Simetra Global Assets Ltd v Ikon Finance Ltd
| Jurisdiction | England & Wales |
| Judge | Mr Justice Robin Knowles |
| Judgment Date | 09 October 2018 |
| Neutral Citation | [2018] EWHC 2624 (Comm) |
| Court | Queen's Bench Division (Commercial Court) |
| Docket Number | Case No: CL-2015-000828 |
| Date | 09 October 2018 |
[2018] EWHC 2624 (Comm)
IN THE HIGH COURT OF JUSTICE
THE BUSINESS AND PROPERTY COURTS OF ENGLAND & WALES
COMMERCIAL COURT (QBD)
Royal Courts of Justice
Strand, London, WC2A 2LL
Mr Justice Robin Knowles CBE
Case No: CL-2015-000828
Clive Freedman QC, Josephine HiggsandPhilip Aspin (instructed by DLA Piper LLP) for the Claimants
Paul McGrath QC and James Sheehan (instructed by Holman Fenwick & Willan LLP) for the First to Fourth, Eighth, Ninth and Twelfth Defendants
The Seventh Defendant appeared in person
Hearing dates: 5–9, 12–15, 21, 22 February; 7, 8 March 2018 and later written submissions
Judgment Approved
Introduction
The evidence at the trial of this action presented a very confused and incomplete picture. I say that as a fact and not as a criticism of the legal teams involved.
Not all parties participated or participated fully. The Claimants (Simetra Global Assets Limited and Richcroft Investments Limited) were fully represented. So too were Ikon Finance Limited (“Ikon Finance”), Ikon Group Limited (a Hong Kong company), Ikon Atlantic Limited, Ikon Europe Limited and FTechnics Inc (“FTechnics”), with Mr Ersan Acun and Mr Engin Yikilmazoglu, (all together “the Ikon Defendants”). Mr Diwakar Jagannath, the Seventh Defendant, took some part, in person, including by giving evidence and providing written argument.
Defences of GStar FX Inc (“GStar”) and Mr George Daskaleas (“Mr Daskaleas”), the Fifth and Sixth Defendants, were struck out early in the proceedings. Simetra Management Limited (“Simetra Management”) and Richcroft Management Limited (“Richcroft Management”), the Tenth and Eleventh Defendants, have taken no part in the proceedings.
It is for me to do my best to make findings that will determine the position between the parties who did participate. I shall not address disputes of fact where in my judgment they lead nowhere in determining whether the Claimants are entitled to what they claim from those parties.
The Claimants
Richcroft Investments Limited, the Second Claimant, was incorporated in late 2012. Simetra Global Assets Limited, the First Claimant, was incorporated in July 2013.
The directors of the Claimants were respectively Richcroft Management with Richcroft Global Sponsor Limited, and Simetra Management with Simetra Global Sponsor Limited.
On the case advanced by the Claimants, Richcroft Management and Simetra Management were owned and controlled by Mr Daskaleas. Mr Litinas was the owner of Richcroft Global Sponsor and of Simetra Global Sponsor.
Mr Litinas gave evidence for the Claimants. A second witness called by Simetra Global Assets and Richcroft Investments was Maria Kitromilidou. I listened to their evidence closely at trial, and I have reviewed that evidence since. The truthfulness and quality of their evidence is of particular importance in this case.
In the case of Mr Litinas I have, as asked by the Claimants, made due allowance for the fact that he gave his evidence through an interpreter.
Mr Litinas
I found the evidence of Mr Litinas wholly unconvincing throughout.
One example was his evidence that, when a Mr Vozianov expressed concerns in 2014, he (Mr Litinas) had worked to bring about that expression of concern to put pressure on Mr Daskaleas. This was not the truth. I am also quite sure that his evidence to me about why the account he gave in a subsequent witness statement about contact with Mr Daskaleas was not included in his first witness statement was false evidence.
Mr Litinas was not frank when giving evidence on the subject of the ways in which the higher the figure claimed for the value of a fund the more he benefitted. Nor did he explain truthfully why he did not add to his own investment, when encouraging others to do so, if he really had the belief he asked the court to accept he had in the figures for trading and balances
I have more to say about his evidence and involvement below.
Ms Kitromilidou
On the whole the evidence of Ms Kitromilidou did not assist one way or the other in finding the truth on the material points in this case.
