The High Court has dismissed the "pathfinder" action by Century Homes co-founder Gerard McCaughey over expected losses from a high-risk Anglo Irish Bank backed investment in two New York hotels.

About 50 "high net worth" Irish individuals had invested an average $1m in the hotels fund in 2006 and the court's decision has adverse implications for 23 similar actions by other investors.

Mr Justice George Birmingham today found there was no evidence of fraud by Anglo in relation to how the investment was promoted and managed and also dismissed all other claims by Mr McCaughey concerning the investment.

The judge said Mr McCaughey clearly "now regrets his investment decision but investor remorse does not provide a basis for a successful legal action".

"Had the hotels been disposed of at a time when they had increased in value very substantially and had a profit been recorded, his attitude might well have been different," the judge added. "Unfortunately that didn't happen and it appears that the plaintiff is now facing a loss on his investment."

"However, that is sometimes the lot of those who participate in high risk investments," he said.

Just because an investment fails to deliver hoped for returns, that did not mean another party was culpable, Mr Justice Birmingham said. "Still less does it provide a basis for concluding there had been fraud on anyone's part".

Having delivered his 95-page judgment, the judge adjourned the case to October when he will deal with costs and other issues. The case ran for several weeks with legal costs expected to amount to several million euro.

Mr McCaughey had sued Anglo Irish Bank and the Anglo-owned Delaware-based Mainland Ventures Corporation (MVC) over the Anglo Irish New York Hotel Fund, a private equity investment.

The action by Mr McCaughey, with addresses at Sandymount, Dublin and Manhattan Beach, California, was regarded as a test or "pathfinder" action for cases by 23 other investors.

Both defendants were sued for $23 million dollars over alleged fraudulent and/or reckless concealment and/or misrepresentation concerning the fund, set up to purchase and renovate the Beekman Tower Hotel and Eastgate Tower Hotel in Manhattan. The defendants had denied the claims.

The investors had claimed a "Black Brochure" given to them in September 2006 aimed at encouraging them to invest in the hotels fund failed to disclose key risks involved and amounted to "conscious and deliberate dishonesty". The judge rejected those claims.

The court heard none of the investors had ever seen the hotels and did not know the persons in the US who brought the project to Anglo in New York. The project involved the purchase of the two hotels with the intention of renovating them.