PropertyMay 7 2013

Property firm pursues libel claim over ‘Ponzi allegations’

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Embattled property investment firm Harlequin has filed a defamation claim in the High Court against its former accountant Wilkins Kennedy and two of its employees over a website that alleged the firm was effectively operating a ‘Ponzi’ scheme.

The details of the case emerged from a newsletter to investors from Harlequin which revealed that it is pursuing a defamation case that is set to go to trial in November and which has not been reported widely.

In the particulars of claim filed at the High Court in August 2012, seen by FTAdviser, Harlequin is claiming damages for libel and breach of confidence, aggravated damages and an injunction to restrain the three named defendants from further publication of defamatory allegations.

The defendants are chartered accountants Wilkins Kennedy, the former accountant and auditor of Harlequin Management Services, which trades as Harlequin Property, its former senior director Jeremy Newman, and a partner at the firm.

Wilkins Kennedy said it is “vigorously” contesting the claim. Mr Newman, the supposed creator of the website at the centre of the lawsuit, is also said to be “vigorously defending the action”.

Harlequin Management Services filed notice of its intention to enter administration last month. The firm, which has been at the centre of controversy in recent months following a Financial Services Authority alert targeted at advisers recommending investments, said it is “confident” it can be rescued following a restructuring.

The claim is in relation to the website, which the claim states was launched in October or November 2011 and was removed from public access on 27 June 2012

Harlequin’s claim says that the website contained a statement that it was designed to give future potential purchasers a “greater insight into the activities of Harlequin in the absence of any proper due diligence by those actively selling and advertising the Harlequin products”.

Harlequin’s claim says the website contained myriad “wildly defamatory allegations of all the claimants”. In particular, it is said to have stated that the entire Harlequin business was “nothing but a fraud” and is a Ponzi scheme.

The court document states that both Wilkins Kennedy employees acted in breach of their duties of trust and confidence.

Harlequin also states in the claim that the confidential documents disclosed did not reveal any wrongdoing and that the allegations are therefore false and defamatory. It is alleged that Mr Newman was responsible for administering the website.

The court document says Wilkins Kennedy is “vicariously liable” for publishing the content.