The Burns brothers were spending investors' money and using Televest Ltd. as "their own private bank,'' the Supreme Court was told yesterday.

They were not even making payments on their own Signature credit cards, the court was told.

Mr. Alan Dunch of Appleby, Spurling and Kempe depicted the Televest Group as a house of cards that was bound to collapse.

Preferred shareholders who invested in Televest should have had their shares redeemed out of company profits, Mr. Dunch said.

Instead, the shares were "being redeemed through the influx of new capital,'' he said. "If you had $100,000 invested in Televest and you asked for it back, the way you got it back was they went out and found another $100,000 some place.

"Eventually it was all going to catch up,'' Mr. Dunch said. "It is clearly right that these companies cannot carry on or be allowed to carry on.'' Provisional liquidators with Kempe & Whittle have said $8.3 million was owed to local investors who bought preferred shares in Televest. The shares, which drew interest of seven to nine percent, were to be redeemable upon 14 days notice.

But redemption of shares was halted when the Supreme Court placed Televest and four related companies in provisional liquidation in December. Among the companies was Telecheck Holdings Ltd., operator of the Signature and Travel Club credit cards.

Represented by lawyer Mr. Julian Hall, Televest directors Mr. Richard Burns, Mr. Thomas Burns, and Mr. Christopher Donnachie are opposing petitions to wind up Televest.

A date to hear the winding-up petitions has not been set. Yesterday's hearing, which was in its fourth day, related to a request by Mr. Hall to set aside an order making Mr. Charles Kempe and Mr. Gil Tucker joint provisional liquidators of Televest.

Mr. Dunch, who represents the liquidators, said loans to the three directors amounted to $2 million, some of which was secured by promissory notes which could not be called in for ten years.

Televest was "a cash cow for these directors,'' he said.

Mr. Thomas Burns said he was going on a five-year sailing sabbatical, and Mr.

Richard Burns increased his company loans by $1.5 million between March 31, 1992 and December 15, 1993.

"The main way funds were advanced to the directors was through transfer of the balances on directors' Signature and Travel Card credit cards to their loan accounts,'' Mr. Dunch said. They received "long-term loans on what should have been short-term credit on terms much more favourable than those charged to the general public.'' Amounts charged to directors' cards "were unusually high when compared with the general public's card usage,'' and there was no information available on who set the limits on the directors' credit cards.

Normal merchant charges were supplemented by use of the card's personal financial planning system, designed for use with merchants who did not honour the Signature card, he said. Telecheck would pay the merchant up front by cheque, and charge the cardholder's account.

A cash advance option was also used by the directors, he said.

In the case of Mr. Richard Burns, charges through personal financial planning amounted to more than $580,000, between January 1, 1992 and December 15, 1993, and miscellaneous credits to his account during the same period were more than $640,000, Mr. Dunch said.

"In this entire period, less than $25,000 of the charges made to the card were paid off,'' he said. "No payments have been made at all since May of 1992.'' Mr. Dunch described a "domino effect,'' which began with a claim from Sarnia Mutual Investments Ltd., a bankrupt United Kingdom company that was an original 40 percent investor in two of the Televest companies -- CTRAK and TBL.

Mr. Peter West, representing Sarnia, came to Bermuda to meet with the brothers in early December. After "a great deal of pulling of teeth,'' he received financial information.

"An immediate analysis of those accounts disclosed that as a group it looked very realistically like they were all insolvent,'' Mr. Dunch said of the Televest companies.

Sarnia also discovered "they didn't have an interest in these new companies called Telecheck Holdings Ltd. and Televest,'' he said.

"Sarnia had been cut out'' through an agreement which it was never made aware of to sell TBL's business to Telecheck Holdings, Mr. Dunch said.

"Asset stripping, pure and simple, is what it was,'' he said.

CTRAK and TBL were "clearly insolvent,'' and had claims against other Televest companies, he said.

The hearing resumes today.