At least €3.7m unaccounted client funds discovered in investment firm

A forensic accountant's review found that clients were misled into believing they had investments held with certain funds or 'product producers' when their monies were paid to accounts associated with Strand Investments and Finance Ltd, and Bernard Kinahan

The High Court judge said this was a very serious matter and wondered if it was indicative of a Ponzi scheme.

At least €3.7m in client funds of an investment firm — whose owner died of a heart attack last August — are unaccounted for in what appeared to be serious misappropriation of the monies, the High Court heard.

Strand Investments and Finance Ltd, trading as 123 Financial Services, Athlone, Co Westmeath, was owned by Bernard Kinahan, of Elm Close, Barrybeg, Roscommon Road, Athlone, who died on August 31. He was a director of the firm along with Ken Kinahan who now says he actually had no involvement in the management of the company.

On Thursday in the High Court, barrister Devina Brady, on behalf of the Central Bank of Ireland, applied on an ex parte basis (only bank was represented) to have provisional liquidators appointed to the firm following a forensic accountant's review identifying serious financial irregularities.

This included that clients were misled into believing they had investments held with certain funds or "product producers" when their monies were paid to accounts associated with the company and Bernard Kinahan.

Clients were provided with falsified certificates purporting to evidence their investments and falsified statements showing that interest was accruing on investments that did not exist.

There were inadequate business and accounting records and it appears steps were taken to modify certain banking and accounting records with a view to concealing the true financial position of the company. It has not yet been possible to reconcile the true financial position or the scale of misappropriation of client assets, the review found.

Initial analysis of available information shows however that it appears 45 clients were impacted by misappropriation and at least €3.7m of client monies are unaccounted for. These are, however, only preliminary figures.

Mr Justice Brian Cregan appointed Aiden Murphy and Declan Hanly of Crowe Ireland as joint provisional liquidators. The judge said this was a very serious matter and wondered if it was indicative of a Ponzi scheme.

The judge ordered that papers in the case also be served on the Insurance Compensation Fund and on the Garda National Economic Crime Bureau.