A Judgment, entered by the Grand Court of the Cayman Islands, regarding B & C Capital, Ltd., has provided conclusive evidence that the company's theft of client funds was the subject of litigation, well known at the time that Northland Wealth Management Inc. transferred assets of many of its Canadian & American clients to B & C, using materially misleading forms that showed the corporation as a financial institution. Client funds should never have been allowed to be transferred to B & C; those funds are now missing.
The case, styled Highgate Securities Ltd. vs. B & C Capital Ltd.* demands that B & C Capital forthwith transfer all of plaintiff's assets, held by the defendant to the plaintiff, that an accounting be delivered, including the method of calculation of fees charged. The plaintiff disputes defendant's allegations regarding the account balance, and there is information in the judgment that indicates a B & C agent pled guilty, in the United States, to criminal charges of securities fraud**.
The discussion, in the ruling, contained references to affidavits filed on behalf of B & C, including those by Fernando Mota Mendes, and Cecil Franklin Speight, the convicted fraudster. We have previously covered Sr. Mendes' criminal charges in Grand Cayman, which remain pending, and have not been dismissed, as well as his bankruptcy filing, and other claims of misconduct.
Sr. Mota Mendes filed affidavits, of his own personal knowledge, meaning that he was with B & C at the time that the account was opened. He was, therefore, resident in the company when Northland Wealth Management Inc. directed millions of dollars in client money to this troubled company. Northland totally ignored the fact that Mendes worked there, in its decision to move client money there.
Northland's counsel has made much of the fact that the company's compliance officer, Arthur Salzer, is overqualified for his position, but even a brand-new compliance professional would have declined to send client money to a shell company, with no assets, that was:
(1) Involved in civil litigation, where there are allegations of missing funds, clearly excessive fees, and a negative balance in the victim's account, and
(2) Which numbered among its agents an individual who had pending criminal charges, and had complaints by victims, made to government regulators, and
(3) Which had, at that time, a Managing Director who was himself a defendant in criminal action, and the subject of multiple client complaints to regulators.
Northland Wealth Management, Inc. obviously performed NO due diligence upon the officers of B & C Capital Ltd., when it ordered client funds to be transferred to its accounts. This is what is known as compliance malpractice, and one trusts that the victims of the fraud, perpetrated upon the investors, will seek justice for this gross negligence in a court of competent jurisdiction.
*Case No.: G96 of 2015.
** The decision referenced above dealt strictly with procedural issues; it appears that the defendant's counsel engaged in tactics that can only be described as dilatory, and the plaintiff sought the entry of a default judgment.