Combined court action over fraud claim can’t continue, judge rules

A combined action by 35 investors who claim they were defrauded in an alleged multi-million euro electronic-trading scam cannot continue, the High Court has ruled.

Mr Justice Brian O’Moore will rule later on whether to strike out or stay the action involving investments with the liquidated Irish registered firm, Greymountain Management Ltd, after he found each investors’ action must be brought as separate claims under court rules.

Complex

The 35 sued Greymountain, its Dublin-based directors, Ryan Coates and Liam Grainger, and alleged shadow directors, brothers Jonathan and David Cortu who are based in Israel.

The investors claim they believed they were investing in a complex trade known as “binary options” when in fact, they say, the software system their trades were conducted on was rigged to ensure they lost their money.

The investors, who come from the US, Canada, Singapore, UAE and the UK, claim they were induced by the defendants to open binary accounts with false claims they would earn significant profits. The claims are denied.

The case was admitted to the Commercial Court last year despite objections from the four personal defendants that the 35 claims had been opportunistically “shoe-horned” into one to bring them over the €1 million threshold for entry of a case to the fast track commercial list.

The four personal defendants then asked the court to strike out or stay the case on grounds it did not comply with a court rule requiring that claims must arise from the same transaction or series of transactions and must involve a common question of law and fact.

Proceedings

The 35 opposed the application saying all the transactions had identical features and characteristics. The money invested was paid to Greymountain and then paid to third parties, it was argued.

Mr Justice O’Moore, on Friday, found the proceedings did not fall within the term of the court rule relating to “same” transactions.

Taking three random cases from the 35, he said the basic fact of the claims made by these three was that they arose from entirely discrete transactions, he said.

Those three cases — of retired South African civil servant Anna Magreta Greffrath, Keith Norton from Derby Dale in West Yorkshire, England, and semi-retired farmer, Scott Aimers, living in Orion, Ontario, Canada — all involved them being attracted to binary option trading as a result of online searches or advertisements.

All three say they lost various large sums as a result of alleged fraud by the defendants. Mr Justice O’Moore said if one looks at their three witness statements, it is very clear the individual plaintiffs do not rely upon the same series of transactions in making their claim.

Transactions

The basic fact of the claims made by these three people was that “they arise from entirely discrete transactions”, he said For example, none of the individual transactions which Ms. Greffrath says constitute fraud, play any part whatsoever in the narrative of Mr. Norton, he said.

“It follows that Ms. Greffrath is not making a claim for fraud arising from the same series of transactions which Mr. Norton relies upon”, he said. The same applies in the case of Mr. Aimers.

The judge will hear later from the parties on the form of the order he should make.