Some of the millions of dollars that went missing from a loan to a failed hotel development has been recovered, a source has said.

But the insider warned that substantial sums had been spent on legal bills and other service in the five-year court battles over Par la Ville Hotel and Residences, which was planned to be built on the Par la Ville Road car park in Hamilton.

Attempts to develop a luxury hotel on Par-la-Ville date back to the mid-2000s, under a series of Hamilton administrations

A loan of $18 million was made by Mexico Infrastructure Finance, a company based in Florida, to Par-la-Ville Hotel and Residences, also known as PLV, in 2014.

The loan was guaranteed by the Corporation of Hamilton under the “Team Hamilton” administration of then-mayor Graeme Outerbridge.

The Corporation of Hamilton and PLV were sued by MIF after the developer defaulted on the loan in December 2014.

MIF’s series of legal actions to recover the money, in Bermuda and overseas, started in January 2015.

The amount recovered, said to be in the millions, came from $12.5 million handed over to Gibraltar-based investment Argyle to raise more funding.

The source said the remainder of the $18 million had been spent on services for the development, that ranged from architects to lawyers.

A judge at the High Court in London ruled in July 2017 that Robert McKellar, the director of Argyle, had engaged in “unjust enrichment” and had spent the money.

Argyle was liquidated in 2019 to recover the cash, which Mr McKellar spent on a luxury Aston Martin car, an engagement ring, and two properties in Sussex, Overton Grange and Rystwood Farm.

Professional services firm KPMG, which was appointed to handle the liquidation, has declined to comment on the case.

But the source said that the two properties and other high-cost purchases had been sold off and some of the money had been given back to MIF and the Corporation of Hamilton, as well as to other creditors.

The recovered cash was said to have amounted to double digits in percentage terms, but the Corporation has not revealed the amount.

The Corporation of Hamilton was ruled to be off the hook on the guarantee in 2016 after a Bermuda judge found that City Hall had acted outside its legal power when it gave it.

A string of charges against Mr Outerbridge, along with Ed Benevides, the city secretary, developer and PLV president Michael MacLean and his wife Yasmin MacLean, were dropped in 2019.

Mr Outerbridge and Mr Benevides were accused of agreeing corruptly to obtain property for the benefit of the MacLeans by authorising the release of $15,449,858 from an escrow account at the Bank of New York.

Mr MacLean, Mr Outerbridge and Mr Benevides were also accused of dishonestly obtaining the money in the account, belonging to MIF

The MacLeans were further charged with stealing $13,749,858 belonging to MIF and using stolen money knowing that it “in whole or in part directly or indirectly” was the proceeds of criminal conduct.

But the Corporation remains embroiled in a court battle with MIF in the New York Southern District Court.

MIF accused the Corporation of Hamilton of allowing the millions to be stolen.

The firm is also suing the Bank of New York Mellon, where the escrow account was held.

The source said much of the $12.5 million, withdrawn from the account and paid to Argyle, had been lost over years of legal wrangling.

Charles Gosling, the Mayor of Hamilton, declined to comment.

The source added that the Bermuda police and Department of Public Prosecutions had opted not to pursue Mr McKellar through the UK police.

Cindy Clarke, the Director of Public Prosecutions, declined to comment last Friday.

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