Manager of Bermuda fund in $6m embezzlement probe
By Alex Wright
Bermuda police have recommended that 55-year-old Canadian money manager Hans Black be criminally prosecuted for allegedly defrauding a client of $6 million.
Black, whose Montreal-based Interinvest group reportedly manages over $2 billion from offices in Canada, Bermuda, Switzerland and the US, is suspected of embezzling funds sent for investment in the Bermuda-domiciled Hedge Hog and Conserve Fund, which is managed by Interinvest (Bermuda) Limited.
A criminal investigation was launched following a complaint from Regula Dobie, a Swiss national residing in Kenya who has been trying to withdraw her funds from Interinvest since mid-2007.
Detective Sergeant David Geraghty, of the Financial Crime Unit of the Bermuda Police Service, told The Royal Gazette yesterday the matter had been referred to the Director of Public Prosecutions (DPP). No one was available at the DPP to comment when contacted yesterday.
"As the result of a complaint made to the Bermuda Police Service and as the result of a subsequent investigation conducted by officers of the Financial Crime Unit, a file has been presented to the office of the Director of Public Prosecutions," he said.
The story was broken yesterday by online newsletter OffshoreAlert.
Interinvest vice-president Gabriel Flores refused to comment on the allegations when contacted by the Gazette yesterday and the Bermuda office referred enquires to lawyers Trott & Duncan, who did not return this newspaper's call by press time.
OffshoreAlert reported that several long-serving officers and directors of Interinvest and Hedge Hog and Conserve Fund had resigned their positions in recent months, including David Notman, a former officer of Butterfield Bank; Malcolm Thomas, a former officer of the Bank of Bermuda and Butterfield Bank; Ward Young, a well-known local businessman; and Charles Collis, a partner of law firm Conyers Dill & Pearman.
They have been replaced with Danesh Varma, who is qualified as an accountant in Canada and the UK, and Bermudian attorney Lynda Milligan-Whyte.
Investors in the Hedge Hog and Conserve Fund were informed in August 2008 that the Fund had begun to liquidate its assets.
Another of Interinvest's Swiss Clients – Rolf Herzog – has been trying to redeem $2 million from the Hedge Hog and Conserve Fund for nearly three years.
Dobie and Herzog have filed separate civil complaints against Black and Interinvest in Bermuda and Canada, respectively, over the last 17 months in which they claim they are owed a combined $8 million.
Dobie transferred $4 million to Interinvest's account at Butterfield Bank in Bermuda in November 2004 and an additional $2 million in September 2005, all of which was supposed to be invested in the Hedge Hog and Conserve Fund. After trying to redeem her investment since May 31, 2007 without any success, she filed a complaint at Bermuda Supreme Court on September 24, 2008 alleging breach of contract against Interinvest (Bermuda) Ltd. and fraudulent misrepresentation against Black.
On June 1, 2009, Justice Ian Kawaley determined that Interinvest (Bermuda) had no defence to failing to repay the monies sent by Dobie and granted her application for summary judgment against the company in a minimum amount of $5 million, plus interest and damages to be assessed at a later date. Justice Kawaley declined to award the entire $6 million being claimed because of a lack of evidence about exchange rates for Swiss francs, the currency in which Dobie's investment was made, but he left the door open for the amount to be increased.
In the same ruling, Justice Kawaley granted Black's application to set aside a default judgment for 7.3 million Swiss Francs that Dobie had obtained against him on January 16, 2009 after he failed to enter an appearance in the case but only if he provided security of $1 million within 28 days of the ruling. There is no indication that the $1 million has yet been paid. Despite giving Black another opportunity – his third – to defend himself, Justice Kawaley left no-one in any doubt about the uphill task he faces in convincing the court that he did not defraud Dobie.
"Although he has not demonstrated that he has a defence which has reasonable prospects of success, the wider interests of justice require that he be afforded an opportunity of absolving himself from the serious allegation that he has misappropriated the Plaintiff's monies," stated the judge.Black's defence when applying to set aside the default judgment was that Dobie had transferred $6 million to Interinvest (Bermuda) "without prior notice or sufficient instructions for either defendant to identify their source or the purpose for which the funds were remitted" and, therefore, Interinvest was not bound by the terms of an Investment Advisory Agreement that Dobie signed in 2004.
