Architects of Wine Limited, a Cayman Islands company that was officially liquidated in August 2005, filed a lawsuit against Barclays Bank PLC in England last month seeking US$1.31 million in damages or restitution.
AOW is a wholly-owned subsidiary of Paradigm Holdings Limited, which was also officially liquidated last August. The company marketed and sold wine investment contracts.
Investors, many of whom were physicians from the United States, advanced more than US$24 million into the scheme.
The Particulars of Claim in the lawsuit filed on 9 March state that AOW had a bank account held in Cayman by Barclays’ affiliate FirstCaribbean International Bank in which payments from investors were deposited.
However, in May 2004, FirstCaribbean’s correspondent banks in the US, of which Barclays’ New York branch was the principal one, refused to accept any further transfers on behalf of AOW after a Cease and Desist Order had been issued with respect to AOW in the State of Arkansas.
FirstCaribbean also refused accept any further transactions on the AOW account as a result of the Arkansas Cease and Desist Order,
Around that same time, Architects of Wine (UK) Limited, as separate and wholly-owned subsidiary of Paradigm incorporated in England and Wales, requested Barclays to open a U.S. dollar account in addition to its sterling account.
Subsequently, cheques in an aggregate sum of at least US$1.03 million made payable to AOW with respect of purchases of wine investment contracts were deposited into AOW UK’s dollar account.
In addition, prior to the opening of the dollar account but after the Arkansas Cease and Desist Order, US dollar cheques payable to AOW for the purchase of wine contracts were deposited to AOW UK’s sterling account.
When Paradigm was put into voluntary liquidation on 12 October 2004, there was only £49,002.62 in the sterling account and US$569.32 in the dollar account remaining.
The lawsuit claims that the cheques made payable to AOW and deposited into one or the other AOW UK accounts were at all times property of AOW and that the collection of those cheques by Barclays amounted to a wrongful conversion of AOW property.
In addition to the US$1.31 million, AOW is claiming interest on the money, costs and further or other relief.
Chris Johnson of Chris Johnson Associates, the company conducting the liquidation, said investors could not expect any payments from funds that might be awarded in the lawsuit.
‘There have been significant costs in getting this far,’ Mr. Johnson said, noting that outstanding liquidation costs would be paid out of any proceeds from the lawsuit.
Mr. Johnson also said there were other actions to be taken.
‘We’ll be taking legal action here an in other jurisdictions to try to recover funds for the investors.’