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Older Ocean-Seed/Heros news can be found in the Ocean-Seed Archive section.
Seed International Ltd and Ocean International Marketing BV Fantasy Bordeaux wine program - the kernel of systematic fraud."No warranties. Seed International in no way represents to the client that it is a wine or champagne expert." "I remember that there was a yearly audit by the Dutch tax authorities. Before the Dutch tax authority visited the company, the employees were instructed to shred all the statements of the clients' accounts." "After two years of employment I came to the conclusion that the investors were disinformed and deceived and that the business that was run by Ocean was not legitimate. Therefore I decided to leave the company." "CPM (Churchill Portfolio Management) bases it's (sic) judgement regarding the value of a deposit as to what the next person is prepared to pay for it and hereby declares that no representations can be made in respect of value or potential sale prices of the physical item a deposit has been paid." |
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The Seed International group of companies is both the most ambitious and longest lived of all the drinks investment companies covered by investdrinks. Wine is only part of their business. Other investment vehicles include property (Zecca Properties Ltd and various individual developments such as South Quay in Lowestoft, UK), oil and gas exploration (Hi-tech Energy), CD protection (Optidisc and CDfender) and a stillborn internet incubator company (cupidus.com). There are elements that are obviously fraudulent, while other elements appear to be legitimate. Wine is the cash core of Seed and the heart of the fraud. Seed International and its marketing arm, Ocean International Marketing, have only targeted the American medical community. Seed International Ltd, or Churchill Associates as it was formerly called, is based in the Cayman Islands. Churchill was probably set up in 1996 by Paul Freeman and Anil Kohli. investdrinks also understands that Kohli is no longer involved. Freeman has a British passport but lives in Monaco and runs Seed International. The parent companies are based in a number of locations including the Cayman Islands, Cyprus, the Turks & Caicos, and Alderney. Freeman and Kohli had previously worked together running an art business in the UK called Michael David Rothschild, a company based in the British Virgin Islands, and Conroy Trading & Development Ltd. They sold works of art belonging to Dr Solomon Klotz, a collector. On 22nd November 1995 Freeman and Kohli were arrested in the UK. Apparently the basis for the police investigation was that Freeman and Kohli were running a Ponzi scheme and that they did not have the right to sell the works from Dr Klotz's collection, This was strenuously denied by Freeman and Kohli. Dr Klotz confirmed that 'he had entered into an agreement with Mr Freeman that he could market the collection on Dr Klotz's behalf'. No charges were pressed. In a letter to the Crown Prosecution Service sent at the beginning of November 1996 the two men's solicitor said that 'there was nothing illegal in the scheme which was devised and it bears no relation to the so-called Ponzi frauds which involve advance payments for which there is no possible consideration. Here, the scheme involved a group of investors trading title in works of art between each other with the object increasing in value at each sale and thus yielding a profit to the investor and commission to the company.' In December 1997 Kohli was disqualified from being a UK director for 12 years for running two holiday scam companies, unconnected with the above companies. Seed have always claimed that Ocean International Marketing BV, formerly Heros Global Marketing BV, is a separate and independent company. Although this may correct on paper, in practice this is a fiction: Ocean exists (or existed) only to market Seed's investment opportunities. Heros Global Marketing Services (now Ocean International Marketing) was registered in Holland on March 1st 1996. The owner is Ranjit Singh Bhamra. Following a fatal car crash in Canada in late 1997, Bhamra retired from the business and is understood to have played no further part in Heros/Ocean, although he remains the registered owner of Ocean International Marketing BV. In 1998 three directors were appointed: Craig Garrett (statutory director), Paul Freeman (strategic director) and Anil Kohli (juridical director). Freeman ceased to be a director in November 2000 and Sean Stockdale was appointed as a statutory director. Ocean International's main office was in Rotterdam. They occupied the sixth and seventh floors of De Leuve, an office block on Schiedamsedijk in the fashionable docks area close to the Erasmus Bridge. investdrinks understands that Ocean left these offices in the spring of 2003. Ocean International Marketing also had offices in Toronto and at Lagoonbeach, Milnerton, South Africa. It is understood that these offices have now been closed. The Seed group also has offices in London. At first Heros-Churchill traded in art and tapestries, including pre-Colombian art, before moving into offering Champagne as an investment. In the lead up to the Millennium Ocean-Seed carried out a number of Champagne trades, often claiming that the initial trade made a profit of 100% in a month. A Seed client explains the approach. 'They stressed the deposit required and size of 'lot'. They would start off with: a lot of "only $25,000" and how many would you like?" If you balked at they would eventually split these down further. All the time their supposed goal was to build a portfolio of around $100,000 so "that way I have a large enough portfolio so my manager will allow me to trade this and reinvest the profits without requiring any further cash from you, unless you wanted to add to it!" Their very first 'trade' was invest only $1000 and let me show you I am serious and will earn your trust. I guarantee that we can trade this for a 100% profit in only a few months.' Of course the first trade always made a 100% often within a month - not a difficult promise to keep if you invent the profits. Evidence held by investdrinks.org suggests that, at least, some of these trades were fraudulent - Churchill had not bought or reserved some of the Champagne they sold . From 1998 trades in individual Bordeaux châteaux were offered. Initially these were trades in specific châteaux's wines and vintages. It is clear that many of these trades were fraudulent, that a false market was created, and that investors were enticed by the alleged profits to invest more money. Investors were sold enormous positions at substantially over market price and then alleged to have made a profit - often over 30%. Seed did not either buy enough Bordeaux nor negotiate sufficient options to cover the investors' positions. During 2000 investors sent around $40 million to Rotterdam. Perhaps realising that the fraud was becoming dangerously transparent or that a client might actually demand their wine, Seed started to offer parcels of unspecified Bordeaux wines. During 2001 and 2002 investors were persuaded to move from the Bordeaux program to an Italian wine program. This involves a ten-year contract typically running from 2002 to 2012 requiring instalments to be paid in March and September. Although the contract indicates the number of bottles and the total price, there was no breakdown of the quantities of the individual wines or their price. A number of investors have told investdrinks that they were either misled into agreeing to join the Italian wine program or were not fully apprised of the long term nature of the contract. Some were apparently assured that once in the Italian programme they would be able to liquidate their funds. This turned out not to be the case. Ocean and Seed have strenuously denied that investors were misled. In October 2002 Seed concluded an agreement with Architects of Wine, a subsidiary of Paradigm Holdings, which allowed AoW to approach Seed's clients directly. The total amount invested by Seed's American clients in the various projects appears to be in the region of $200-250 million. Of this wine probably accounts for between $130 million to $160 million. If all the outstanding balances on the Bordeaux trades had been paid, the total value would have been in the region of $500 million. The full value of Seed's subsequent Italian wine contracts is believed to be in the region of 800 million Euros. Over the years the Seed group of companies have employed a number of outside consultants and advisers including Gerald Edelman, Ernest Saunders and the Pelican Partnership plc. They have also used the services of a number of well-known law firms such as Richards Butler and djfreeman, now called Kendall Freeman. Since mid-2003 there has been a question mark over Seed's future. Since 2000 the FBI has been investigating Ocean-Seed, albeit in a rather half-hearted fashion. On 17th January 2003 the Dutch police raided Ocean's Rotterdam offices and there is now a criminal and tax investigation underway. On 23rd January the Dutch Securities Board warned investors against investing in Ocean-Seed. Three American states - Arizona, Kansas and North Dakota - have issued cease and desist orders, while Mississippi is investigating complaints. In September 2002 a number of Seed clients started a civil action against Ocean International BV and its directors. This group also have taken action in Guernsey freezing bank accounts and seeking court authority to divulge the money trail. Since 1999 I have been seeking answers from Ocean-Seed. Until November 2002 they had declined to comment. I am pleased that Seed International are now responding to questions, although they have yet to provide any substantial answers to the how the wine trades (mainly Bordeaux) carried out during 1998-2000 worked. It has been suggested that AOW/ Paradigm group is actually Seed International or merely the latest version. Indeed in the alert issued by the United States Department of the Treasury, Office of the Comptroller of Currency, on 13th August 2004 links Seed International and Architects of Wine. Bob Middlemiss claims that people have accused him of being Paul Freeman. Although investdrinks has not met Freeman - he suddenly got cold feet when I agreed to meet him - Middlemiss is not Freeman. investdrinks does not believe that Paradigm group is part of Seed International Ltd and to date has seen no evidence to show that AOW/Paradigm group are one and the same. This allegation has been made by World Law Direct in the actions it has brought against AOW. I have yet to receive a reply to an email, asking what evidence exists to show that that Seed, Ocean etc. are collectively Architects, sent to World Law Direct on 28th April 2004 and forwarded to Brad Haskins. investdrinks understands that World Law Direct offered to settle their case against AOW for $9 million. Their two clients at the time are understood to have paid Ocean-Seed a total of $3 million. (Most of the material posted prior to November 2000 is now archived.) |
