Restaurant boss's transfer of money to wife's firm is fraud, court finds
The transfer of money from a firm behind a failing restaurant run by businessman Jeffrey Stokes to another owned by his wife Pia Bang Stokes was a fraud under company law, a High Court judge has ruled.
Judge Mary Finlay Geoghegan ordered Mr Stokes, a co-director of Citywest Hire Ltd, which operated the Il Segreto restaurant in Merrion Row, Dublin, to repay €21,000 back to the official liquidator of business, Myles Kirby.
Mr Kirby wanted the court to order repayment of €63,000 which he claimed had been wrongly transferred over an 11-day period in May/June 2013 involving the use of one of two credit card machines in Il Segreto, which was being managed by the Stokes's sons, Christian and Simon.
The sons, who previously operated the Residence Gentlemen's Club, had in January 2012 been barred by the High Court from being company directors for four years over their involvement in another restaurant business which went into liquidation.
Mr Kirby's lawyers argued the transfer of the €63,000 was a "self-serving exercise" at a time when Il Segreto was in freefall.
Mr Stokes denied it was fraudulent and said it was a response to a very difficult trading situation.
Yesterday, the judge said she was satisfied it was Jeffrey Stokes who, at a minimum, had control of the money which was transferred to a company called Petrolo, owned by his wife Pia, and which itself ran another restaurant, the Unicorn, around the corner from Il Segreto.
Mr Stokes must therefore repay the money, she said.
However, she added, because nearly €42,000 of the €63,000 transferred had actually been paid on staff wages, and for supplies to the restaurant, she was ordering that only the balance of €21,000 be paid back to the liquidator.
The judge said no application had been made against Christian and Simon Stokes and in reaching her decision, she had not taken into account any prior activity of the brothers.
The court heard the Revenue sought and obtained the appointment of the liquidator to Citywest in September last year. Mr Stokes and Giorgio Casari were directors of Citywest.
The judge said it was clear there was a significant falling out between Mr Casari and Mr Stokes and his wife, although the three had previously worked together in the restaurant business for around 20 years.
There were a number of facts which were not in dispute including that two credit card machines were used in Il Segreto, one linked to a Citywest bank account and the other to a Petrolo account, Ms Pia Bang Stokes's company.
When the landlord of the Il Segreto premises repossessed it on June 10 last year, the day it ceased trading, he (the landlord) handed over the Petrolo credit card machine.
Investigations showed that between May 30 and June 10 last year, €63,000 was transferred from the till takings of Il Segreto to the Petrolo bank account. On June 10, employees of Il Segreto transferred to the employment of Petrolo.
Judge Finlay Geoghegan said she was satisfied the effect of the lodgment of that money to the account of Petrolo was to deprive Citywest of monies it was entitled to. The effect was therefore to perpetrate a fraud of Citywest within the meaning on the Section 139 of the Companies Act 1990, she said.
The judge declined to make another order sought by the liquidator that Mr Stokes was guilty of misfeasance/breach of duty. This was a matter which the court could only determine at a further hearing but she believed this was not warranted in the interests of the orderly winding up of Citywest.