Bolt’s SSL funds validated

Jamaican authorities have “validated” a claim that a company owned by sports legend Usain Bolt was allegedly defrauded of US$6.2 million, or almost J$950 million, at investment firm Stocks & Securities Limited (SSL).

The disclosure came last week during the trial of a claim that the Financial Services Commission (FSC) has brought against SSL and trustee Caydion Campbell.

During cross-examination by the defence on Thursday, SSL's temporary manager Kenneth Tomlinson said just over a month after his team took over, they confirmed the amount that was taken from the account of Bolt's company, Welljen Limited.

“So, by the end of March 2023, you were able to validate the Welljen claim in terms of the US$6.2 million?” asked King's Counsel Carlene Larmond, the independent attorney appointed by the Supreme Court to represent SSL.

Tomlinson responded: “Yes.”

He explained that although Welljen had submitted a claim to SSL for US$6.2 million, his team conducted its own forensic exercise to arrive at an independent conclusion.

It was not revealed how and when Bolt's funds will be repaid.

LAWSUITS FILED

The FSC, which regulates investment houses, installed Tomlinson on January 17, 2023, seven days after SSL reported the alleged multibillion-dollar fraud at the St Andrew-based firm.

Welljen filed a lawsuit against SSL and Jean-Ann Panton, a former client relationship manager, to recover damages of US$6.2 million, the original sum he invested or alternatively US$12.7 million, the amount on one of the last statements Bolt received in 2022, the court was told.

Welljen's account was opened at SSL in 2012. The sprint legend said the funds were for his retirement.

Two other lawsuits against SSL were highlighted during last week's trial – one by Jean Forde and the other by Robert Clarke, Brian Clarke and Tanya Wildish.

The 51-year-old private investment company has been rocked by an alleged fraud that has ballooned to approximately J$4 billion, impacting over 200 clients. The authorities say investigations revealed that the fraud spanned over a decade.

The FSC has faced criticisms for never revoking SSL's licence, despite concluding in 2017 that SSL was a “problem institution” with a “culture of non-compliance and mismanagement of client funds”.

Last year Bolt's attorney, Linton Gordon, said Welljen had a balance of US$12.7 million (J$2 billion) as at October 31, 2022, in his SSL investment account. The figure plummeted to J$1.8 million or US$12,000 when Bolt checked his accounts on January 11 last year.

So far, Panton is the only person charged in the fraud case.

She gave a statement of confession dated January 7, 2023, in which she admitted to stealing from 30 clients and covered it up over many years by providing fictitious statements. Bolt's company was not among the list of clients she gave.

Panton later stated that the confession “was premised on an offer” from her former boss and SSL founder Hugh Croskery. He has denied the allegation.

UNCOVERING THE

ALLEGED FRAUD

It came out in court last week that Bolt's team was prompted to make checks about Welljen's investment account after Panton reportedly informed them of her alleged fraudulent actions.

The details came from the lawsuit filed by Welljen, which Larmond used to question Brian Hackett, a Trinidad-based senior partner for international consultants and advisory services firm PwC and whom the FSC has used as an expert witness.

He stated in his report that regarding Welljen, SSL had liabilities of US$6.2 million relating to “loss of client funds”, which he said was validated and confirmed by the temporary manager.

“This claim was brought to the attention of the directors of SSL prior to 16th January 2023,” the report added, a key conclusion that supports FSC's view that SSL directors knew the company's already difficult financial situation was set to get worse.

Asked to clarify what he meant by “this claim”, Hackett explained that: “The full claim is for US$12 million. The US$6 million represents the original principal sum. The US$12 million represented appreciations in value as well as numbers reflected upon statements provided.”

PANTON'S CONFESSION

Larmond later asked him to state what he relied on to assert that the SSL directors were aware of the “claim”.

“I'm seeing from page six of my report that we noted that SSL notified the FSC of the fraudulent activities on January 10, 2023,” Hackett said.

That's when Larmond took the witness through the details of Welljen's lawsuit in a bid to determine whether any specific sum was mentioned by the Welljen team.

“On or about 11th January 2023, at about 1 p.m., the first defendant (Panton) came to a meeting with Welljen where the performance of the portfolio was discussed. … During the meeting, the first defendant told Walker that she had been stealing from clients' accounts held at the second defendant (SSL),” Larmond cited from the Welljen claim.

It was referencing a meeting that involved Nugent Walker, Bolt's manager.

It continued: “The first defendant asked Walker if the claimant (Welljen) would be prepared to help her to return the monies stolen. Walker then asked the first defendant whether she had taken any money from the claimant's account and she said, 'yes'. However, she said she could not recall the exact amount taken.”

According to the claim, “The first defendant (Panton) also told Walker that the second defendant (SSL) was aware of the first defendant's misappropriation of clients' funds belonging to the clients' accounts from August of 2022.

“After the first defendant confessed to stealing money from the claimant's account, Walker then drove to the offices of the second defendant and informed the second defendant that the first defendant confessed to stealing monies from clients' accounts, including that of the claimant. Walker was informed by the second defendant's representatives that the second defendant was in the process of conducting an investigation into the first defendant.”

