It has appointed provisional liquidators to Strand Investments & Finance Ltd, based at 15 Castlemaine Street in Athlone, following an application by the Central Bank of Ireland.
The company has been trading as 123 Financial Services. It has over 700 clients, all based in Ireland, and believed to be mainly local people.
An initial analysis suggests 45 clients are affected by the feared misappropriation and at least €3.7m is unaccounted for. One client has told the Central Bank his planned investment of €333,000 was never made.
The company had been owned by Bernard Kinahan, of Elm Close, Barrybeg, Roscommon Road, Athlone, who died last August. The Central Bank said it became aware of a number of “unusual” aspects in relation to the business that were of concern following his death.
It told the High Court that a forensic accountant’s review had identified serious financial irregularities. Some clients were misled into believing they had investments held with certain funds, when in fact they were paid to accounts associated with the company and Bernard Kinahan.
Clients were provided with falsified certificates as evidence of 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 change some banking and accounting records in order to conceal the true financial position of the company.
Justice Brian Cregan appointed Aiden Murphy and Declan Hanly of Crowe Ireland as joint provisional liquidators. He said it was a very serious matter and wondered if it was indicative of a Ponzi scheme.
The judge ordered that papers in the case be served on the Insurance Compensation Fund and on the Garda National Economic Crime Bureau.
The court heard that, last October, a product provider told the Central Bank that it had received information about an investment being made with the company, when no such investment had actually been made.
The Central Bank then began a review of the firm. Following an initial investigation, Bernard Kinahan’s bank account was restricted and from a review of company and personal accounts it emerged there were suspicious transactions involving large sums of money passing through them.
The court was told that several bank statements appeared to have been modified or partially edited, including by the use of TipEx.
On December 15, Central Bank officers seized documents and devices in the company’s Athlone offices
News in 90 seconds – Thursday 22nd of January
Customers of Strand Investments will now be contacted by the joint provisional liquidators, who will also do a full assessment of the current position of all clients’ investments.
The Central Bank said: “In many cases our expectation is that clients’ investments with their product provider will be intact and secure.”
The application to the court was made on an ex-parte basis, which means only one side was represented. A full court hearing to consider the appointment of an official liquidator has been scheduled for February 9.
Customers can direct queries via email to strand.investments@crowe.ie, the bank said.
In a question-and-answer page on its website, the Central Bank points out that as Strand is not an authorised credit institution, it is not covered by the Irish Deposit Guarantee Scheme.
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