Firm loses €1.7m after investment went to fraudulent entity

A company that invested €2 million in what it was led to believe was a secure deposit account lost more than €1.75 million after it turned out that the money went to a cloned and fraudulent entity masquerading as a legitimate firm, it has been claimed in the Commercial Court.

Annaba Unlimited Co, with a registered office in Tuam, Co Galway, has sued its accountant and financial advisers for negligence claiming they recommended investing in RBS International Asset Management (RIAM), which had impersonated RBS Asset Management (Dublin) Ltd.

The proceedings are against Declan Merry and Patrick Hoyne, trading as Merry Mullen Chartered Accountants and Tax Advisers of Dublin, Merry Mullen Ltd, LHK Kelleher Insurance Ltd trading as LHK Financial, and also trading as LHK Kelleher, of Drogheda, Co Louth. It is also against a number of other linked LHK companies and against Conail Flynn, a financial adviser with LHK.

There is no claim of fraud against the defendants who, Annaba claims, have not admitted liability for the alleged negligent advice.

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The case was admitted to the fast-track commercial list by Mr Justice Denis McDonald on Monday and on consent between the parties.

Martin Hayden SC, for Annaba, said it was a “rather sad affair” in which €1.7 million of the original investment remained unrecovered. He said directions had been agreed between the parties for progressing of the case.

Annaba director Declan Goggins, of Roganstown Golf and Country Club, Swords, Dublin, said in an affidavit seeking entry of the case to the Commercial Court that his company had been looking for a low-risk account into which it could invest surplus cash not immediately required for trading purposes.

Last June, he met Declan Merry, whose firm acts as Annaba’s accountants, along with two other people to discuss where the money should be invested.

Subsequently Mr Merry got Conaill Flynn involved, who recommended the RIAM fixed-rate deposit account starting at 4 per cent for the first six months.

Arrangements were made to apply to RIAM through an “individual purporting to be Michael Mills of RIAM” and last July 17th Mr Merry submitted completed applications to “Mr Mills” and another individual purporting to be Siobhan O’Reilly of RIAM, Mr Goggins said.

Mr Merry also advised Mr Goggins by phone he had met the person purporting to be Mr Mills in person.

Between July 25th and August 10th last, 10 payments totalling some €1.99 million were made to RIAM.

On August 9th, the Central Bank of Ireland issued a warning that a fraudulent entity had cloned and impersonated a legitimate investment firm called RBS Asset Management (Dublin) Ltd. It operated using websites including www.rbsinternational.ie and an associated email address.

On August 11th, Mr Merry told Mr Goggins about the fraud by RIAM and that it had been reported to the gardaí.

Mr Goggins said Annaba has recovered some €480,000 from its own bank, AIB. However, AIB has requested the repayment of €240,000 of that sum which means, if it has to be repaid, his company will have lost €1.75 million.

Mr Goggins said the loss was caused by the actions of the defendants in advising the transfer of the money and they failed to carry out appropriate due diligence before doing so.