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Charges against Esther van Hengel dropped investdrinks learned on 10th March 2008 that Esther van Hengel had appealed successfully against her conviction and that all charges against her were dropped on 30th March 2007. investdrinks has clarified the 28th April 2006 post. Garrett and Stockdale questioned in South Africa In late March 2007 Craig Garret and Sean Stockdale, who ran Ocean International Marketing in Rotterdam who have faced possible extradition proceedings to Holland, were questioned at a hearing in South Africa (see news story by Johan Schronen below). Garrett and Stockdale professed their innocence claiming to be but pawns in the Ocean-Seed scam and did not know that the wine they sold did not exist. Although investdrinks would agree that they were not the principal actors - that role belonging to Paul Freeman and Anil Kohli - an analysis of the wine sales from Ocean International Marketing’s boiler room in Rotterdam surely indicates that the wine prices were extraordinarily flexible - possible only because the product was fictitious. investdrinks is distressed to learn that relations between Garrett and Stockdale and their former boss, Paul Freeman, may be less cordial than they were. SA wine entrepreneurs in the dwang A high-powered delegation of Dutch justice officials arrived in Cape Town this week to grill two local businessmen accused of fraud in the Netherlands involving at least R600-million. Sean Stockdale, a Milnerton property developer, and Craig Garrett, a Somerset West businessman, had also been facing extradition for allegedly running a fake wine quota investment scheme in Holland in the 1990s before returning to South Africa. The men's advocate, William King, confirmed that an extradition process had been withdrawn by the Dutch prosecutors. Reliable sources said the extradition process could be reinstated at a later stage. 'They (the investors) initially do gain a little on their investment, although only on paper' The men appeared in the Cape Town Magistrate's Court on Monday and Tuesday. King reiterated that in Cape Town they had been summonsed only as "witnesses in an inquiry", not as suspects and that they were giving their full co-operation. Dutch prosecutors allege the two had attracted investors - including 3 300 US professionals, mostly doctors and dentists - into buying non-existent wine investment portfolios. But during questioning this week, Stockdale and Garret were adamant that they had been made scapegoats by their employers, the actual perpetrators and were "100% innocent". Garrett, a former national squad hockey player in South Africa, said after he had dropped out of the University of Stellenbosch with a huge unpaid study loan in 1993, he had accepted a job offer as a call centre salesperson overseas. Stockdale, a former barman, said he had joined the same group, also as a "telesales" person in 1996. Both men said they quickly rose through the ranks and were made directors after a relatively short time. However, they were really only office managers and had no executive powers. Stockdale said he was a pawn in the hands of his bosses and had not been aware that the wine they sold had not existed. But Jeichien de Graaff of the Dutch prosecution office earlier said Stockdale and Garrett were the main suspects in a "big fraud case" involving "non-existent wine investments sold to American people". De Graaff said the two were suspects in a major "boiler room fraud", in which "clients or victims are constantly phoned and put under huge pressure to buy, buy, buy and not waste opportunities". "They (the investors) initially do gain a little on their investment, although only on paper. They then invest more. "Our investigators calculate that in the region of R1.1bn passed through the accounts of Oceans International Marketing (of which the two were directors) between 1996 and 2003." De Graaff said the two had been sought to stand trial in her country but the case had proceeded without them after they could not be found. She would not elaborate about the extradition process. Ocean International allegedly had a branch at Milnerton Lagoon, where Stockdale still has an office. But Stockdale testified that after he returned to South Africa in 2000 he ran a telesales outfit from his Milnerton Lagoon office, which also sold "physical" wine to US people. When the story first surfaced in SA the previous year Stockdale said the Dutch justice system had "prejudged me as a criminal". In 2003 alleged victims of the scheme successfully challenged their activities in civil courts in the Cayman Islands, the US, Scotland and the Channel Islands.’ Barclays Bank plc win appeal against Architects of Wine On March 20 the UK Appeal Court threw out the summary judgment handed out in 2006 by Mr Justice David Steel, sitting in the Commercial Court, in the case for negligence bought by the liquidators of Cayman-based Architects of Wine against Barclays Bank plc. Cayman-based company Architects of Wine offered the American medical community investments in wine futures. Much of the wine turned out not to exist or was of inferior quality. Architects of Wine was one of a number of companies within Paradigm Holdings group, run by Bob Middlemiss. Paradigm was put into liquidation in October 2004. The case arose from cheques sent by American clients to Architects of Wine made payable to the Cayman Island company. Following a cease and desist order being issued by the State of Arkansas on March 3 2004 the American bankers of Architects of Wine refused from April 2004 to process any further cheques. Middlemiss arranged for these dollar cheques to be sent to the UK and banked through Architects of Wine (UK) Ltd, another company within the Paradigm group. In all there were 400 cheques for around $1.3 million. None of the cheques were made out to the UK company. The money was later withdrawn from the account of Architects of Wine (UK) Ltd. The three Appeal Court judges found that the Mr Justice Steel was wrong to reject Barclays’ defence that it had followed current banking practice by accepting cheques. Lord Justice Rix commented that ‘Although the judge may have been sceptical, he was not I think entitled to reject out of hand, or to disregard, as he appears to have done, the bank's evidence that the current banking practice was that a sufficient match was acceptable and that the names in question did in fact sufficiently match.’ At present it is not known what the next move in this case will be. It remains possible, however, that Architects of Wine claim of negligence against Barclays Bank plc could go for full trial. Headed for a full trial? A full trial of AOW’s liability claim against Barclays Bank looks a considerable possibility after the appeal hearing on 28th February at London’s High Court. Although the claim is fascinating within the long Seed/AOW saga, it has potentially serious and wide ranging implications for the UK banking community as the appeal court judges and the two parties readily acknowledged. Whether Mr Justice Steel’s summary judgment of 16th June 2006 is upheld or the case is sent for a full trial Barclays Banks and its competitors may have to tighten up both their cheque handling and anti-money-laundering procedures, especially in regard to cheques moved between companies within the same group (of companies). The appeal was moved back a day to the 28th February from the 27th February originally set. It was heard by the president of the family division, the Right Honourable Sir Mark Potter, as well as Lord Justice Rix and Lord Justice Wilson. The case centres on around 400 dollar cheques sent by AOW’s American clients and worth a total of $1.4 million that were paid through the Architects of Wine UK Ltd account between April 2004 and September 2004 after two Cayman Island banks had stopped accepting payments from AOW (Cayman Islands) Ltd in the US. (The two banks were: Caledonian Bank & Trust Ltd., whose US correspondent was the Bank of New York and FirstCaribbean International Bank (Cayman) Ltd, an affiliate of the defendant bank whose correspondent bank in the United States was Barclays New York.) The principal submission of Barclays Bank plc - put by Alan Steinfeld QC - was that Barclays’ procedures for these handling batches of dollar cheques - typically the cheques were submitted to the bank in batches of around 10 cheques - were followed correctly. It would have been remarkable if the cashiers at the Regents Street, London W1 branch and the checkers at Barclays’ International Cheque Operations Division at Poole has picked out that none of these cheques were made out to the full name of the UK company - Architects of Wine UK Ltd, especially as the UK company traded as Architects of Wine. Since these cheques were being paid into the Architects of Wine UK Ltd account by the account holder, the cashiers and checkers might be ‘entitled to lower their guard’. The cheques were either made out to Architects of Wine or Architects of Wine Ltd as they had originally been made out for Architects of Wine in the Cayman Islands. (About 10% of the cheques included AOW’s Cayman address.) Middlemiss, variously described as a ‘fraudster’ and a ‘rogue,’ had had them sent to the UK for them to be ‘laundered’ as Lord Justice Rix observed during the hearing. Once laundered the money was then removed from the account. The three judges appeared to accept that it was common and reasonable for banks to accept cheques with slight variations in the name. One can imagine the delays and time involved if there was an insistence that every cheque must be correctly made out to the last detail. If there was a fault it could well systemic. Michael Black QC for AOW concentrated on the marked change in the company’s trading pattern during 2004. Should not the inflow of dollar cheques into a UK retailing company have raised questions? If AOW’s claim comes to a full trial one of the crucial and most interesting aspects will be the account manager’s testimony in relation to whether he should have been alerted by the marked change of AOW’s pattern of trading in mid-2004: moving from banking sterling cheques to dollar cheques paid into a specially opened dollar account while payments into the sterling account dried up. The account manager had been told at a meeting with AOW UK Ltd on 24th July 2003 that this was the new name for The Wine Corporation Ltd, a UK mail order wine company who had been a customer of Barclays since 1999 that Middlemiss had recently acquired. The parent company of Architects of Wine UK Ltd was Paradigm Holdings based in the Cayman Islands. The account manager was also told that if the bank refused credit lines then the parent company would supply injections of capital from the Caymans. Towards the end of the hearing Alan Steinfeld helpfully outlined some the questions the claimants might wish to address to the manager at a full trial. The manager might also be asked whether having been put on notice in June 2004 that there were questions over the creditworthiness of Architects of Wine UK Ltd did he not wonder about the source of all this money? A company that may have financial problems suddenly becoming flush with funds from a new source and in a foreign currency - did not that seem odd? The cheques could hardly be for wine bought from the UK mail order company to be shipped to the US, especially given the difficulties importing wine into the US. (At the hearing before Mr Justice Steel in 2006 written statements were provided by Barclays from