Harlequin wins £8.5m misappropriation case

Beleaguered property investment group Harlequin Property has won its fraudulent misappropriation case against a former contractor at its Buccament Bay Resort development in St Vincent and the Grenadines.

During the 31-day trial at the High Court in Ireland, the court heard how the contractor allegedly fraudulently misappropriated in excess of $13m (£8.5m) from $50m (£32.7m) that was sent to his firm for the resort’s construction.

Of the $13m that was diverted, more than $2m (£1.3m) was sent to Ireland to pay for items including a new house and a lavish wedding. Other sums were used to fund luxury purchases, such as a $1.5m (£1m) private jet, a racecourse in St Lucia, a car franchise business and renovations to a rented property on the Sandy Lane estate, the court was told.

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Whilst the funds were being misappropriated, very little of the promised construction work was actually carried out. Consequently, the Buccament Bay Resort opened later than originally planned and on a smaller scale.

Other developments were also delayed as Harlequin was forced to create its own construction company to resume work in June 2010, the firm said.

A Harlequin spokesman said: “We are delighted with the Court’s decision and grateful that this unfortunate episode is behind the company. This case has taken up so much of our time over the last three years and we are now able to focus on moving the business forward.”

Delays to constructions that deposits had already been taken against have been a regular criticism levelled at Harlequin, which is currently embroiled in a number of law suits and is working on a restructuring of its UK sales arm after it entered administration earlier this year.

The fall into administration came following a Financial Services Authority alert targeted at financial advisers warning them to check due diligence when placing clients into self-invested pensions weighted heavily to Harlequin property investments.

Harlequin chairman David Ames previously told FTAdviser that the group lost £30m-£50m of income as investors pulled out following the alert being issued.

On the construction delays, Mr Ames said the firm had been guilty of no more than being “naive” and said money had been returned to investors in almost all cases except where the investor had decided to remain invested.

In April this year, the Financial Conduct Authority issued a fresh warning to financial advisers over Harlequin property investments after a Caribbean-based company that is part of the group approached self-investment pension savers seeking fresh investments for one of its resorts.

On the same day, the regulator also recommended prospective Harlequin investors contact a financial adviser.