By FRANCIS JOSEPH
Businessman Gary Aboud, his wife, and sister-in-law, have lost their claims for more than $12.7 million which they claimed they invested and which were eventually lost.
Their claims were dismissed by Justice Devindra Rampersad in the High Court on Monday.
In a 114-page judgment, the judge even ordered Aboud and his relatives to pay more than $297,000 in costs in a matter stretching back to 2011.
Aboud, his wife, Merylle Mahabir, and sister-in-law, Natalie Mahabir, were the claimants, while Investment Designs Limited and Lawrence Anthony Mollenthiel, were the two defendants. Aboud lost $10 million, Merylle lost $644,000; and Natalie lost US $297,000.
Gregory Delzin SC, instructed by Dianne Mano, represented the Aboud family, while Kiel Taklalsingh and Vivek Lakhan-Joseph, instructed by Raphael Morton-Gittens, appeared for the defendants.
THE CLAIM
The claim was brought by Gary Aboud, Merylle Mahabir and Natalie Mahabir against Investment Designs Limited and Lawrence Anthony Mollenthiel arising out of a number of investment transactions between 2011 and 2015. The claimants alleged that Mollenthiel held himself out as an experienced and qualified investment adviser, analyst, broker and manager and induced them to invest substantial sums through him by representing, among other things, that the Kijani Commodity Fund was safe, backed, guaranteed, insured and capable of producing high returns.
They alleged that they relied on his expertise, assurances and relationship of trust when deciding to invest. Aboud’s claim concerned $10 million transferred in February 2012 for investment in Kijani. He pleaded that Mollenthiel arranged the transfer, represented that the monies would be invested in Kijani, failed to provide satisfactory investment documentation or online access, and later continued to reassure him that the fund was performing well despite the emergence of information concerning Kijani’s collapse and liquidation.
He further alleged that searches and inquiries later revealed that neither he nor Merylle appeared on Kijani’s shareholder register and that the monies had been transferred to an offshore account in the name of Belvedere Life Limited PCC. He relied additionally on the agreement signed in September 2017 in which, he said Mollenthiel accepted responsibility for the missing monies and agreed to transfer property and raise funds to compensate him.
Merylle’s claim concerned $644,000 paid by two bank drafts directly to Mollenthiel in June 2013. She alleged that she had expressly informed him that the money represented substantially all of her savings and that she did not wish to take any risk, but that he nevertheless recommended Kijani as safe and profitable.
She said the funds were deposited into joint accounts associated with Mollenthiel and members of his family and were never invested in Kijani for her benefit. She further alleged that the life insurance policy later provided to her did not represent the investment she had agreed to make and that she was never informed that her monies would be placed into a life insurance product.
Natalie’s case concerned both an earlier Friends Provident International investment (FPI) and later Kijani investments. She alleged that she invested approximately US$276,301.18 through FPI and ultimately recovered only US$212,957.02, resulting in a loss of US$63,344.16, and that the two defendants failed to account fully for the redeemed proceeds.
She further alleged that, after expressing dissatisfaction with the FPI investment, Mollenthiel encouraged her to invest US$85,000 and later US$212,000 in Kijani by representing that the fund produced very high returns, was fully insured and was completely secure.
She said those monies were transferred to Belvedere AMI but were not in fact invested in Kijani, notwithstanding subsequent life assurance policies, investor statements and updates provided by the second defendant. On the basis of those allegations, the Aboud family pleaded fraudulent misrepresentation, negligence, breach of fiduciary duty, breach of trust, breach of contract, monies had and received, and unjust enrichment.
They also sought tracing and an account on the basis that the defendants allegedly obtained access to or benefited from the monies and may have received secret profits or other financial gains. The family further alleged that Investments Designs Limited was used as a corporate vehicle to conceal or control funds and profits. They sought repayment of $10 million to Aboud, $644,000 to Merylle, and US$297,000 to Natalie.
THE DEFENCE
Mollenthiel and Investments Designs Limited denied that either of them was liable for the losses and pleaded that the claims were out of time and that the family should in any event be denied relief by reason of their alleged unconscionable and unlawful conduct.
They said that Mollenthiel acted only as an intermediary insurance investment broker and not as an investment manager or principal of any fund. According to the defence, he assisted investors with due diligence, administrative matters and access to investment platforms, but the ultimate decision whether and where to invest remained with each investor.
The defendants specifically denied that Mollenthiel ever represented Kijani as risk free, guaranteed or certain to return capital. In relation to Aboud, the defendants maintained that his monies were in fact invested in the Kijani structure through Belvedere Life Limited PCC and the ePortfolio Solutions platform.
They pleaded that the family completed the relevant application forms, received policy documentation and were given access to the online platform through which they could monitor their investments. They denied that Mollenthiel induced Aboud to invest all his money in Kijani, represented that he was a principal or investment manager of the fund, or personally guaranteed the investment.
They further relied on contemporaneous correspondence in which Aboud referred positively to the fund’s volatility and confirmed that he had accessed the online platform, which they said was inconsistent with his pleaded case that he understood the investment to be risk free and was unable to access it.
