They have obtained an order to take control of anything owned by Banners Broker International Ltd (BBIL) and compel its Canadian-based operators to give evidence as to the whereabouts of the company’s assets.
Papers filed with the court have thrown fresh light on the growth of the company; the manner in which it moved its assets; and the ongoing efforts by investors to chase down their funds.
They have revealed the nature of its business in Ireland and this country’s place in the global operation.
Affidavits filed with the court described a truly modern phenomenon.
“An online cloud-based business, BBIL’s operations were international in scope and it appears that its physical presence in any one jurisdiction was negligible”.
Irish investors were among the first to get sucked into the scheme.
Evidence presented to the Canadian courts show that a reseller agreement was signed with “Banners Broker Ireland Ltd”, on December 15, 2011.
Under the sales’ agreement Banners Brokers Ireland was entitled to 5% of all sales here. This rose to 7% if it hit a turnover target of more than $100,000 a month; and if continued for three consecutive months the commission increased to 10%.
One of the standout early payments into an Isle of Man account set up to house BBIL’s profits was a $491,375 lodgement from an entity called Banners Broker Ireland Ltd with an address at Mahon, Cork.
From that point, in the summer of 2012, BBIL grew to attract more than 12,000 account holders here in addition to thousands more in 27 other countries.
But the Canadian court was told initial assessments of BBIL showed it was “deeply insolvent”.
On the Isle of Man the group had been using a corporate service provider since it set up a base there in March 2012.
The shares were held in the name of an arms-length trust company, Targus Investments.
The Isle of Man hub was anchored around a bank account set up with the Royal Branch of Scotland.
From May 2012 money began arriving into it from unspecified sources that appeared not to have been linked to any contracts BBIL was involved in.
Four months after opening the RBS account the balance had hit $6.8m.
The company service provider on the Isle of Man, Ocra, began to get suspicious and had asked for due diligence records to explain its activities.
Ocra also raised concerns about how the chief executive of the company, Canadian Chris Smith, was getting money directly into his internet payment account from BBIL registered users.
At this stage there was a unusually steady stream of income with very little going out by way of expenses.
“A review of RBS bank statements in or about October 2012 revealed incongruously high and accumulating revenues, coupled with generally very low expenses. Internet searches revealed a myriad of complaints against BBIL. Ocra’s suspicions and concerns escalated,” the filing with the Canadian court read.
On November 29, 2012 further attention was directed at the group when an article appeared in the Irish Examiner and on Irishexaminer.com linking one of the key players in the group with an earlier pyramid scheme in Canada.
This article highlighted its promise of guaranteed profits for everybody who signed up.
Two days later Ocra told RBS it was no longer comfortable with the activity on the BBIL account. Three weeks later it pulled the plug altogether.
By March 18, 2013 RBS had said it no longer wanted to supply banking services to BBIL and the remaining $6.6m was put into a joint account.
Ocra was pressing to have the Isle of Man structure transferred elsewhere but no other provider was willing to accept it.
This became even more problematic in July 2013 when Banners Broker’s registered contractor in England, Ian Driscoll, lodged a $3m claim against it.
No defence was filed and the company moved closer to being liquidated.
In accepting the foreign proceedings the courts in Ontario have broken new ground by recognising a liquidation initiated in the Isle of Man.
The order has allowed a receivers, Msi Spergel, to be appointed to the assets of BBIL and its principals who work from Canada.
According to the affidavits BBIL had set up its headquarters in the Isle of Man but, when suspicions grew, it looked to relocate. The company has publicly claimed to have set up in the Central America country, Belize.
The liquidators found that money paid through the payment processor Payza, by investors, was lodged to three Canadian banks linked to BBIL principals.
The court application said these needed to be probed to find out where the money went.