AOW account manager and the compliance officer at the International Cheque Operations Division at Poole. They weren’t present at the hearing, so weren’t cross-examined.) Cross-examination at a trial might also seek to establish what procedures Barclays Bank has for passing on information from one country to another bearing in mind that FirstCaribbean International Bank (Cayman) Ltd, one of AOW’s Cayman banks) and affiliated to Barclays, ceased to accept payment of AOW’s cheques in the US in April 2004. Was this information relayed to Barclays in the UK, to whom and what steps were taken. Similarly was the alert issued by the US Comptroller of the Currency on 13th August 2004 passed onto Barclays in the UK and, if it was, what was done with this information. Court 33 in the Royal Courts of Justice was incredibly hot - no concessions to global warming here as the temperature must have been well in excess of 70˚. investdrinks was most impressed by the sharpness of the judges - Lord Justice Wilson appeared to know the case papers better than either barrister - able to point out a page number if the barristers stumbled. Lord Rix posed searching questions about banking practice and the relevance of some of the lines of argument put forward. Judgment is expected in around four weeks time. Contract as well as a bounty? As well as Bob Middlemiss having a bounty on his head for information leading to his arrest (according to WorldLawDirect), there are also rumours that some Italian producers furious that they haven’t been paid have taken out contracts on both Middlemiss and Paul Freeman. This seems pretty unlikely and may well be a product of someone’s fevered imagination but investdrinks has heard this from several sources. Dutch team to interview Stockdale and Garrett Story taken from: int.iol.co.za A high-powered Dutch investigative team is heading for Cape Town to question the two alleged masterminds of an international investment scam that runs into hundreds of millions of rands. The investigators want to talk to Milnerton property developer Sean Stockdale and his former associate, Graig Garrett of Somerset West, who they believe can shed light on a massive wine quota scam which left more than 3000 American professionals, mostly medical doctors, with worthless "ghost" investment portfolios. Forensic detectives estimate that up to R1.1-billion passed through the accounts of a company called Ocean International between 1996 and 2003. Garrett and Stockdale are both believed to have been closely linked to this company.’ Update on AOW v Barclays case Barclays Bank PLC has appealed against the 16th June 2006 ruling and the appeal is due to be heard on 27th February 2007. AOW Liquidator wins Barclays case Robert Middlemiss ‘fraudulent’ Chris Johnson and Chris Johnson Associates acting as liquidators of Architects of Wine have successfully sued Barclays Bank PLC in the High Court in London for negligence. The original claim was for $US1.3 million arising out of some 400 cheques paid through Barclays in the UK. This followed FirstCaribbean International Bank, AOW's bank in the Cayman Islands and an associated company of Barclays Bank plc, decision to refuse to transfer any further monies following the issuing of cease and desist orders in the United States. The cheques were paid in during the summer of 2004 and by 20th September 2004 most of the $1.3 million paid in had been transferred out of AWUKs account. (For details of the claim see 31st March 2006 posting.) In the judgment issued on 16th June 2006 and published in early July by the Honourable Mr Justice Steel Barclays was ordered to pay $250,000 as an interim payment. This payment will be stayed as Barclays have decided to appeal. Steel also ordered that there be an enquiry as to whether the proceeds of any of the cheques listed in Appendices 1 and 2 to the Particulars of Claim herein were used to discharge the liabilities of the Claimant. In the notes on the judgment the Judge The Honourable Mr Justice Steel clearly found that Middlemiss’ intention was fraudulent - ‘the inevitable inference is that the transfers were undertaken to strip funds out of AWCI, which the investors had been fraudulently induced to provide, and to facilitate the dishonest misappropriation of those funds.’ See relevant notes below: 15. Initially, I was under the impression that it was accepted that Mr Middlemiss had acted in a fraudulent manner, vis-à-vis the company. Indeed, sections of the petition for winding up Paradigm were quoted with apparent approval. For instance, the court was invited to consider paragraphs 8 and 11 on the notes to the petition: “8. If at any time until 23rd September 2004 Middlemiss had combined, agreed and conspired with others since 2003 to defraud the public in general of vast sums through the means of a wine purchasing scheme which they ran out of the Cayman Islands between 2003 and mid September 2004.” “11. The group companies were completely controlled by Middlemiss, they were a sham a mere cloak, devised and intended by Middlemiss to facilitate and carry out the fraud described herein, and they were used for that purpose. These companies were a mere device for enabling Middlemiss to defraud the victims of the above scheme in general, and the petitioner in particular. The group companies had no purpose or activity other than the carrying out of the fraud. There was no legitimate part in them.” 16. As I say, it did not appear that the defendant took issue with that description. However, at the hearing it was made plain that no concession in this respect was made, or intended to be made. The defendant, through Mr Pelling, asserted that the transfer of the cheques was performed simply because AWCI was faced with a loss of its local banking facilities. Thus, it was contended, there was not established a fraud on the company, even if, as was not conceded, there had been a fraud on the customers. 17. I am unable to accept that proposition. The material before the court is in effect all one way. The purpose of the transfer was to avoid the banking restrictions imposed because of the fraudulent trading by Mr Middlemiss. Notably, the transfers coincided with the restrictions imposed by the United States Securities Authorities. This clearly prompted AWUK, on Mr Middlemiss’s instructions, to open a US dollar account in its own name, and all these steps were taken at a time when AWCI was in severe financial difficulties. In the result, the inevitable inference is that the transfers were undertaken to strip funds out of AWCI, which the investors had been fraudulently induced to provide, and to facilitate the dishonest misappropriation of those funds. Mr Justice Steel finds that Barclays were negligent over their handling of the cheques as he explains: The relevant account was in the name of AWUK. (2) None of the 400 cheques were payable to AWUK, the payee was variously; Architects of Wine, or Architects of Wine Limited. (3) All the cheques were in United States dollars, drawn on various United States banks, in sums averaging about $3,000, but up to as much as $27,000. And (4) some of them, about 10 per cent of them, gave the payee’s address in the Cayman Islands. In my judgment, as I have indicated, the defendants have fallen well short of establishing a prima facie case of due care. First: there is no evidence of any employee who exercised any judgment in the matter. Second: the payee never matched the account name. At best, it is accepted by the defendants that the names on the cheques were ambiguous. Thirdly: the business of AWUK had been described as a mail order wine company by way of adoption of a wine retailing business in Northampton and the only anticipated source of United States dollars from AWUK’s point of view was from the parent company in the Cayman Islands. No date has yet been set for the appeal. Here are the judgment and judgment notes in Word format. Robert (Bob) Middlemiss and World Law Direct The World Law Direct site reports the following: Update: July 1, 2006: U.S. Federal Court issues final judgments against Robert Middlemiss and Chris Els. Federal District Court will next rule on RICO charges and triple damages provisions. Update June 20, 2006: 100,000 dollar bounty issued for Robert (Bob) Middlemiss, Nadyia Isak and Chris Els--contact us for more information. Earn 100,000 dollars for information resulting in the location and arrest of Robert Middlemiss, Nadyia Isak (suspected UK citizen) and/or Chris Els. (worldlawdirect.com/article/1711/Seed_International_and_Architects_of_Wine.html) Robert J Middlemiss is currently on the UK electoral roll in the Christchurch area of Dorset. First trial and sentence in OIM case On 24th April Esther van Hengel, a former employee of Ocean International Marketing, was sentenced in Rotterdam to 180 hours of community service and was given a four month suspended prison sentence for knowingly avoiding Dutch taxes on bonuses paid to Ocean's sales force. Van Hengel who was employed as the company's bookkeeper, appeared in a Rotterdam court on 10th April on charges of tax fraud. Van Hengel was a co-conspirator in an attempting to evade Dutch income taxes. Ocean International Marketing was the marketing arm of Cayman Island registered Seed International Ltd and was based in Rotterdam. The sales force of Ocean International Marketing targeted the American medical community selling them a range of investments-principally wine but also property, oil and gas exploration and a protective covering for CDs. The Rotterdam Fraud Squad and the Dutch tax authorities raided the offices of Ocean International Marketing on January 17, 2003. This raid signalled the start of a long investigation into the company's affairs by the Dutch authorities. Van Hengel is the first Ocean employee or director to appear before a Dutch court on charges relating to this investigation. The prosecution said that the weekly salaries paid in Holland to the staff were merely pocket money. Instead, huge bonuses were paid out from Cyprus and Guernsey to the staff's offshore accounts. An email sent by Van Hengel to all Ocean employees told them to "shred all evidence of bonuses because the tax authorities would pay Ocean a visit the next Monday." Van Hengel, who pleaded not guilty, said that she did not recollect the email but said that if she did send it, this was "to avoid confusion with the tax authorities." The public prosecutor demanded 240 hours of community service and a six months suspended jail sentence. Although van Hengel is a "small fish" the prosecutor said that "is important that Holland is seen to be serious about cracking down on "boiler room fraud'." A pro forma hearing against the former directors of Ocean International Marketing, Craig Garrett and Sean Stockdale, is expected to be held in July. Garrett and Stockdale are believed to be currently in South Africa and it remains to be seen if the Dutch authorities will be able to persuade them to return for the court case or whether they can extradited to Holland. (Clarification: 11.3.2008: Esther van Hengel appealed successfully against this judgment. The appeal was heard on 30th March 2007. The prosecutor concluded that the first ruling was incorrect and asked the high court to acquit her immediately and all charges against her were dropped.) Barclays Bank plc sued for $1.3 million Architects