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Buccament Bay Resort

Wilkins Kennedy duo implicated in Harlequin fraud verdict

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6th Aug 2013
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Two UK accountants were at the heart of a fraud case in Ireland in which Caribbean property company Harlequin won more than $2m in damages from a former contractor.

Sitting in the commercial High Court in Dublin, justice Brian McGovern handed down a ruling on 25 July that Padraig O’Halloran, managing director of construction firm ICE Group, had misappropriated funds meant for the construction of Harlequin's Buccament Bay project on the Carribean Island of St Vincent and the Grenadines.

The development was one of several that ran into trouble, ultimately pushing Harlequin Properties in administration on 23 April this year. The case continues to arouse controversy and further court cases are in the offing. In the Harlequin v O’Halloran judgement, the contractor was found guilty of fraudulent misrepresentation and deceit and ordered to repay $1.9m and €120,000 in damages to Harlequin.

The court noted allegations that O’Halloran had misappropriated $13 of the $50m paid in total by Harlequin to ICE Group.

“Although the plaintiffs claim they were illegitimate payments and expenditure, they do not form part of the Irish proceedings other than being offered as evidence corroborating his misappropriation of funds,” the judge said.

The court heard that O’Halloran used the money in Ireland to buy properties and passed sums to his father, a co-defendant. He also set aside around $200,000 for a wedding that never happened.

What makes this more than just a run of the mill fraud case is the close involvement of a partner and tax manager at top 25 accountancy firm Wilkins Kennedy.

Martin MacDonald (known as “Mac”) is a partner at Wilkins Kennedy's Southend office and was retained by Dave and Carol Ames.

“He became a close friend and confidante of Mr and Mrs Ames and, as time went by... he became, to all intents and purposes, the chief financial officer of Harlequin," the judgement read.

“I am satisfied that the evidence establishes that by the spring of 2010, Mr MacDonald was working in league with the first named defendant (Mr O’Halloran) and he had a serious conflict of interest in continuing to act for Harlequin.”

As the project dragged on O’Halloran assured Harlequin the first phase of the project would be finished by July 2010, when he knew it was highly unlikely. According to the judge, he ensured that Ames was kept uninformed on the progress and MacDonald helped him to do this.

Jeremy Newman, at that time a tax manager in the firm's Egham offices, was retained to give tax advice to Harlequin, but also acted for ICE Group, advising the firm in its corporate structure. Dave Ames complained about the potential conflict of interest, but received assurances from the firm that safeguards were in place. Nonetheless Newman resigned in November 2012 and subsequently set up a new construction company with Padraig O’Halloran in Jordan.

As previously reported, Wilkins Kennedy is the subject of a professional negligence claim from Harlequin. The Dublin judgement noted that MacDonald did not turn up to offer evidence in the case.

Grant Thornton Ireland’s head of forensic investigation services Paul Jacobs carried out a review of the payments made by Harlequin to ICE Group and found the contractor was “effectively insolvent” when Harlequin ended the contract due to continuing delays in 2010. Some $9m of payments were made from ICE Group bank accounts between 2008 and 2010 that were “totally unrelated” to the construction project.

Between 2009 and 2010, more than $2m was transferred into Irish personal bank accounts of ICE Group employees that had “nothing to do with” its business.

Among the witnesses in the case was former ICE Group accounts supervisor Shone Quammie, who detailed how O’ Halloran had no payment structure other than monthly payroll and that no cashflow projections were made. O’Halloran decided what was paid and what wasn’t, she said.

The judge concluded: “All the evidence points to the conclusion that the first named defendant [O’Halloran] misappropriated significant sums of money paid to the ICE group for the completion of phase one and that the level of misappropriations increased significantly in the last few months prior to ICE being dismissed.

“I hold that [O’Halloran] was guilty of fraudulent misrepresentation and deceit and that he is liable to the plaintiffs in damages.”

Harlequin itself is the subject of a a Serious Fraud Office (SFO) investigation and in April, its auditor BDO stepped down, the second auditor to do so in three years.

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Replies (7)

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By query
08th Aug 2013 14:54

absolutely [moderated headline]

you'd expect wilkins kennedy to review their internal procedures after this

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By plummy1
09th Aug 2013 15:12

Harlequin

Just to say you have referred to Harlequin as a property timeshare company but I don't believe this to be true. They are developing (or have been trying to at least) five star resorts in the Caribbean using investors money, The idea is that Harlequin and the investor would eventually share the benefits when the property is available for booking. The investor themselves has no right to using the property themselves.

I will be interesting to see how the Wilkins Kennedy case develops now that O’Halloran has been found guilty and a direct link between him and the Wilkins Kennedy partner has, I believe, been established. 

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John Stokdyk, AccountingWEB head of insight
By John Stokdyk
09th Aug 2013 14:34

Thanks Plummy

I because aware that "timeshare" wasn't quite right after I initially published the article, and has nothing to do with the Buccament Bay project on which the story turns. I had started to amend the article, but missed the introduction that was still posted on the front page.

thanks for keeping us on our toes!

PS: There are two sets of legal procedings carrying on around this case, including one for libel. In the circumstances it is best to avoid making comments that could be interpreted as prejudicing any trial. That's why we removed word from the first comment. 

Thanks (1)
John Stokdyk, AccountingWEB head of insight
By John Stokdyk
09th Aug 2013 17:45

Moderation in both senses of the word

I have had to step in on your comment George because you have gone too far again and made derogatory personal comments (about me and my team in this case). This is against our community rules - for good reason.

While you like to claim that a true statement is not libellous, this is not a practical stance. For example, have you thought what might happen if we decided to contest the defamatory statement you posted? Could you really prove what you said? How much might it cost you to retain a lawyer to compile a defence and negotiate a settlement?

This is something we have to consider every time someone posts a negative statement about someone on AccountingWEB, which is why we specifically forbid our members from doing so in our community rules. This is the price we all have to pay for participating in a reputable online community, and not the kind of bullying forum that featured in the news earlier this week.

As I specifically mentioned in my previous post, there are already libel issues surrounding the Harlequin case, so let's stop trying to make the judges' minds up for them - they take a very dim view of that too. 

It might also help the atmosphere around here if you could moderate some of your more heated comments and stick to the main points of any discussion.

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By plummy1
10th Aug 2013 04:22

Minor Point

The point I raised was only a minor one about the actual description of the nature of Harlequins business. When John says thank you for keeping them on their toes it wasn't because I had picked up some glaring defamatory comment.

Many thanks John for taking the time to comment.

 

 

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By query
12th Aug 2013 08:35

this is scandalous

you would expect better from wilkins kennedy

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By LDNAcc
10th Mar 2014 11:04

Harlequin now suing Wilkins Kennedy for professional negligence!

Harlequin emailed investors at the weekend confirming they're taking Wilkins Kennedy to the London High Court for professional negligence! This all ties in with the fraud you covered in this article. This is what they emailed.

 

 

Dear Investor,

To update you, on Thursday 6th March 2014, Harlequin issued proceedings for professional negligence against Wilkins Kennedy in the High Court, London.

We will keep you informed of developments as appropriate.

Regards,

Harlequin

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