Larmond then asserted to Hackett that Welljen's claim “doesn't state that Walker reported fraud in a specific sum”.

The expert said: “I agree”.

The lawyer further suggested that: “The validation of the sums allegedly defrauded from this client's account came later than January 11, 2023, and was reported to you as being some time between July 2023 and January 2024.”

“Correct,” said Hackett, who was retained by the FSC in July 2023. He submitted his report in January.

In a statement issued on January 30 last year, SSL said “no current board members or managers were aware that Dr the Hon Usain St Leo Bolt had an account” at the firm because “the account was not held in his name and the account did not, from 2018, have balances which would have flagged it as a high-value account”.

A CRUCIAL POINT

Hackett's claim that the SSL directors were aware of the fraud before January 16, 2023, is a crucial point in the trial, as the FSC is contending that SSL directors were not entitled to declare that the company was solvent at January 16 when it appointed the trustee and applied to the Companies Office of Jamaica for a voluntary wind-up and reorganisation.

SSL reported the fraud to the FSC on January 10, and two days later, the FSC issued directions to SSL, which, among other things, required that the FSC approve all transactions and further that SSL and its officials not take any action involving the company's assets.

The FSC claims that SSL's actions breached the Financial Services Commission Act and if the winding up was allowed to happen, it “anticipates that the 1st defendant's (SSL) clients will not recover their funds and/or assets, if the company is dissolved”.

However, the trustee, Caydion Campbell, has insisted that he was properly appointed, which, if accepted by the court, would dislodge the FSC's role in SSL.

Campbell argued in court documents that the FSC was fully aware of SSL's decision to appoint him as a trustee. He said concerns raised by the FSC that funds may not be recovered if he is allowed to operate were unfounded.

Through his attorney, King's Counsel Caroline Hay, Campbell has argued that SSL's accounts up to December 2022 showed a positive cash flow, which was buttressed by an October 2022 shareholders' agreement with Spectrum Capital Partners, which provided for a US$4 million capital injection.

But Hackett argued that though the size of the fraud was not known as at January 16, 2023, the directors did not give sufficient consideration to how it would impact the company in light of its longstanding financial problems.

“As at June 2019, 60 per cent of the asset base of the company was comprised of cash and other liquid assets. As at January 2023, that figure had declined to 22 per cent, which speaks to declining solvency,” he said.

During cross-examination by Hay, Hackett admitted that he was not aware of the Spectrum agreement and was also not aware that the temporary manager had reversed a portion of Spectrum's investment into SSL.

“So, if there was an error in reversing Spectrum, would you consider that material?” Hay pressed.

“It would be considered,” Hackett replied.

PANTON SERVED NOTICE OF SUSPENSION

The expert witness was also challenged by SSL's attorney Larmond over his conclusion that the SSL directors were aware of the allegations of fraud from as early as October 2022 and not from January 2023, when a report was made to the authorities.

He based his opinion on the lawsuits from Welljen, Jean Forde and the Clarkes.

Larmond went through each claim and asked Hackett whether there was anything in them that spoke to the directors being aware of the fraud from October 2022.

“I see no evidence of the October date claim, but I do feel confident that that October date would have been picked up by my team based upon the conversations and documents provided to us, but I do not have what that specific source document is … ,” he said at one point.

It also came out in the trial that SSL served Panton a notice of suspension dated August 22, 2022, levelling fraud allegations against her. She was accused of “knowingly providing inaccurate financial information to our client and shareholder George Chai on numerous occasions … over a period of several years”.

GOVERNMENT WANTS TO INTRODUCE NEW CLAIM

The trial will continue on Monday, when government lawyers will make an application before Justice David Batts to amend their lawsuit against SSL and the trustee.

The Government wants to introduce a new claim that former SSL directors Laurence Adamson and Peter Knibb signed the solvency declaration after they had already resigned.

The defence lawyers have argued that any potential amendment is an effort to “change the case”.

The FSC filed documents in court last week claiming that Adamson resigned on January 12, 2023 and Knibb on January 2, 2023. They, along with other directors, signed the solvency declaration dated January 15, 2023.

“What these documents are intended to do is to change the case that is before the court. The case before the court as it relates to the declaration of solvency has proceeded on the sole basis that the directors should not have signed because the company was insolvent,” Larmond argued.

She added: “What I see from this development last evening (Wednesday) is that the shape of the case is intended to be changed to challenge whether they should have signed on the date they signed. …The FSC, as claimant, has proceeded for a year and more on the basis that these men were directors at the time they signed.”

Hay supported Larmond's argument.

The FSC filed its lawsuit on January 23, 2023. It initially named Adamson and Knibb as defendants but later dropped its case against them, as well as against SSL founder Hugh Croskery.

Along with Tomlinson and the expert witness, other witnesses called by the FSC were Karene Blair, the senior director for securities at the regulator, and the agency's General Counsel Donia Fuller-Barrett.

Senior attorney Lisa White from the Attorney General's Chambers is leading the FSC's case.

The defence is due to present its case.

jovan.johnson@gleanerjm.com