As to Merylle, the defendants admitted that her bank drafts were made payable to and deposited by Mollenthiel but said this was done solely to facilitate conversion of her Trinidad and Tobago dollars into United States dollars as a favour to her. They maintained that the monies were thereafter invested into Kijani through the Belvedere structure and that she received a policy and online access evidencing that investment.
In relation to Natalie, they denied ever taking control of her Friends Provident International investment without authority and plead that her FPI monies were redeemed directly to her own bank account. They further maintained that her subsequent Kijani investments were made of her own free will after the risks had been explained to her and that the policy and ePortfolio documentation she received accurately reflected the manner in which the investment was structured.
The defendants therefore denied the pleaded claims in fraud, negligence, breach of fiduciary duty, breach of contract, monies had and received and unjust enrichment. Their case was that the family knowingly entered investments carrying inherent risk, that Mollenthiel exercised reasonable care in his role as intermediary, that all monies received for investment were in fact invested, and that any losses resulted from the subsequent failure of Kijani and associated entities, matters which were outside the defendants’ control.
They also denied that any monies were retained for the Mollenthiel’s personal benefit or that the later banking transactions relied upon by the claimants can be connected to the claimants’ funds.
By counterclaim, Mollenthiel sought to have the “Agreement to Pay” dated the 9th of September 2017 set aside on the ground that it was obtained by duress and undue influence. He pleaded that, during a meeting at Aboud’s office, he was threatened, intimidated and prevented from leaving for approximately four hours while Aboud and a man referred to as “Abdullah” pressured him to acknowledge liability and disclose details of his assets.
He alleged that he signed the agreement only because he feared for his own safety and that of his family, after which he and his family temporarily left their home and retained private security. He accordingly sought a declaration that the agreement was invalid and also claimed aggravated damages for unlawful detention and false imprisonment arising out of the same incident.
THE DECISION
Justice Rampersad stated, “In this court’s respectful view, Mollenthiel has established on a balance of probabilities that the “Agreement to Pay” dated 9 September 2017 was procured by duress. The court accepts that he attended the meeting voluntarily, retained possession of his cellular telephone and was able to make calls while there. Those matters weigh against any suggestion that he was physically restrained throughout the meeting, but they do not determine whether he freely agreed to assume personal liability for $10 million.
“The relevant question is whether illegitimate pressure was exerted upon him and whether that pressure was an operative cause of his decision to sign. The accounts of the meeting are sharply opposed. The second defendant (Mollenthiel) said that persons other than the first claimant (Aboud) were present, including a man known as Abdullah, that threats were made against him and his family, and that he understood he would not be permitted to leave without agreeing to the demands being made.
“The first claimant denied any threats, intimidation or coercion and maintained that the second defendant (Mollenthiel) voluntarily accepted responsibility for the failed investment. No independent witness from the meeting came to resolve that dispute, even though they ought to have been available or have their absence explained. However, the court notes one glaring omission.”
The judge continued, “One Ishmael Ferguson was present on the first claimant’s case and signed the “Agreement to Pay” as a witness. It seems that he may have been the same person referred to as “Abdullah”. In cross-examination, the first claimant accepted that Mr Ferguson was a longstanding friend who assisted him with collecting debts and rents and remained available to him, yet no witness statement was obtained from him, despite the allegations of coercion having been pleaded since 2020.
“Remarkably, in cross-examination, he said for the first time that he had only seen the allegations made in relation to “Abdullah” over the weekend before the trial, despite the allegation having been made in the defence and counterclaim, to which a reply and a defence to counterclaim had been filed.
“In particular, paragraph three of the defence to counterclaim filed on 2 September 2021 addressed the issue in 16 sub paragraphs. The obvious result is that the court got the distinct impression that it could not rely upon what this witness was saying and his attempted explanation for failing to bring any witness.
“Remarkably, the second defendant was not even cross-examined at all about this event and it was never suggested to him that he was free to make phone calls to persons outside, including his wife, that the meeting was amicable and that the parties shook hands at the end in an affable manner.”
THE ORDER
* The claim of the family members against the defendants is dismissed in its entirety. * On the counterclaim, it is declared that the “Agreement to Pay” dated 9 September 2017, entitled “Agreement to Pay – Lawrence Mollenthiel to Gary Aboud”, was procured by duress exerted upon Mollenthiel. The “Agreement to Pay” is accordingly set aside and cannot be relied upon by the family, or any of them, as an acknowledgement by Mollenthiel of liability for Aboud’s investment loss.
* The family’s request for a declaration that the counterclaim is an abuse of process is refused.
* Judgment on the counterclaim for false imprisonment is entered for Mollenthiel against Aboud.
* Aboud shall pay to Mollenthiel damages for false imprisonment in the sum of $25,000, including an element of aggravation. Interest shall run on the damages at 2.5% per annum from the date of service of the counterclaim, 5 August 2020, to 12 October 2026, being $3,868.15. 358.
* The family shall pay Mollenthiel’s costs.
