The High Court has ruled that two persons jailed for fraudulently operating a forestry firm as “a Ponzi scheme” should be made personally liable for some or all of the company’s debts.
Liquidator Declan De Lacy sought the orders and declarations against David Peile and Garret Hevey over their operating of Arden Forestry Management (FM) Ltd.
In his judgment, Mr Justice Brian O’Moore said the company was operated in an “utterly fraudulent way” and it carried out “no genuine business and conducted no real trade”.
“The disparity between the funds it received and the value of the forestry purchased”, the judge said was “utterly jarring”, the judge said.
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The judge said that, in light of the evidence, he was prepared to make a declaration that Hevey, while an officer of the company, was knowingly a party to the carrying on of business of the firm with the intent to defraud creditors of Arden FM.
The judge said he was making an order making Hevey personally liable for the firm’s debts and other liabilities of just over €3.8 million.
For Peile, who opposed the liquidator’s bid for orders against him, was “more complicated”, the judge said.
The judge accepted Peile’s claims that Hevey was the “architect of the fraud”, that Peile’s involvement in the fraud “was significantly less than that of Hevey”, and that there were certain things that Peile was not responsible for. He was not a director of the firm, the judge said.
However, the court found there were aspects of the fraud in which Peile was “centrally involved”.
The judge said he was making a declaration that Peile was knowingly a party to the carrying on of the business of Arden with the intent to defraud the firm’s creditors.
The judge said he was making an order declaring Peile to be personally liable for a yet-to-be-specified portion of the company’s debts and liabilities.
That portion is to be finalised at a future hearing of the court, the judge said, adding that Peile is involved in aspects of the fraud to creditors that total approximately Stg£509,000.
The two were jailed by Dublin Circuit Criminal Court in 2019 after they pleaded guilty to offences including deception and fraud.
Mr De Lacy, a chartered accountant, had argued that Arden induced 166 mainly older foreign investors to acquire forestry in Ireland.
Represented by Brian Conroy SC, instructed by solicitor Peter Boyle, the liquidator said investors were led to believe that monies were being used to acquire forestry lands from which they would ultimately receive payments after the trees were sold.
They acquired more than €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 acquiring some 30 acres of forestry lands. A further €393,000 was transferred back to investors.
One of the investors, who visited Ireland to see the forestry site he owned, became suspicious and after inquiring with the Land Registry discovered the land was registered to somebody else, made a complaint to the gardaí.
Mr De Lacy was appointed as liquidator to Arden FM in 2016.
Hevey with an address at Shankill in Dublin was sentenced to a total of four years imprisonment, which was increased to six years following an appeal by the DPP.
Peile, now based in the UK, was jailed for a total of three years.
The company was placed into liquidation and following a detailed and complex investigation conducted by Mr De Lacy €3.39 million of investors’ monies were eventually recovered from foreign bank accounts and from the sale of assets including property in Spain beneficially owned by Arden FM.
Mr De Lacy argued that the two were behind what was a “carefully planned, meticulously executed fraud” targeted on retired persons.
Hevey was the “chief engineer” of the fraudulent scheme, while Peile was “centrally involved” in his capacity of consultant and second in command to Hevey, Mr De Lacy claimed.
Hevey did not contest the liquidator’s application, while Peile had contested the liquidator’s entitlement to secure any of the orders against him.
Peile, with a previous address in Ballyguile, Co Wicklow claimed his role in committing the fraud was far less than Hevey’s.
He said that was reflected by the fact he received a much lighter sentence than Hevey, who he claimed was responsible for 99.9 per cent of the fraud.
He said that he had pleaded guilty based on legal advice, and had believed he would get a suspended sentence.
Peile also denied being a senior employee or director of Arden, saying that he joined the firm to work in a sales role a year after Hevey set up Arden FM.
He also denied ever having any control over bank accounts linked to the fraud.
Peile claimed the orders sought against him could not be granted because he was adjudicated a bankrupt in the UK in 2019.
He has since been discharged from bankruptcy.
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