Banner Brothers caught up in web of intrigue
IF you were among the 12,000 Irish people who had money invested in the mysterious online advertising product Banners Broker you are probably wondering what happens now.
A holding company in the Isle of Man was put into liquidation on Wednesday with no physical assets to its name, no remaining representative to stand for it, but there was a dormant bank account with $6m (€4.34m). It will be for the joint liquidators, overseen by a Committee of Investigation, to Banners to assess who should get that money.
But with the company previously boasting that it had 400,000 affiliates around the world, that bank deposit will not be enough to pay all those who have been waiting months to get their cash.
In response to the liquidation the principal of Banners Broker and the director of the Isle of Man company, Chris Smith, moved to reassure investors.
In an online presentation responding to this newspaper’s coverage of the court hearing he produced a company formation document dated July 25, 2013 to show a second Banners Broker International Ltd had been established in the Central American tax haven, Belize. He said the liquidation was a “bump in the road” because it had moved its money from the Isle of Man and the $6m left in the wound-up company was “nothing more than a rainy day trust”.
This comment had investors curious because rainy day or not they have been starved of their money and had not been told about this reserve.
Mr Smith later admitted that not having access to this money would delay payments further.
He blamed it all on the company’s former sales manager in Britain, Ian Driscoll, who Mr Smith said, had been paid more than $540,000 in his two years with the company but was chasing BBIL for $3m in lost profits.
He said Mr Driscoll had been pushed out of Banners Broker for using a sales trip to Portugal to promote a rival multi-level marketing product.
But because Mr Driscoll was named on the Isle of Man account, BBIL could not get the $6m to Belize before the liquidation.
Mr Driscoll disputed this narrative. He had spent 14 months taking a legal challenge to BBIL’s decision to terminate his contract and was owed considerable sums. He said he pressed for joint liquidators to protect his interests, following a successful court hearing in early February, and he believed his proceedings would help secure some right of claim for the investments of affiliates around the world.
He said if the frozen fund was discretionary why was it sitting idle when investors had not been paid? And he said if money has been moved to Belize it will be chased and unlocked.
“[Mr Smith] told everyone that this $6m was ‘rainy day’ money so why has he not paid the money he owes to affiliates for well over a year now?
“I will disclose more very damming information soon,” he said.
At Wednesday’s hearing Mr Driscoll was listed as a creditor as he is due costs from the case.
One of the liquidators Paul Appleton, who brought some investors’ claims to the attention of the Isle of Man court this week, said people who feel they are owed money will get an opportunity to set it out.
“The Joint Provisional Liquidators are in the process of drafting a letter, which will go to all known creditors informing them as to the next steps. Additionally, the forthcoming creditors meeting will be communicated and advertised in accordance with the statutory requirements,” he said.
Mr Driscoll’s counterpart in Ireland was Paul McCarthy, who operated the national BBIL service contract from a rented premises on Dublin Hill, Cork.
He made the sales pitches for BBIL, fronted the investors meetings and fielded media questions from this newspaper, the Sunday Mirror and RTE’s Liveline.
Mr McCarthy has said since his contract ended last September, and people were left calling a mysterious office in Belize for their money, he has felt under immense pressure. He said his life has been made hell by aggrieved investors who parted with money on the strength of his presentations that promised guaranteed returns.
Mr McCarthy remained BBIL’s independent contractor in Ireland until the company shut its office here, and at the same time faced angry people who could see healthy balances on screen but were denied the right to withdraw their apparent profits.
Mr Driscoll said he stopped promoting BBIL in 2012 when he sensed something was not right. Others said BBIL’s story did not stack up on day one. Its owners were in Canada, its offices were in Belize, its service desk was in Knocknaheeny and its holding company was in the Isle of Man.
But Apple is equally international and yet was its near neighbour on the north side of Cork city.
People have also lost money on the fluctuating stock price in Apple. But they made their choice based on an assessment of tangible hardware and software produced by Apple.
This has been influenced by customers’ real appetite for owning Apple products and supported by Apple’s well-policed patent portfolio.
From the outset Banners Broker was different. Nobody saw its product and the third party websites where affiliates had pegged their investments were considered trade secrets.
To invest in Banners Broker meant putting blind faith in a start-up Canadian business with links to a previous pyramid scheme, which had no technology background, and trusting this company to rent out space on undisclosed second tier websites before subletting that space out for enough to cover guaranteed profit margins.
Inexplicably your ability to hit those 400% margins was tied to your ability to entice other investors to join Banners Broker.
On a number of occasions this newspaper went to Banners Broker seeking explanations for what it was doing and where the money was going.
The company provided assurances it was above board and was not a pyramid scheme. But no clarity on its business model was forthcoming.
It also said it would sue if its name was tarnished and it blamed bad publicity when people did not get their money as promised.
Emails to affiliates from Mr Smith have since suggested it was falling behind on payments because it was due $40m in money from investors.
But BBIL has also said the delays were caused by technical problems and it was waiting to launch a new system in mid-March.
Explanations have varied. But the fight for money has largely remained an internal struggle.
In 2012 this newspaper first flagged links between a key player in Banners Broker, its financial officer Rajiv Dixit, and an earlier Canadian pyramid scheme.
At the time footage from inside investor meetings revealed promises of certain four-fold returns from revenue garnered from unknown and confidential third party websites.
The sure-fire way to make a profit was to register new affiliates and have your returns multiplied by their investment.
At that stage a reported 9,000 people were involved here and the main players in BBIL were coming to the City West Hotel in Saggart for the launch of a worldwide publicity tour.
The National Consumer Authority was contacted by a concerned member of the public and asked to look at the operation of the company.
Under the 2007 Consumer Protection Act it is an offence to operate or be a part of a pyramid scheme.
But in a statement the NCA said its subsequent dealings with the BBIL phenomenon were limited.
“The National Consumer Agency received a small number of contacts on this issue, the majority were from businesses seeking information on how the company operated.
“The agency would strongly urge any consumer who is considering investing in any type of scheme to take care, fully understand the scheme and any risks involved...
“Don’t be influenced about the potential for easy earnings and always read the small print of any scheme before you sign up to it or part with your money,” it said.
Irish investors are now caught in a situation where personal online information panels tell them their money is still in an account. But they do not know where that money is or which entity — in Belize, the Isle of Man or Canada — is supposed to be holding it.
Mr Smith said such specifics were private company matters .
Investors have been told, by Mr Smith, that they will be shut out if they seek redress from the courts.
And it is unclear what, if any, claim they can make to the newly appointed liquidators.
Some investors, who paid by credit card, have applied for charge backs on the basis that there was either fraud or the product has not been delivered.
This is aimed at recovering initial investments not perceived profits. It may yet be the only way investors in the red realise any of what they trusted BBIL with.
Meanwhile one of the liquidators, Mr Appleton, has said it will become clearer as his work progresses.
Looks like those who invested in Banners Broker will still be looking for answers for some time to come.
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