Local investment firm Lines Overseas Management Ltd. (LOM) is denying knowledge of a default judgment that has reportedly been entered in a US court against it and 30 other defendants.

According to a recent report in the KYC Alert newsletter, which covers developments in the offshore financial services sector, a default judgment for $6.4 million has been entered against LOM, RBC Dominion Securities, of the Turks & Caicos Islands, (an offshore brokerage arm of the Royal Bank of Canada) and the other defendants in connection with an allegation of banking and securities fraud.

The report says court records show that the judgment was entered against LOM and RBC Dominion Securities at the US District Court for the Southern District of Alabama on July 1, 2004 after they failed to defend a civil complaint after being served in December, 2001.

KYC Alert says that LOM, RBC Dominion and the 29 other defendants were held jointly and severally liable for an award of $6,429,996 concerning banking and securities fraud committed by Cambridge International Bank & Trust (CIB&T), a now-defunct offshore bank that was once licensed in Grenada, and its officers and associates.

The report adds that the plaintiffs alleged in a complaint that was filed on May 21, 2001 that they were defrauded through the sale of sham certificates of deposits and promissory notes issued by CIB&T and in private placements carried out by the bank?s principals.

In a written Press statement LOM said: ?The LOM Group is not aware of such a judgment, and has never been served or even notified by any court or plaintiff that any such lawsuit existed.?

The firm added that ?the lawsuit appears to be an amended version of one filed in May, 2001, which named dozens of entities, including several well-known brokerage firms and insurance brokers?.

The statement went on to reiterate that the firm was not served or contacted about that lawsuit and only became aware of it via a news article in KYC Alert, and stated that there were ?no allegations of wrongdoing against or even a mention of LOM within the original complaint?.

It said that LOM considered the matter to be frivolous at the time and consequently took no action.

And according to LOM several of the other named defendants in the lawsuit defrauded its subsidiary Lines Overseas Management (Guernsey) Ltd. and the firm obtained a default judgment against them in New York in 2000.

The statement said that in the absence of having any knowledge of the default judgment entered in the Alabama court, ?as a matter of prudence LOM is having our US legal counsel research the matter and (will) take whatever action is necessary?.