Allegations put top execs' safety and careers in danger, says Cornerstone

Private investment firm Cornerstone says the personal safety and careers of top executives Paul Simpson and Jason Chambers are at risk over allegations surrounding $2 billion worth of transactions involving retired businesswoman Rita Humphries-Lewin.

That disclosure is contained in a defamation lawsuit which Cornerstone and the two officials have filed against Deborah Mordecai Edwards, Humphries-Lewin’s niece, over her letter of complaint to the Bank of Jamaica in 2022.

King's Counsel Michael Hylton, whose firm Hylton Powell is representing the Cornerstone team, confirmed Wednesday that the defamation suit was filed in the Supreme Court on September 7.

The claimants are Cornerstone Holdings Jamaica, Cornerstone Financial Holdings, Simpson who is their founder and president and Chambers, the chief investment officer. A fifth claimant is Barita Investments Limited, a subsidiary of Cornerstone.

Simpson and Chambers "have suffered mental and emotional distress" and as directors or officers of regulated entities, “they have been exposed to risks given the need for them to continuously satisfy regulatory requirements for fitness and propriety, and risks to their personal safety”, one of the filed documents said.

The Cornerstone team alleged that they were defamed in a letter dated March 31, 2022 which Mordecai Edwards wrote to the Bank of Jamaica asking for an investigation into the transactions.

They say the letter was also sent to the Financial Services Commission and the Financial Investigations Division.

"In their natural ordinary meaning the words meant and were understood to mean that the claimants are guilty of crimes involving dishonesty, deception, forgery and fraud," the document said.

The Cornerstone team outlined four "facts and matters" to support their claim for aggravated damages.

They say Mordecai Edwards "published the defamatory statements without any basis for any belief in the truth of the allegations" and further that before delivering the letter to the Bank of Jamaica, she did not share her concerns to give them an opportunity to respond.

On the third point, Cornerstone said Mordecai Edwards as a former Bank of Jamaica employee and an experienced commercial “was fully aware" that her allegations "would have serious professional and personal consequences" for Cornerstone, Simpson and Chambers.

Regarding the fourth issue, Cornerstone said Mordecai Edwards “did not seek to reverse or to accept the reversal of the transactions of which she complained, but instead attempted to induce the claimants to pay her a substantial sum of money in exchange for her not pursuing the allegation”.

There were no further details on that fourth point.

A reference to a reversal is also included in a document accompanying a separate application that was filed in the Supreme Court in May by Cornerstone, Simpson and Chambers who are seeking an order, declaring that the transactions in September 2021 are legal.

"Your client has explicitly stated (both in meetings and correspondences with Messrs Hylton and Braham) that she has no interest in recovering ownership of the Barita shares Mrs Lewin liquidated as the means of paying her interest acquired in Cornerstone," noted a letter from Cornerstone attorneys to Mordecai Edwards’ lawyers.

That December 2022 letter is attached to Simpson’s affidavit submitted to support the application.

The Cornerstone officials said in court documents that they became aware of Mordecai Edwards' letter to the BOJ in September 2022.

Last Month, The Gleaner sought to speak with Mordecai Edwards but she declined, stating that doing so would be “inappropriate… at this time”.

The 87-year-old Humphries-Lewin, sold Barita to Cornerstone in 2018.

But two transactions three years later are the ones under scrutiny.

In September 2021, Humphries-Lewin reportedly sold 28.2 million of her remaining shares in Barita to pay the reported US$15 million (J$2 billion) cost of acquiring 1.4 million shares in Cornerstone.

In their May application for these deals to be declared valid, the Cornerstone team said they were seeking the court’s intervention because of accusations in Mordecai Edwards' letter, that the transactions involved “some level of deception, coercion and/or fraud”; that they knew Humphries-Lewin was diagnosed with dementia in 2019 and that her aunt did not get independent legal advice before agreeing to the deals.

Mordecai Edwards, who is also chairman of BPM Financial Limited, a competitor to Barita, claims that Cornerstone took advantage of the elderly woman because around the same time when it sold the shares to her aunt at US$10.80 per unit, it was selling shares also at US$1.40.

But Cornerstone, Simpson and Chambers have rejected those allegations and Cornerstone has instead questioned whether a purported request for more than US$20 million by Mordecai Edwards could be viewed as “extortionate”.

They also say they saw no signs Humphries-Lewin was unwell during the negotiations between April and September 2021.

Cornerstone also argued that the lower share price was made to existing shareholders in a separate and unrelated transaction.

A committee managing Humphries-Lewin’s affairs has asked the court to reject Cornerstone’s application and to reverse the transactions.

“I deny that my wife was at the material time of sound mind and say that it would have been obvious to him and persons who knew her and had spent time with her that she was not her usual self,” said HumphriesLewin’s husband, Karl, in response to an assertion from Simpson.

A court has declared the 86-year-old man as the principal guardian and chairman of the committee responsible for his wife’s affairs.

The first hearing of the Cornerstone application is set for October 2.

EDITOR’S NOTE: Cornerstone, its senior executives Paul Simpson and Jason Chambers, along with Barita, have filed a lawsuit against The Gleaner alleging defamation associated with the coverage of the matters filed in court.