This was partly because her role with the Claimants was simply administrative and she took no relevant decisions and had no responsibility to take relevant decisions. She explained her understanding of the role in which she was involved as “not to verify the result” but “just to calculate the net asset value based on the results produced to us and given to us by Mr Daskaleas, who was the investing manager and solely responsible for the trading …”.
However a further reason why the evidence of Ms Kitromilidou did not help me was because it was not, in my assessment, reliable. An example was her evidence by witness statement that the auditors to the Claimants, GMA, “periodically requested and received” confirmations from Ikon Finance (or other of the Ikon Defendants). This was incorrect, yet she persisted in that evidence at trial.
Her evidence was opportunistic. Below I set out correspondence from October 2014 about balances that featured centrally at trial. The contrast between the lack of attention to these in Ms Kitromilidou's witness statement and her oral evidence at trial was marked. Mr Paul McGrath QC for the Ikon Defendants does not overstate things when submitting that “in her oral evidence she presented them as if they were so important that, without them, the funds might not have continued to operate”.
Again I have more to say about her evidence and involvement below.
The Ikon Defendants and Mr Jagannath
I am satisfied from the documentary and oral evidence that Mr Jagannath had in all material respects the authority of a chief executive in relation to Ikon Finance, and for that matter all other of the Ikon Defendants that are companies.
The evidence of Mr Yikilmazoglu, for himself and the other Ikon Defendants, seeking to distance Mr Jagannath from authority of this breadth was not credible and I reject it. Mr Yikilmazoglu referred to Mr Jagannath as “our group CEO” on 4 February 2014, and there is other correspondence in similar terms. I also reject Mr Yikilmazoglu's evidence seeking to distance FTechnics and Ikon Finance from what was termed the “Ikon Group” (of companies) when they were so described in the Group's brochure and that brochure was made widely available.
Indeed on this aspect of Mr Jagannath's authority I accept as accurate his own evidence in these terms:
“…you have to understand something. Ikon, the name was actually – I actually came up with the Ikon name, right? I actually registered the Ikon name in New York. My name, along with Mr Yikilmazoglu, was synonymous Ikon itself as a brand and an entity amongst the entire trading community. So it's not as if it is some wild assertion of me as being the CEO of Ikon Group. Everyone understood that Engin [Yikilmazoglu] and I were the drivers of the Ikon brand and the Ikon companies … I was the face of Ikon …”
The business model
The business model for the Claimants was, in summary, as follows. Investors would purchase non-voting shares in one or other or both of the two companies. This would provide the two companies with additional funds, in addition to funds each already had.
The two Claimant companies would then make their funds available for forex trading. If the forex trading with the Claimants' funds was successful the Claimants' shareholders would expect a return on their investment in the Claimants.
The forex trading would be on trading platforms licensed by GStar (the Fifth Defendant) from FTechnics (an Ikon Defendant) under what was termed a “White Label Agreement”. Under this, on the Claimants' case:
“… clients would trade on a “GStar” branded trading platform, and hold trading accounts with GStar, rather than an Ikon trading platform and holding accounts held with Ikon [Finance]”.
Mr Jagannath signed the White Label Agreement for FTechnics.
GStar had been incorporated in Belize in 2012 by Mr Daskaleas. The trading platforms were set up in early 2013, and initially US$ 20 million was transferred to them by PK Equity Investments Ltd (“PKI”).
PKI was a BVI company with funds under Mr Daskaleas' control. The funds originated from investors in return for (in due course) shares. On the Claimants' own case Mr Daskaleas was the sole beneficial owner of PKI, and controlled its sole director.
The individual who encouraged investors to purchase shares in the Claimants was Mr Litinas. He acquired shares himself too. He would additionally take a proportion of management fees tied to asserted increases in the value of the funds involved.
The facts and the fraudulent scheme as originally alleged
The Claimants were the latest in a line of companies involved by Mr Litinas and Mr Daskaleas in forex trading in line with the business model described at paragraphs 22 and 23 above.
The Claimants say they were victims deceived by a fraudulent scheme. The Claimants describe Mr Daskaleas as “the critical and central figure in all aspects of the fraudulent scheme”. However the Ikon Defendants and Mr Jagannath are alleged by the Claimants to have played a “vital supporting role” in the fraudulent scheme practised on the Claimants.
Mr Clive Freedman QC, appearing for the Claimants with Ms Josephine Higgs and Mr Philip Aspin, described in opening what it was said happened in the early stages of Richcroft Investments...
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