Business Irish

Thursday 14 November 2019

Liquidator was paid €100,000 bill to wind up CHC firm

A High Court described CHC as a 'sort of Irish Ponzi scheme'
A High Court described CHC as a 'sort of Irish Ponzi scheme'
John Mulligan

John Mulligan

The liquidator of Custom House Capital - the Ponzi scheme that imploded in 2011 losing investors millions of euro - was paid a total of €102,000 in fees in the two years following the scheme's collapse.

A report by liquidator Kieran Wallace of KPMG shows that over €81,000 in legal fees have also been paid out in relation to the liquidation of Custom House Capital (CHC).

The liquidator also realised almost €7,000 from the sale of CHC furniture, new filings with the Companies Office show.

The filing of the liquidator's report - the first to be filed at the Companies Office since the collapse - comes as the Examiner's Court continues to consider the costs associated with the liquidation.

A judgment on the matter was discussed on Monday at the Examiner's Court, and was adjourned until February 10.

CHC spectacularly collapsed in 2011 after High Court inspectors uncovered the "systematic and deliberate misuse" of more than €56m in assets including cash belonging to the firm's clients.

A High Court judge described CHC as "a sort of Irish Ponzi scheme".

As many as 2,000 CHC clients were affected by the collapse of CHC, whose directors included former Bank of Ireland employee Harry Cassidy.

It used clients' money to heavily invest in property during the last decade, acquiring assets in countries including France, Germany and Switzerland.

But as the financial crisis took hold, CHC began using client funds to make up shortfalls.

Investors received €1m in compensation in 2012, and €5.6m in 2013.

The newly-filed liquidator's report - which covers a two-year period from October 2011 to October 2013 - shows that CHC paid €48,125 in IT charges in that period, as well as almost €2,000 in public relations services. The Revenue Commissioners received €43,217.

It also shows that the firm received €553,778 in property management fees during the period, while it got an insurance refund of just under €80,000, and a €31,500 VAT refund.

Last summer, Bank of Ireland UK initiated legal proceedings against dozens for former CHC clients who'd lost money after the investment firm's failure.

The people being pursued by the bank had borrowed money from it to invest in CHC, with the loans arranged by CHC on behalf of clients.

The average amount being sought by Bank of Ireland UK from each former CHC client it was pursuing was reportedly around €250,000.

Last year, a former director of CHC - John Whyte - was determined by the High Court to have fraudulently misrepresented to a Wexford woman that her €145,000 investment in the firm was "safe", just a year before the company collapsed.

The woman entered a subordinated loan agreement with CHC in 2010, lending it €145,000. When she signed the contract she was recovering from cancer treatment.

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