of Wine, a wine investment company based in the Cayman Islands, has issued a writ in London's High Court against Barclays Bank PLC for allegedly wrongfully moving $1.3 million from a dollar account to a sterling account and subsequently either paying this money to a third party or retaining it for its own use. Both accounts were held in the UK. The cheques were payment for wine investments held by AOW for various American doctors. Architects of Wine, which has been in compulsory liquidation since September 2005, is one of a number of companies in the Paradigm group that was set up by Australian Bob Middlemiss. In October 2002 Middlemiss gained the right to market wine contracts worth up to euros 800 million ($955 million) held by Seed International Ltd on behalf of a number of American doctors. These had originally been contracts for classed growth Bordeaux. In 2001 and 2002 the American investors were persuaded to transfer to 10-year contracts with Italian producers. In March 2004 Arkansas issued a cease and desist order against Architects of Wine stopping them from selling wine investments in that state. Further cease and desist orders were issued by West Virginia and Mississippi. The writ states that on 26th May 2004 the FirstCaribbean International Bank, AOW's bank in the Cayman Islands and an associated company of Barclays Bank plc, wrote to Middlemiss refusing to accept any further transfers from Middlemiss and his various companies 'as a direct result of the cease and desist order'. The writ claims that the majority of the cheques were paid into AOW's Barclays dollar account after this date. Subsequently on 13th August 2004 the US Government issued an alert to all US banks about both Architects of Wine and Seed International. Ocean International Marketing Ltd, the marketing arm of Seed International Ltd, was raided by the Dutch police in January 2003 and then investigated by the Dutch tax and fraud authorities. A spokesperson for Barclays Bank Plc said "Barclays are unable to comment because this is going through legal process." Justice Henderson's judgment investdrinks has now received a copy of the judgment handed down by Justice Henderson in the Cayman Islands. The judgment was published on 1st September. Although Justice Henderson found that the allegations 'that 'Paradigm and Middlemiss' were involved in 'fraud, conspiracy and a Ponzi scheme have not been proven', he did find that the wine contracts that Paradigm and its associated companies were selling constituted securities and as the companies were unlicensed they were in violation of the Cayman Islands Securities Investment Business Law. Henderson also found that Paradigm's business affairs and whether company is solvent required a full investigation, so he confirmed the appointment of the liquidators. Apparently Middlemiss' lawyers, Turner and Roulstone, are appealing against Justice Henderson's decision. Whether this gets very far will depend in part on whether Middlemiss has paid this set of lawyers. Justice Henderson's judgment mentions that lawyers Coudert Brothers, who apparently gave Middlemiss an opinion that the wine contracts were not securities, have not been paid. That legal opinion, if it actually exists - Middlemiss failed to produce a copy for the court - was presumably given around three years ago when Middlemiss was setting up the Paradigm and Architects of Wine operation. Justice Henderson expressed amazement that Middlemiss couldn't 'locate his copy' as the document had cost 'almost $200,000 to produce'. The liquidators have put AVE North America Limited into liquidation and AVE United Kingdom Ltd and Architects of Wine [UK] Ltd have been struck off and dissolved for non-compliance. Dazebao UK Ltd is in the process of being struck off, although the proposal is currently suspended. Apparently Dazebo UK Ltd was insolvent to the tune of £2,817,361 as of 30th June 2004 according to recently recovered statements. Middlemiss appeals against Cayman liquidation investdrinks understands that on August 9 Justice Henderson of the Grand Court of the Cayman Islands ordered that Paradigm Holdings Limited be wound up and that Christopher Dorrien Johnson and Russell Smith of Chris Johnson Associates Ltd be appointed Joint Official Liquidators. Paradigm Holding's subsidiary Cayman companies - Paradigm Wine International Ltd, Ultimate Wine Limited, Paradigm Logistics Limited and Worldwide Wine Limited - have now been put into liquidation by Chris Johnson Associates Ltd. Justice Henderson also gave permission for wine held in Switzerland to be sold. Middlemiss' lawyers, Turner and Roulstone, are appealing against Justice Henderson's decision. There are unconfirmed reports that Middlemiss has set up a new wine company in Italy. If these rumours are correct and given Middlemiss' well established track record of financial disasters - Wine Finds and the whole Paradigm mess - it is all too likely that this new venture will also end badly. Middlemiss loses in Cayman Islands According to several sources Bob Middlemiss lost his lengthy legal battle in the Cayman Islands to reverse the appointment of a provisional liquidator to Paradigm Holdings Ltd. The latest hearing started on 5th August as the hearings due on 29th and 30th July were put back a week. investdrinks is awaiting full details of the court order. However, the court’s decision may now open the way to liquidating a number of Middlemiss’ companies in various countries. Clarification investdrinks has been informed by Chris Johnson, the provisional liquidator of Paradigm Holdings in the Cayman Islands, that Johan Schronen is incorrect (see posting 18th July 2005) when he states that Johnson is looking at Sean Stockdale and his business activities in South Africa. This is apparently not the case. AOW - court hearings 29th and 30th July The next hearing of the now increasingly extended saga of the putting Paradigm Holdings Ltd into provisional liquidation will be held on 29th and 30th July in the Cayman Islands. Whether two days will prove to be sufficient to decide whether the appointment of the liquidator is confirmed or rescinded remains to be seen. Chris Johnson was originally appointed as provisional liquidator on 12th October 2004. It does appear rather extraordinary that by the time the court meets on 29th July it will have already taken more than nine months to reach a decision. Stockdale and Garrett in South African news story The Cape Argus featured the following story by Johan Schronen on 12th July. JOHAN SCHRONEN, Crime Writer, Cape Argus, Cape Town South Africa, July 12, 2005 Sean Stockdale, 30, of Woodbridge Island, who has been attracting investors locally for his plush Island View development, was the director of Ocean International Marketing, a company accused of conning more than 3300 US professionals, mostly medical doctors, into buying non-existent wine investment portfolios. A spokeswoman for the Dutch prosecution office, Jeichien de Graaff, confirmed that Stockdale was one of two main suspects in a "big fraud case" involving "non-existent wine investments sold to American people". The other man is Craig Garrett, 37, who is also believed to be in Cape Town. De Graaff said the scam involved $88m. Dutch prosecutors also want to speak to Garrett. De Graaff said Stockdale and Garrett, who are believed to have dual South African-Dutch nationality, were sought to stand trial for fraud in Rotterdam later this year. "It is, however, our prosecutor's intention to go ahead with the case, with or without these two suspects," she said. De Graaff could not verify earlier media reports that an extradition process was under way, but confirmed that "they are suspects of fraud and we aim to bring them before a court ... I can, however, not comment on what steps are taken to get them there". Stockdale and Garrett ran Ocean International Marketing in Rotterdam, with a branch at Milnerton Lagoon. The Cape Argus traced Stockdale to his office at Milnerton Lagoon, from where he runs his property business. He lashed the Dutch justice system, which, he claimed, had "prejudged me as a criminal". "I'm just a middle man bearing the brunt (for) the real culprits. I was only the marketing arm of Seed International, Ocean International's mother company." "Instead of smearing my name through the mud, the media should warn other South Africans who want to make it in business abroad of the pitfalls there," Stockdale said. Asked if he would surrender himself to authorities abroad, he said he was in contact with the Dutch Office of the Prosecutor but "the process of justice must follow its course". De Graaff said earlier that her office knew Stockdale and Garrett had left the Netherlands. Meanwhile, alleged victims of dealings by Stockdale's companies have successfully challenged their activities in the Cayman Islands, Maryland in the United States, and in Scotland and the Channel Islands. Last year, the Maryland Commissioner of Securities issued a final order against Stockdale, a business associate and the group of companies to "cease and desist" from trading, and fined the companies and their directors $40 000. The commissioner found Stockdale and his co-accused were trading illegally, and had violated securities and agent registration provisions and anti-fraud provisions of the US Securities Act. He issued the order in August 2004 after judging "immediate action against the respondents was in the public interest". In November 2003, several disgruntled investors successfully applied in the Cayman Islands for a "cease and desist" order against the group of companies, including Seed and Ocean and their directors. This meant they were to stop operations worldwide and reveal their assets. Forensic auditor Chris Johnson, operating in the Cayman Islands where some alleged scam victims live, said he had been employed by investors to recover their money. He said the case transcended international boundaries including America, Europe and South Africa and "is very big". "I'm looking at all the suspects and their financial activity including that of Stockdale in South Africa," Johnson said. Also in 2003, a group of American doctors and a dentist's wife successfully applied for a court order prohibiting Stockdale, Garrett and their company from disposing of assets. The group obtained an order in a Guernsey court freezing the company's bank accounts in Scotland and Guernsey. Ocean International Marketing - criminal proceedings The Dutch authorities have issued extradition requests to South Africa for 36 year-old Craig Garrett and 29 year-old Sean Stockdale on charges of fraud and forgery arising from the selling of wine investments to American doctors by Ocean International Marketing. Garrett and Stockdale are directors of the company, which was the sales' arm of Cayman based Seed International Ltd and operated from offices in Rotterdam. Garrett and Stockdale have joint Dutch and South African nationality and are believed to currently living in South Africa. Ocean International Marketingmainly sold red Bordeaux wine positions. They are alleged to have defrauded 3392 Americans of 75 million euros ($91.98 million). Two women from Rotterdam have also been charged. The case is expected to come before a Rotterdam court later this year. The Rotterdam fraud authorities started their investigation in 2002. The two major