as a worldwide manufacturer and distributor of biofuel. Its chief executive at the time the money was being raised was Frederick Berndt. In 2014, he was sentenced to a prison term in Ohio for tax evasion.
Good Energy had created presentations on its business that were furnished to Florida-based investment advisory firm JHS Capital.
JHS then used that material to market Good Energy shares to potential investors.
Other Irish investors who stumped up money include a company called Berrick Industries, based in Tralee, Co Kerry. Its directors are Glasgow-based Rick Earley and Cork-based Ursula Earley. The company invested $375,000 in Good Energy. Berrick was placed in voluntary liquidation last month.
Good Energy had claimed that a production facility in Ohio capable of generating 14m gallons of fuel a year would be operational by summer 2009.
It also claimed that it was involved in talks with other companies regarding transportation and distribution of the fuel, and would also be able to secure contracts for the sale of the fuel. It also claimed it would also be building a second production plant.
But lawyers for the investors insist the claims were false and that JHS Capital breached its fiduciary duty to the investors who were its clients.
The lawyers have taken their case to the US Financial Industry Regulatory Authority (Finra). Finra operates the largest securities dispute resolution forum in the United States. A decision made by a Finra arbitrator is final and binding on all parties involved in a case. JHS Capital, which was acquired by Ameriprise last year, was a member of Finra.
Lawyers have made an arbitration claim at Finra against both JHS Capital and Ameriprise. But JHS's membership of Finra ceased last October. The claimants then sought to include Ameriprise as a respondent in the case.
But Ameriprise has claimed in court that it expressly disclaimed any liabilities of JHS when it acquired it, and is not a "successor-in-interest" to JHS. Ameriprise also insists it did not acquire the accounts of the claimants.
Ameriprise has sought a court injunction to prevent the claimants from proceeding with arbitration against it.