Firms claiming to sell gold bars to investors operated 'Ponzi scheme' and defrauded customers, High Court told

Firms claiming to sell gold bars to investors operated ‘Ponzi scheme’ and defrauded customers, High Court told

A company which claimed to sell gold and silver bars to investors was being run as “a Ponzi scheme” and defrauding its customers, the High Court has heard.

the company, Irish Gold and Silver Bullion Ltd, (IGSB) with registered address at The Crescent, Monkstown in South Co Dublin, was wound up last year, and chartered accountant Myles Kirby was appointed liquidator.

As a result of a thorough investigation into the company’s affairs, Kirby has brought High Court proceedings against the company’s director and sole shareholder Nicholas Wickham, who it is alleged recklessly induced customers to deposit with IGSB which the defendant knew could never be repaid.

Represented by John Kennedy SC, Arthur Cunningham Bl, instructed by Michael Quinlan of RDJ solicitors Mr Kirby also alleges that Mr Wickham misappropriated clients’ money to various entities for improper purposes, including making illegal payments for his own personal gain.

Wickham concealed the extent of the company’s financial situation and failed to keep proper records; made false representations that funds invested in IGSB would be repaid when it was “hopelessly insolvent,” Kirby added.

It is alleged that the ponzi scheme was run by the IGSB for several years and when Kirby was appointed liquidator there was “no stock of precious metal in the company.”

So far, Kirby says he has been able to identify €1.03 million that remains owed to the company’s creditors.

On Tuesday, Justice Brian O’Moore granted lawyers for Kirby a temporary freezing order, known as a Mareva injunction, against Wickham and a company he allegedly owns and controls called Hamden Development Homes UK Ltd.

Mr Kirby alleges that Wickham, who has misappropriated funds from the IGSB for the benefit of the second named defendant.

The injunction, which was granted on an ex-parte basis, prevents the defendants, with addresses in London and Watford in the UK, from reducing their assets including cash in bank accounts below a value of just over €1.03 million.

Seeking order Mr Kennedy said his client sought the freezing order because of concerns that the defendants may seek to disperse these assets and place them beyond the reach of IGSB’s creditors.

Counsel said Kirby’s investigations have revealed that the defendants have significant assets, in the form of several properties in Watford with an estimated combined value of up to Stg £2m.

In a sworn statement, Kirby said the IGSB’s operations, he said, were straightforward.

Customers transferred their money to the company to buy gold and silver on their behalf, believing it would be sold at a higher price to generate a profit.

Mr Kirby said that in reality payments from clients were often used to make payments to other clients who had invested in IGSB at an earlier time.

Other funds were transferred to third parties or beneficiaries of Mr Wickham, which Mr Kirby alleges were used for the defendant’s own benefit.

Mr Kirby said proper books and records were not kept by the IGSB, which allowed Wickham “to run the ponzi scheme” and “conceal his fraud”.

Wickham, he said, kept no records of claims from customers who paid money to the IGSB, but received no gold or silver from it.

This gave the impression that the company’s assets matched what customers had paid into the company, when there were a large number of unpaid creditors and a large deficit.

It has not been possible for Mr Kirby to determine the whereabouts of all the company’s assets, including cash invested in the company, or bullion stocks held by IGSB due to Mr Wickham’s cavalier approach to record keeping.

It is believed that around €3 million in gold and silver was bought by the company between May 2019 and June 2001, Kirby said.

In addition, some of the customers were told that the precious metals were stored in vaults at the world famous department store Harrods in London and were provided with certificates from the IGSB confirming their purchase.

However, Kirby said Harrods has confirmed to him that it had no dealings with the company since 2016 when it closed its accounts and at the time of his appointment it had no gold in its vaults for the company.

This meant the certificates issued were “a fabrication” and that gold customers believed to have been bought because of their behavior did not exist, Kirby said.

Mr Kirby said that following his appointment as liquidator, on behalf of an IGSB client owed over €40,000, in June 2021 he wrote to Mr Wickham and asked him for some information about the company.

No information was ever given by Mr Wickham to Mr Kirby.

In emails from Mr Wickham, the liquidator was told there were “credible threats to my (Wickham’s) life and my family.”

Wickham also said that all documents from the company were in “a safe place in Ireland and that he would instruct a solicitor in Dublin.”

No representative for Mr Wickham ever contacted him and when Mr Kirby’s representatives arrived at the IGSB’s Monkstown office last August the premises had been evacuated and no files or computer equipment were found.

Kirby referred the matter to the Gardai.

Mr Kirby added that the IGSB’s office had also been visited by the Garda Criminal Assets Bureau.

Wickham also allegedly ran a similar business in the UK, which has also been dissolved.

Legal claims by customers of that company have been brought against Wickham in that jurisdiction, the court also heard, including a claim alleging he supplied someone with a 500g gold bar which turned out to be silver bars gilded with gold.

A criminal complaint was also made against Wickham in 2018 alleging that he loaned a £33,000 gold bar that his company acquired for a client, which he wanted to show to other clients, which he allegedly did not return.

He made a partial payment in gold to the appellant, but it is alleged that he still owes the appellant an estimated gold value of £18,000.

After granting the freezing order, Justice O’Moore made the matter recoverable for a date in September.

He also imposed an order restricting the media from publishing details of the case until after 12.01am on Wednesday 27 July next, to give Kirby’s lawyers time to inform financial institutions of the order.

The judge also gave the defendants permission to apply to the courts, after notice to Mr Kirby, to seek to vary the freezing order.

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