figures in Seed International Ltd, Paul Freeman and Anil Kholi who were both listed as Ocean directors by the company's accountant, D P Klop of DéPé Klop BV, have not been charged by the Dutch authorities. AVE United Kingdom Ltd One of Bob Middlemiss' companies AVE United Kingdom Ltd was dissolved on 17th May 2005. Set up on 23rd August 2003 no accounts were filed and the annual return was overdue from 20.9.04. investdrinks has just received a copy of letter sent out by Chris Johnson on 24th May to creditors of AOW Dear Sir/Madame As you are aware from my previous communications a Grand Court hearing took place on May 2 and 3, 2005 before Mr. Justice Henderson. The hearing concerned the earlier application of Strathvale House Limited to place Paradigm Holdings Limited into Official Liquidation. Mr. Robert Middlemiss, who was present for the hearing, had voiced his objection to the liquidation through his firm of attorneys, Turner and Roulstone. On behalf of Mr. Middlemiss the attorneys also applied to have the liquidator removed in terms of both provisional and voluntary appointments, on the grounds that the relevant companies are all, in fact, solvent. Since only two days had been allocated for the hearing the lengthy examination and cross-examination of Mr. Middlemiss which took place left insufficient time for the liquidator to fully present his own findings. As such the hearing was incomplete and has now had to be adjourned until July 20, 2005. As it stands, therefore, Paradigm will remain in provisional liquidation until the outcome of the reconvened hearing. This delay is regrettable because the liquidator cannot sell the wine until his application to Court has been heard and approved. Consequently, without such funding in place the liquidator cannot proceed to wind-up the companies in an orderly manner. In the meantime the storage costs for the wine will continue to accrue by $15,000 per month. Of further concern to the liquidator is the fact that the storage companies are now contemplating taking their own actions to sell the wine as they are no longer prepared to allow their already considerable outstanding costs to escalate further. If taken, such action could only have a further detrimental effect on the outcome of the liquidation. During the run-up period to the next hearing the liquidator requests that you forward (by email where possible) a list of all monies that you paid to Architects of Wine Limited and/or Seed International Limited. This request includes any monies sent to group companies or to enterprises in Italy, along with any monies that you may have received from AVE International Limited. The information is required in order that the liquidator might reconcile the records in his possession with creditors’ and customers’ own records. At this stage the liquidator does not require any additional information but may require it later. In anticipation of any such request the liquidator requests that you retain all relevant records presently held within your possession. A number of creditors and customers have sent information previously but there are many that have yet to do so. This information is critical to the liquidator as he is dependent upon widespread creditor and customer co-operation to allow him to trace all funds sent and to enable individual account reconciliations. Yours truly Chris Johnson Paradigm Holdings Ltd hearing of 2nd-3rd May inconclusive investdrinks understands that the two day hearing in the Cayman Islands to hear the application to remove Chris Johnson, the liquidator for Paradigm Holdings Ltd, was inconclusive with the court running out of time. investdrinks understands that Bob Middlemiss was present for the hearing. It is thought that there will be a further hearing in a month or so time. Third report from Chris Johnson AOW: Third report from Chris Johnson, liquidator of Paradigm Holdings Ltd in the Cayman Islands was sent out to creditors at the end of March. I'm most grateful to creditors, who have sent copies of the report. It makes grim but fascinating reading. ATTENTION IMPORTANT COMMUNICATION FROM THE LIQUIDATOR Dear Customer/Creditor I attach herewith a further report to the customers and creditors of Paradigm Holdings Limited (Paradigm’) and its two subsidiary companies, Architects of Wine Limited (‘AOW’) and AVE International Limited (AVE’). The provisional liquidation of Paradigm arises following the October 12, 2004 petition of the landlord to place the company into liquidation following the closure of the Cayman office and as a consequence of the then mounting rent due. At the time there were many unpaid financial obligations, other than liabilities which may have been due to customers (e.g. utilities, suppliers and consultants), and the company was deemed unable to pay its debts. Similarly there were substantial creditor debts owed by both AOW and AVE which necessitated placing these two companies into liquidation also. In addition, AOW and AVE were unable to meet their own commitments to customers. Of particularly importance within the report is the paragraph relating to the proposed sale of wine in Switzerland. As stated therein it is my intention to urgently apply for a court hearing to sell the wine for the purposes of progressing the ongoing liquidation and for the general benefit of customers and creditors. Should you wish to either support or oppose this proposed action please urgently address your written communications (by fax or email) to Mr. Peter Broadhurst. E-mail broadlaw@westtel.ky or facsimile: 1 345 949-7725. Any additional enquiries or requests for information should be addressed by email to architectsofwine@yahoo.com. However, please remember if replying to an email initially received from the Liquidator, in order to avoid incoming e-mail storage capacity and processing difficulties, please remove any attachments before returning emails to either address provided above. Yours truly C. D. Johnson You can download or view the full document here. Cayman hearing adjourned until early May The hearing challenging the appointment of Chris Johnson as voluntary liquidator of Architects of Wine in the Cayman Islands was heard on 16/17th February. On the second day the hearing was adjourned until 2nd/3rd May. Middlemiss' attorneys Turner & Roulstone were seeking the discharge/removal of Chris Johnson. AOW clients still paying money into AOW/Paradigm accounts not in the direct control of the Provisional Liquidator may want to consider pay these monies into an escrow account until the Cayman court (hopefully) clarifies the position in early May. investdrinks understands that the Provisional Liquidator now controls all the known wine stocks with the exception of those held in Italy. Following the adjournment clients of AOW/Paradigm, who have not already done so, may wish to contact Chris Johnson, the provisional liquidator. His contact details are: Chris Johnson Associates Ltd, Strathvale House, P O Box 2499, GT, Grand Cayman, Cayman Islands, BWI tel. (345) 946 0820 fax. (345) 946 0864. email: chrisjohnson@candw.ky Legal challenge to AOW liquidator The hearing challenging the appointment of Chris Johnson as voluntary liquidator of Architects of Wine in the Cayman Islands will be heard will be heard on 16/17th February. Middlemiss' attorneys Turner & Roulstone will be seeking the discharge/removal of Chris Johnson. Middlemiss wrote to AOW clients on 16th December explaining the position in the Cayman Islands and that he had been 'advised by his attorneys that because of the actions taken by Strathvale House and Mr Johnston that I am not permitted at this stage to send out statements or confirm the wine positions that a number of customers have requested before the application to discharge is heard by the Grand Court of the Cayman Islands.' investdrinks understands that Architects of Wine have ceased trading from their site in Northampton having failed to pay the rent and other creditors. Les Garagistes, another of Middlemiss' companies has moved out of its London office and its accounts and annual return are both overdue. Middlemiss' letter concludes with 'I will be in contact with you and hope to be able to confirm your wine positions as soon as I learn of the decision of the Grand Court of the Cayman Islands regarding this matter.' This may happen but I can't help feeling that there's more chance of seeing a squadron of flying pigs circle London. Paul Freeman starts a new career? investdrinks understands that Paul Freeman, boss of Seed International Ltd, is now involved in the Cwrt Bleddyn Hotel in Llangybi, near Usk, South Wales. The 33-room hotel was recently bought by Roadbeach Ltd, whose sole director is 42 year-old Maria Beth Freeman of 33 Rue de Millo, Monaco. Roadbeach Ltd was formed on 4th March 2004 and its registered office is in Bristol. investdrinks understands that Maria Freeman prefers to remain in Monaco and to leave her husband Paul to visit the hotel on average about once a week, although it is believed to be Maria Freeman as sole director who signs the cheques drawn on a Scottish Bank. Apparently Freeman drives a silver Mercedes 4x4 registration number V365 KON. The hotel is run by a manager. The hotel offers conferencing facilities and its restaurant is called Jester's. Roadbeach are understood to be spending considerable sums on renovating the hotel. Freeman apparently has taken a considerable interest in the planning and execution of the substantial renovations to the hotel's bar area. It is understood that the initial budget for the bar renovations was between £15,000 and £20,000. However by the time walk-in fridges etc. had been installed, the cost is believed to have topped £20,000. Former cabaret king, George Savva, used to run the hotel, then owned by his businessman son-in-law, David Lewis. Savva used to book former pop stars, like The Searchers, Dave Berry and Gerry and the Pacemakers, to appear at Cwrt Bleddyn's function room. Prior to this Cwrt Bleddyn was one of Richard Branson's Virgin Hotels, which the group bought in 1997. investdrinks has received a letter dated 27th January 2005 from hunt & coombs solicitors, 35 Thorpe Road, Peterborough PE3 6AG. The letter states: 'You should know that Paul Freeman has no connection with Roadbeach Limited or is (sic) shareholders or promoters. It is owned by a trust with which he has no connection whether as trustee or beneficiary. He is in no way involved in the management of the hotel. He does not "look after" it. He is not "running" it. Neither the trust nor the hotel has been funded by Seed International or any of the other companies referred to on your site.' The letter also states that 'You know because you have been involved with protracted correspondence with, inter alia, solicitors acting for the companies that the allegations of fraud and misconduct are strenuously denied and you know that Paul Freeman denies being involved in any malpractice or dishonesty.' investdrinks' long standing invitation to Paul Freeman to explain how the Bordeaux wine trades worked remains open. investdrinks has asked Freeman whether discounts will be offered to investor clients of Seed International Ltd and associated companies and am unfortunately still awaiting a reply. Of course as he is not running or managing the hotel he may well not be in a position to offer discounts. Cwrt