The liquidator of a forestry firm that operated as a “Ponzi scheme” wants to make two people who were jailed over the fraud personally liable for the company’s €3.8 million debts.
Chartered Accountant Declan De Lacy has sought the orders against David Peile and Garret Hevey who are alleged to have operated Arden Forestry Management (FM) Ltd in a fraudulent manner.
The two were jailed by Dublin Circuit Criminal Court in 2019 after they pleaded guilty to offences including deception and fraud.
The court heard they induced mainly older foreign investors into putting money into the company to acquire forestry in Ireland.
Investors were led to believe that funds were being used to acquire forested lands from which they would receive payments after the trees were sold.
They obtained over €6.4 million from investors, which should have seen Arden FM acquire several hundred acres of land on behalf of investors.
However, the company only spent €133,000 of investors’ funds on some 30 acres of forestry lands. A further €393,000 was transferred back to investors.
One of the investors visited Ireland to see the forestry site he owned. He became suspicious and made a complaint to gardaí, after making an inquiry with the Land Registry and discovering the land was registered to somebody else.
Mr De Lacy was appointed as liquidator to Arden FM in 2016.
Hevey, with a previous address at Shankill Co Dublin, was sentenced to a total of four years imprisonment, which was increased to six years following an appeal by the Director of Public Prosecutions.
Peile was jailed for three years.
The company was placed into liquidation and, following an investigation by Mr De Lacy, €3.39 million of investors’ money were recovered from foreign bank accounts and from the sale of assets, including property in Spain beneficially owned by Arden FM.
Mr De Lacy, represented by Brian Conroy BL, instructed by solicitor Peter Boyle, is seeking High orders and declarations including that the pair carried out company business with the intent to defraud creditors. He also seeks an order that they are made personally liable for the Ardem FM’s debt of €3.8 million.
Counsel said the two were behind what was a “carefully planned, meticulously executed fraud” targeting retired people.
Mr Conroy said both men used pseudonyms in their dealings with investors.
Counsel said the company’s sole purpose was to commit a fraud against investors in what was a “Ponzi scheme”.
Hevey misled investors and engaged in fraudulent activity, including forging documents and certificates of land folios, the court heard.
Foreign accounts and companies
Counsel said he also set up bank accounts and companies in several foreign jurisdictions with a view to dissipating investors’ money. Investments were also transferred to him personally and entitles linked to him.
Counsel said that Peile, with a previous address in Ballyguile, Co Wicklow, was also a director of a related company in the UK that was established after a freezing order was made against Arden FM.
Counsel said the UK firm was set up in order “to circumvent the freezing order.”
Peile also knowingly misled investors, while large sums of investors’ money were transferred to him and entities connected to him.
Counsel said that investors’ money were recovered following an investigation that resulted in legal proceedings in Ireland, England and the UAE.
The complex liquidation cost about €1 million, counsel said.
The application came before Mr Justice Brian O’Moore on Thursday.
Hevey was not present nor represented in the proceedings. Counsel said he remains incarcerated.
Peile, who attended the proceedings via video link from London, told the court he was opposing the application on various grounds, including that his role in committing the fraud was far less than that of Hevey.
He said that was reflected by his much lighter sentence. He claimed Hevey was responsible for 99.9 per cent of the fraud.
Peile also denied being a senior employee or director of Arden, saying he joined to work in a sales role a year after Hevey founded Arden FM. He also denied ever having any control over bank accounts linked to the fraud.
The court heard Peile claims the orders sought against him cannot be granted because he was adjudicated a bankrupt in the UK in 2019. He has since been discharged from bankruptcy.
He said that an updated sworn statement outlining his position had not arrived in time due to UK mail strikes. He said he had posted the statement because he had been told it would not be accepted by the court unless it was formatted in a certain way.
Mr Conroy expressed his client’s surprise over Mr Peile’s submission and said he could have easily emailed his sworn statement to Mr De Lacy’s solicitor.
Mr Justice O’Moore adjourned the case for a week to allow the liquidator’s legal team to consider Peile’s affidavit.
