PricewaterhouseCoopers (Bahamas) was accused of failing to pursue legal action against several parties involved in the failed fund, according to a recent article by KYC News.
According to the article, Zurich Financial Services Group (ZFSG) claimed that PwC so far has taken no legal action against the administrator or directors of the M. J. Select Global Ltd., which went into liquidation in 2001 after suffering losses of $40 million to $70 million.
As a result of the “inaction” by PwC, it was noted that ZFSG, along with many other shareholders were forced to institute legal proceedings against these parties in the United States, in which they allege they were victims of fraud.
In an interview with The Guardian on Wednesday, Wayne Aranha, partner at PwC and joint liquidator of M. J. Select Global Limited, along with Ishmael Lightbourne, refused to give any detailed comments on the ongoing proceedings noting that any statement given would first have to be made in the courts.
He suggested that further comments be sought from the firm’s attorneys, Alexiou Knowles and Co. “My co- liquidator and I, Ishmael Lightbourne, to the extent we do comment, we make them firstly to the courts,” he said.
He did state however, that contrary to accusations by ZFSG and other shareholders of the fund, legal actions were filed against some of the parties that the liquidators were accused of not pursuing. “We do have an action filed though, including some of the parties we are accused of not having pursued. We are pursuing them in the U.S.”, he said.
Mr. Aranha shied away from revealing whether or not any legal action was also being sought against these parties in The Bahamas, referring The Guardian to the firm’s attorneys for any additional comments.
Mr. Aranha shared with The Guardian that as liquidators of a mutual fund, their responsibilities are to shareholders of the fund. “The liquidator is responsible to the parties who have an interest in the estate. With respect to funds where creditors are generally few, and most of the parties having interest are in fact shareholders, quite often preference shareholders, then of course the duty is to them as a group. Our duty is to marshal in the assets and distribute them in accordance with the provisions of the law,” he said.
The allegation against Lightbourne and Aranha was made in a civil lawsuit filed at the U.S. District Court for the Northern District of Illinois on November 7, the article stated.
The article continued that plaintiffs: Zurich Capital Markets Inc., of Delaware; ZCM Asset Holding Company (Bermuda) Ltd., of Bermuda; ZCM Asset Holding Company LLC, of Delaware; and ZCM Matched Funding Corp., of Delaware, are seeking damages in the amount of $24.2 million.
Among the defendants are the Fund’s administrator, Oceanic Bank and Trust Company Ltd., and two of its directors, Terah Rahming, and Kenneth Clowes, all of the Bahamas.
Other defendants are: Michael Coglianese, of Illinois; Michael Coglianese, CPA PC, of Bloomingdale, Illinois; CCS Financial Services Inc., formerly Commodity Compliance Services Inc., of Illinois; Commodity Compliance Services International Ltd., of the Bahamas; GLS Services Corp., of Illinois; Gina Coglianese, of Illinois; Jeffrey A. Vorisek, of Illinois; Vorisek & Company LLC, of Illinois; Sonic Investments Ltd., of the Bahamas; Relms Ltd., of the Bahamas; David Lunn, of the Bahamas; Millennium Fund I Ltd., of the Bahamas; Delta Ltd., of the Bahamas; Global Arbitrage Development Ltd., of the British Virgin Islands; Marcus J. Mahy, of Bermuda; Landmark Trust (Bermuda) Ltd., of Bermuda; John Caseley, of Monaco; Ambassador Directors Ltd., Ian Ledger, of Monaco; and Landmark Management, SAM, a.k.a. Landmark Monaco, of Monaco.
ZFSG has alleged conspiracy to defraud, and unjust enrichment against all of the defendants and securities law violations, breach of fiduciary duty and accounting malpractice against selected parties.
It was reported in the article that the shareholders, through investing in M. J. Select Global Fund, Limited, believed that they were investing in “an extremely safe and liquid Bahamian mutual fund that was engaged in a market-neutral trading strategy while in reality millions of dollars went into highly risky and illiquid funds.”
The lawsuit, filed on November 7, is the second action filed at federal court by the Zurich Financial Services Group in connection with its investment in M. J. Select Global.
In August, 2001, Zurich Capital Markets filed a complaint in Illinois against “several culpable parties in this scheme”, including Oceanic Bank, M.J. Select Global, M.J. Diversified Fund LP, M.J. Financial Arbitrage LP, and Martin James Capital Management, Inc., described as “the purported investment manager of M.J. Select,” the article revealed.
By Martella Matthews, The Nassau Guardian