Bleddyn Hotel, Llangybi, near Usk, South Wales NP15 1PG Paradigm Holdings Ltd liquidation - affidavits etc. investdrinks understands that Bob Middlemiss has retained Turner & Roulston, lawyers in the Cayman Islands, to challenge last month's appointment of a provisional liquidator to Paradigm Holdings and the subsequent winding up of two other associated companies. This case will not be heard until sometime in 2005. Here are a couple of affidavits that investdrinks understands were presented in the Cayman Islands' Grand Court when Paradigm Holdings were placed in provisional liquidation: Affidavit1.doc, Affidavit2.doc. In addition investdrinks also has a copy of a letter that Chris Johnson, as liquidator, sent to clients of AOW on 10th November 2004: Chris_Johnson.doc. Some clients of AOW have also received an offer to buy their Italian wines from International Wines SA, a company based at P.O. Box 820, Glenvista 2058, 21 West Street, Houghton 2198. Tel: 011-27-11-728-0257. Not surprisingly some AOW clients have expressed reservations over dealing with an unknown company that appears to have recently strung up in the South Africa. Paradigm Holdings Ltd in provisional liquidation The crisis surrounding Bob Middlemiss' Paradigm group appears to have intensified. On 12th October Chief Justice Smellie put Paradigm Holdings Ltd into provisional liquidation in the Cayman Islands' Grand Court. Christopher Johnson of Chris Johnson Associates Ltd, Grand Cayman was appointed provisional liquidator. The following day Johnson put two subsidiary companies of Paradigm Holdings Ltd - Architects of Wine Ltd and AVE International Ltd - into voluntary liquidation. On November 2nd Johnson wrote to AOW clients advising them of the liquidation and alleging that 'following the preliminary investigations it would appear that Paradigm, its two subsidiaries, Architects of Wine Ltd, and AVE International Ltd may have been vehicles used for fraudulent purposes'. Johnson has advised AOW clients to continue make their contracted payments into an escrow account. It is not clear whether the money AOW clients paid for wine was used to for this purpose or rather was diverted to fund other companies in the Paradigm group and support expensive lifestyles which included luxurious rented accommodation at Seven Mile Beach on the Cayman Islands. In any ironic twist Seed International Ltd claimed in late September that they are unable to supply their clients with wine as Paradigm have failed to deliver wine as agreed. Seed allege that they have 'paid in excess of $9 million towards the supply of wine. At a meeting in London in late August Middlemiss told investdrinks that he would not be supplying Seed International with wine. Buzwell Group further winding up petition The Buzwell Group appears to be winding down with remarkable speed. investdrinks understands that another company in the group has received a winding up order: Econowall Group Limited, manufacturers of shopfitting equipment, has received a Winding Up Petition. The petition was apparently served on the company on 2nd August 2004 and is to be heard in Birmingham District Registry of the High Court at 10.00am on 15th November 2004. A press release on spacewall.net sheds some further light: The move ends weeks of uncertainty following non-completion of the sale of Spacewall Ltd. to the Econowall Group: part of a consortium owned by the troubled Buzwell Group. The new business is operating from the same purpose built Northamptonshire factory it occupied when trading as Spacewall Ltd.' Further Buzwell news (taken from Printweek) Abbott Holdings has registered a debenture against the assets of Buzwell Group, effectively declaring itself as a preferential creditor of the troubled group. However, it has emerged that the shop fittings manufacturer is part of Abbott International, which is owned by the Buzwell Group, and shares a common director in Buzwell chief executive Colin Parker. Further companies in the Buzwell Group empire have been wound up after a re-financing package for the group failed to materialise (PrintWeek, 16 September). SMS Services (UK) and Gridloc Group, both subsidiaries of Buzwell have been wound up. Administrator Begbies Traynor, which issued the winding-up petition against both Buzwell and White Productions, is working with the official receiver on the appointment of a liquidator for the businesses. Begbies Traynor partner Nick Hood said the firm wanted to ensure that the case ends up in the hands of an insolvency practitioner, "who will look very closely at everything to see what has gone on. White Offset, which traded as a division of White Productions and was formerly known as Offset Colour Print, has also closed its doors at its Southampton office. It is understood that the business has had no staff since 1 September, due to the failure of Buzwell to pay any wages. Administrator appointed for White Productions A liquidator has been appointed to White Productions following its winding-up by Perivan Group administrator, Begbies Traynor. Menzies Corporate Restructuring was appointed to White on 6 October. A liquidator is still to be appointed to the Buzwell Group, which was wound-up at the same time as White. Leigh-on-Sea based White Productions was wound up by Begbies after a re-financing package for its parent Buzwell Group Taken from Printweek, 23rd September 2004 'End of the line for White and Buzwell The businesses of both White Productions and the Buzwell Group have been wound-up, after a refinancing package for parent Buzwell failed to materialise. Some 30 jobs are believed to have been lost at White Productions as a result. The two companies were wound-up by Begbies Traynor, administrator of the Perivan Group. It is unclear as to whether White Offset, formerly Offset Colour Print is affected by the latest moves. This latest move in the saga of both Buzwell and White Productions comes less than a year after White, then Perivan White Dove, was acquired from its administrators by the Buzwell Group, under the name of Skyrooks. It also follows a staving off of a winding-up petition by Begbies Traynor against White Productions last week. The winding-up petition was issued by Begbies to recover a significant amount still outstanding from the sale of the assets of Perivan. Begbies Traynor partner Nick Hood said that despite promises of refinancing and payments of outstanding debts, this failed to materialise. By the time all parties had reached the High Court on 22 September, Hood said Begbies had been joined in the petition by a number of employees from White Productions. He said the Leigh-on-Sea premises of White Productions had also been closed by its landlords. Hood said the businesses would now into the hands of the Official Receiver, who would decide who will be appointed as liquidator. "What happens next is entirely up to the liquidator," said Hood. In previous weeks both White Productions and the Buzwell Group had both been the subject of winding-up petitions. It had also emerged that Buzwell Group chief executive Colin Parker was in an individual voluntary arrangement (IVA). An IVA is entered into when an individual is unable to meet debts, and where the debtor makes an offer to creditors that is accepted by 75%. Despite calls to Buzwell no one was available for comment.' Debts pile up for Architects of Wine UK Ltd investdrinks now understands that the Northampton based mail order company Architects of Wine UK Ltd has substantial debts including owing NYK Logistics Ltd around £130,000 and other known debts in excess of £100,000. Other debtors include Corby Bottlers Plc and the company's former staff. It seems probable that Architects of Wine UK Ltd, previously The Wine Corporation, owes at least £250,000. As there are only two staff left at the Northampton offices of AOW it looks highly unlikely that the company will be able to trade out of its problems. Equally it is difficult to see from where an injection of funds will come. The main source of income for the Paradigm group appears to be from the instalments paid by American clients on their multi-vintage contracts. As Middlemiss explains in his 'Mea on culpa' the flow of funds has been disrupted by 'commercial terrorism'. Unfortunately the Paradigm group's business has also been severely disrupted recently by Hurricane Ivan. In any case these monies have been paid for wine and not to prop up a failing mail order business in the UK. Middlemiss has told investdrinks that AOW UK Ltd "may be disposable'. One has to wonder whether the comany isn't already insolvent. investdrinks also wonders whether the wines paid for and that are due to be delivered under the multi-vintage programme are secure. Unfortunately the funds have not been paid into an escrow account, so they appear not to be protected. If the multi-vintage payments have been Paradigm's main income stream, investdrinks has to wonder how the setting up of the mail-order business in the UK, the address at Unit 1, Laguna del Mar, Seven Mile Beach on the Cayman Islands, administrative expenses including numerous flights, expensive lawyers and other projects have been funded. Can the Paradigm group supply all of the wines that have been paid for in the multi-vintage contracts? investdrinks has put these questions to Middlemiss but has yet to receive a reply. Clients of the Paradigm group in the multi-vintage programme might well now wish to establish whether Paradigm is in the position to supply their wines before sending more money. They could consider paying any instalments due into an escrow account to be released once it is clear whether Paradigm can supply. Naturally Paradigm/AOW clients should seek legal advice to establish whether this would put them in breach of contract. Four companies in Buzwell Group wound up On 22nd September the following companies within the Buzwell Group were wound up in London's High Court: Buzwell Management Ltd, SMS Services (UK) Ltd, Gridloc Group Ltd and printing company White Productions Ltd. Paradigm Alliance Ltd wound up On 8th September Paradigm Alliance Ltd was wound up in the High Court in London following a petition from Executives Online, who had supplied Paradigm with an executive earlier this year. Paradigm failed to pay the fee and the total debt amounted to £50,000. Founded in March 2003, Bob Middlemiss was Paradigm's sole director (appointed 5.8.2004) and shareholder. The original sole director, Robin Hampden Bromley-Martin was appointed in April 2003 and resigned on 6th April 2004. Between April and August 2004 the company was in breach of UK company law as it had no director. Paradigm is now in the hands of the Official Receiver. Middlemiss told investdrinks that he had disputed the amount owing to Executives Online. However, Executives Online Limited replied that. 'Middlemiss did, at a very late stage, offer to pay approx 65% on the basis that he did not think he got value for his money. Payment to be staged weekly over next 6 months. We rejected this as nonsense as our executive worked entirely under the control of his company and no complaint was received until 3 months after the work was done and only one day before the High Court hearing.' In May Architects of Wine UK Ltd based in Northampton started advertising on UKWinesOnline but failed to pay. Andy Barrow, who runs the site, had to take AOW to the Northampton small claims court over a footling debt of £116. The promised cheque has yet to arrive. The deadline is understood to be 19th September. Barrow has also received several complaints from AOW mail order customers, who have yet to receive their wine. here is one posting: 'Beware Middlemiss has told investdrinks that there have been staff problems at AOW UK but that the company is committed to trying to resolve customer complaints and will respond to all customer queries. Customers should call 0870-213610 where the two remaining staff will deal with their queries. Middlemiss also alleges sabotage by previous AOW UK employees. The company's accounts are seven months overdue. Whatever the problems at Architects of Wine UK investdrinks has to wonder how solvent the UK companies are if they are unwilling or unable to cough up a mere £116. Unfortunately Middlemiss' grasp of the requirements of UK company law appears to be surprisingly sketchy for someone who is or has been a director of at least seven UK companies. For Bob's convenience here is a checklist of requirements that need to be fulfilled:
Unfortunately Paradigm/AOW operations in the Cayman Islands have been badly hit by Hurricane Ivan and that the staff are being repatriated because they have lost their homes. Fortunately One Stop Shop run by AVE Italia, which sells wine direct from producers to restaurants in Italy and in which Paradigm has an interest, is reported to be operating successfully. Mea non culpa 'Not my fault guv!!' investdrinks has just received a copy of an 89 page 'Strictly private and confidential' document sent out by Bob Middlemiss to clients of Architects of Wine. The document sets out to explain the history of the Paradigm group's involvement, the current situation - alleging that Paradigm has been a victim of a campaign of 'commercial terrorism' - and what are the next steps for clients holding wine contracts with the Paradigm group. It is no wonder that with the AOW/Paradigm group apparently looking decidedly shaky that some people have wondered whether this is Middlemiss' attempt to blame the wreckage, if the group does eventually go under, on others and certainly not on himself. Mea non culpa (Mnc) would perhaps be a fitting title. Or it may be a flawed attempt to fight back against the 'campaign of commercial terrorism'. Whether it will reassure AOW clients must be doubtful. As doctors they might advise the author to lie down in a cool, dark room with a cold compress around his head and to take occasional sips of weak tea. Mnc includes quotes from investdrinks and Middlemiss' choice of quote is as selective as any theatre manager's with an over-ripe turkey on their hands. Take this example from Page 31 and highlighted by Middlemiss in bold - presumably so the reader doesn't miss its significance. 'Middlemiss is certainly a wine enthusiast and is keen to promote quality wines irrespective of where they are produced. His business is searching out high quality wines from lesser-known areas.' In the classic tradition Middlemiss has quoted the first two sentences of a longer paragraph. Quoting the whole paragraph (see below) would have given a rather different but, I suggest, a more balanced if inconvenient view of Middlemiss' chequered career. It may, of course, be that Middlemiss was concerned that he was boring his reader's silly and was desperate not to lengthen the document still further. I leave you to decide. 'Middlemiss is certainly a wine enthusiast and is keen to promote quality wines irrespective of where they are produced. His business is searching out high quality wines from lesser-known areas. He was director of Cellar Select Ltd that operated as Winefinds, a mail-order wine company. The company was founded in 1993. Cellar Select Ltd went into administrative receivership on 10th March 1998. Middlemiss then acted as a consultant to the re-born Winefinds, the trading name for Consulate Wines Wines plc and Discern Ltd. These companies in turn failed and went into liquidation in June 2000, when Winefinds and its customer database was purchased from the liquidator by The Wine Corporation, part of Seed International. Middlemiss acted as a consultant to The Wine Corporation for part of 2000. In the same year he set up Orchestra International Ltd, based in the Cayman Islands, which provided an injection of capital into Orchestra SRL, an Italian company based in Treviso that had been set up some eight years previously to distribute the wines from small high quality, boutique Italian producers. Equally on page 14 'About Myself' Robert John Middlemiss makes no mention that at least two businesses he has been involved in have gone belly-up -at least of these when he was a director. Strange in view of his ringing declaration on page two. 'It is critical that you ensure that you are fully equipped with all the relevant facts and information to make an informed decision about what you need to do next in order that you take the necessary steps to isolate yourself from any further consequences that may ensue from our fight with those who refuse to undo the damage they have caused.' Bizarrely Middlemiss in Mnc ascribes almost supa-normal powers to investdrinks. Not only does he apparently believe that investdrinks brought down the Seed International group but also is a significant factor in the current woes of the AOW/Paradigm group. The idea that investdrinks single-handedly persuaded the Dutch fraud squad and tax authorities along with the FBI to investigate Ocean-Seed and to send detectives to the US to interview clients of Seed International Ltd is patently absurd. These investigations have led to two arrests - investdrinks again!? I think not. In truth Seed's 'problems' are almost certainly down to selling huge quantities of wine that it did not have title to and, in some cases, is most unlikely to have been able to get title and then pretending that these wine positions had made big profits in an extraordinarily short time. Seed and its associates had a penchant for selling wine for which they did not hold title as Middlemiss was soon to learn. This penchant is surely one of the reasons why a number of US states have issued cease & desist orders against Seed International Ltd and its agents. Middelmiss appears to ignore the fact that Seed International Ltd has to this date failed/or refused to explain how their multi-million Bordeaux wine trades worked. Middlemiss seeks to blame Albion Contracts, a subsidiary of Seed International Ltd. This may or may not be correct. The person, who ran Albion, has rigorously denied this allegation. Ultimately, however, the buck stops at the top. It stops with Paul Freeman, head of the Seed International group and a director of Ocean International Marketing BV. Don't forget the golden rule: follow the money trail. 'It must be remembered that nobody sent any money to individual sales staff at Ocean, they sent money to Ocean and from what I understand Ocean sent 95% of it to Seed.' Mnc page 24. Since Seed International Ltd held the purse strings, it would surely know what money it had provided to Albion or what invoices it had paid on behalf of Albion Contracts. Remember that Ocean International Marketing sold Bordeaux positions on behalf of Seed International Ltd at least from 1998 to early 2001, taking around $40 million from clients in 2000 alone. If the allegation is that Albion Contracts supplied Ocean with details of a large number of fictitious Bordeaux positions, how could this continue for more than three years without any questions being raised? Running an investment programme Seed International had a duty to ensure that investors were sold Bordeaux positions to which it held title or had made arrangements to supply. As far as AOW/Paradigm is concerned: It wasn't investdrinks who hired an executive from a recruitment agency and then allegedly failed to pay the fees. This led to a petition to wind up Paradigm Alliance Ltd that was heard on 18th August in London's High Court and adjourned until 8th September. investdrinks understands that Paradigm Alliance Ltd made a 'ludicrous offer' the afternoon before the hearing which was rejected. investdrinks understands that Paradigm Alliance Ltd is a service company and that there is a dispute over the debt owed. But why in the current climate of 'commercial terrorism' allow this dispute to reach the High Court and inspire the inevitable questions it raises about Paradigm's future? It isn't investdrinks who has failed to file accounts for Architects of Wine (UK) Ltd. Due on 5th February 2004. It wasn't against investdrinks that the US financial authorities issued their alert on 13th August 2004 to all banks to take due care when dealing with AOW. Crucially it wasn't investdrinks who believed that Seed International Ltd (Paul Freeman and Anil Kohli - a disqualified UK director) would keep to the agreement of September 2001 and on receipt of a 'small initial deposit' entered into 'legally binding long-term purchase agreements with the wine producers it represented to deliver the wines that Seed had agreed to purchase.' By January 2002 Seed had breached this agreement. 'If Seed had honoured this agreement it would have been able to deliver all the wines it had contracted to deliver to its clients and none of what followed would ever had happened.' (Mea non culpa page 7) investdrinks understands that there may be legal action arising from alleged inaccuracies and libels in Mnc. Given the US Federal Alert, the winding up petition in the High Court and this document, it is hardly surprising that a number of lurid rumours have been flying about. investdrinks understands that Architects of Wine (UK) Ltd is still in operation from Northampton with two permanent employees running at present what is described as a 'holding operation' - processing existing orders rather than seeking new ones. The Paradigm Group continues to trade in the Grand Cayman. AOW/Paradigm in danger of collapse? There must now be serious questions over the future of Bob Middlemiss' Architects of Wine/Paradigm group. On 13th August the US Office of the Comptroller of the Currency issued the following alert to all US banks against Architects of Wine in the Grand Cayman, Cayman Islands. 'The Office of the Comptroller of the Currency (OCC) has received information regarding enforcement actions taken by multiple state regulatory authorities against the above-referenced entity for the sale of unregistered securities using unlicensed persons. A copy of a recent cease-and-desist order issued by the State of Arkansas Securities Department is attached for your information. Be advised that banks may be approached to open a deposit account in which the sales proceeds of unregistered investments are deposited and then wired out of the country. Banks should exercise caution and perform appropriate due diligence prior to opening such deposit accounts. Be further advised that, as additional enforcement actions are taken against the entities involved, new company names are being used to engage in the same activities.' The US authorities linked Architects of Wine, Ltd, Caledonian House, 69 Dr. Roy's Drive, P.O. Box 1043, GT Georgetown, Grand Cayman, Cayman Islands, BWI to Seed International, Ltd., 174 South Church Street, P.O. Box 1778, GT Grand Cayman, Cayman Islands, BWI, formerly known as Churchill Associates at the same address; and Ocean International Marketing, Ltd., De Leuve, Schiedamsedijk 42, 3011 ED Rotterdam, The Netherlands, formerly known as Heros Global Marketing, Ltd., of the same address. The US authorities quote a cease and desist order against Architects of Wine, Seed International, Ocean International Marketing and various employees including Craig Garrett and others issued on 4th March 2004 by Michael B. Johnson, the Arkansas Securities Commissioner. It is known that AOW has serious cash flow problems. A petition to wind up Paradigm Alliance Ltd, a UK company, was due to be heard in London's High Court on 18th August. Investdrinks understands that the hearing of the petition was adjourned to give time for the debt to be settled as, just before the hearing, part of the debt was paid. Should AOW collapse, it is not known what effect this will have on the various producers - Italian, Slovenian, French and others - involved in the AOW/Paradigm group. Buzwell defence It is understood that winding up petitions against the Buzwell Group Limited (founded: 6.6.03) and Buzwell Management Limited (1.7.03) - ultimate owner Anil Kohli - are being defended. Seed's 2002 Italian wine release: new bizarre twist investdrinks has been informed by Bob Middlemiss that a new agreement between Paradigm International and Seed International Ltd should be signed shortly. Apparently under this agreement Paradigm will supply Seed clients direct but under the additional condition that they prove that they have not been involved in the 'commercial terrorism' that Middlemiss alleges has been waged against his companies. Middlemiss is prepared to supply the Seed client (mentioned in the 6th August posting) on the following conditions as he explains. 'I will be happy to arrange for the supply (of) these wines to him or his nominee on receipt of 21 days written notice on or after 1st September 2004, provided that he shows that he is indeed an innocent party in all of this by confirming in writing -
Whether Seed's client will accept these new conditions is not known. Certainly these bizarre conditions did not form part of the client's original contract with Seed International and that all the client is seeking to do is to obtain possession of wines he was told by Seed International Ltd earlier in the year would shortly be released. After all what we are talking here is wine not trying to buy uranium or nuclear secrets! Middlemiss' conditions are frankly absurd. It would not be surprising if people concluded that either AOW/Paradigm are unable to supply the wines because of financial difficulties or that they have no intention of doing so. It is possible that all of this will be academic as Paradigm Alliance Ltd faces a winding up petition in London's High Court on Wednesday 18th August for a commercial debt believed to be in the region of £50,000. Anil Kohli and the Buzwell Group By an amazing co-incidence winding up orders against four Buzwell companies - Buzwell Group Limited (founded: 6.6.03), Buzwell Management Limited (1.7.03), SMS Services (UK) Ltd (24/07/2003) and Gridloc Group Ltd (10/11/2003) are also due to be heard in the High Court on Wednesday. It is thought that the petition alleges that Buzwell owes in the region of £300,000. Buzwell Group Ltd and Buzwell Management Ltd are both late in filing their annual return - 4.7.04 and 29.7.04 respectively. investdrinks understands that Buzwell is a fast expanding group of companies which specialises in buying small companies both ones that are profitable and ones that are in difficulty. On 15th April, for example, dotprint reported that the Buzwell Group was in negotiation to take-over Offset Colour Print Ltd, based in Southampton. investdrinks understands that the ultimate owner of the Buzwell companies through a series of trusts in the British Virgin Islands and Brunei is Anil Kohli. As the Anil Kohli of Seed International Ltd and the Anil Kohli of Buzwell share the same mobile number and both live in the St Johns Wood area of London, it seems reasonable to assume that they are, at the very least, closely related. As the 41 year-old Mr Kohli is a disqualified director, he is doubtless not involved in the day to day running of the Buzwell companies. Also apparently involved in Buzwell are Colin Parker, Robert Brooks, previously with solicitors Merricks LLP (in administration), which merged with Fairmays - previously called Palmer Cowen. The Financial Mail reported on 25th April 2004 that the 'controversial businessman Simon Allso' is also involved in the Buzwell group of companies. Seed's 2002 Italian wines release delayed Seed International Ltd's 2002 release wines have been delayed apparently due to various changes and modifications to the agreement between Seed International and Paradigm that have been demanded by Paradigm. Earlier on this year Seed International informed some of its clients that their 2002 Release Wines under the Italian programme would shortly be released. One client, who wished to take possession of the wines and to sell them through uvine, was told by Seed International Ltd on 31st January 2004 that wines were reserved in their name. The client was contacted by Fazorak and asked whether "they wished to take delivery of the wines, have them shipped or put the lot up for sale." They obtained an offer for $10,000 for the 7,106 bottles of wine on the contract. This, the client estimated, was about 10% of what these wines are worth wholesale. Fazorak's final offer was apparently $11,000. Instead the client decided to sell through uvine, which uvine were happy to do provided the client had possession of the wines. It is here that the problems have arisen. The client contacted both the bonded warehouse in Switzerland and Paradigm International in Italy but was unable to find out where his wine was nor when it would be released. investdrinks then contacted David Wilcock, the vice-president of Seed International Ltd and received the following reply: 'Anyway, the information provided to Mr **** and those other active and former Seed clients who are due 2002 release wines was accurate at the time of provision and within the context of the prevailing supply agreement between Seed and Paradigm Wine Services Limited at that time. Regrettably since that time and at the behest of Paradigm that agreement has been subject itself to various changes and modifications. I understand that the latest version is likely to be signed by the parties very shortly. I also understand that within that agreement Paradigm will supply an email address for Mr **** and others of his ilk to contact Paradigm directly rather than have to transit through Seed for updated information.' Although it does appear rather strange that Fazorak offered to buy the client's wine, investdrinks trusts that Seed's various clients will soon have their 2002 release wines made available. investdrinks will be soon contacting be contacting a leading and highly experienced bookmaker to establish odds on when the wines may be available. AOW UK accounts overdue The accounts for Architects of Wine (UK) Limited, 39 Brown Street, Salisbury, Wiltshire, SP1 2AS, formerly called The Wine Corporation Ltd, are overdue. They should have been filed with Companies House on 5th February 2004. Offer from New Wave Wines Ltd - keeping it in the family? Some Seed International clients have received recently an offer from New Wave Wines Ltd to buy wines from the Italian program that are about to be released into a bonded warehouse in Switzerland. According to the letter the address of New Wave Wines Ltd is Mill Mail, Road Town, Tortola, British Virgin Islands. It is quite likely that the beneficial owner of New Wave Wines Ltd in Tortola is that well known resident of Monaco and boss of the Seed International group, a Mr Paul Freeman. Before considering the offer Seed International clients might be interested to know that there is also a New Wave Wines Ltd in the UK. This may be entirely coincidental. However, one of the three directors is David Wilcock, Seed International's distinguished vice-president. Wilcock was appointed on 27th May 2002 - the same day that the company was incorporated. His fellow directors are Philip Capp (DOB: 21.9.1966) and Gregory Shaw (DOB: 24.5.1966). Capp is also the company secretary and was a director of Architects of Wine Ltd -- formerly The Wine Corporation as was Wilcock. They both resigned their directorships on 11th December 2002. This followed the acquisition of The Wine Corporation by Architects of Wine at the end of 2002. New Wave Wines Ltd's registered address is W3, Moulton Park Business Centre, Redhouse Road, Northampton NN3 6AQ. The company is currently listed as dormant by UK Companies House. Also at the W3, Moulton Park Business Centre, Redhouse Road, Northampton NN3 6AQ is The Easy Drinking Wine Company Ltd - a mail-order wine club. Its three directors are Philip Capp (also the company secretary), Gregory Shaw and David Wilcock. They are the only shareholders with one share apiece at £1 each. To his many friends David Wilcock is well known and admired for his exquisite and well-developed sense of humour. investdrinks does not know whether Wilcock penned the letter but is confident that he would thoroughly enjoy the jest. Here is part of the letter to give a flavour. 'OFFER TO PURCHASE We understand that you own some wines that are, or will shortly be located in a bonded warehouse in Switzerland. We have been provided with details of those wines. We are prepared to offer to purchase those wines from you, delivery to take place at the bonded warehouse in Switzerland at the following price: (The price quoted is the equivalent of $1.46 a bottle.). Kindly note that the price we have offered does not necessarily reflect the market value of the wines and that this offer remains open for acceptance for seven (7) days from the date hereof where after this offer will lapse.' No indication, of course, that New Wave Wines Ltd (in Tortola) is part of the Seed International group. And how were they provided with the details of the wines? Did they arrive in an unmarked brown envelope, were they found under a gooseberry bush or were they just on Seed's computer system? From the example investdrinks has seen, it was indeed kind of New Wave Wines Ltd to point out that the price offered 'does not necessarily reflect the market value'. Marvellously droll! A quick look at wine-searcher.com for the wine that the client of Seed holds shows that the pre-tax price of the wine varies between $11.15 to $24.95 a bottle depending on whether it is the 'basic' cuvée or the riserva. In any event the offer from New Wave Wines is not compellingly generous. Clients of Seed International will doubtless be reassured that New Wave Wines Ltd in Tortola 'have appointed a company called Fazorak Consulting'. Doubtless New Wave Wines searched long and far before alighting upon Fazorak - Seed International Ltd's customer service agents in South Africa. The deal may have been set up by the urbane Mr Wilcock during his recent visit to South Africa. Fazorak Consulting's business address is provided by MSI Nolands, an apparently reputable accountancy company in Mowbray, South Africa. Nolands are aware of the various world-wide investigations against Seed International Ltd but this firm of integrity deal only with Fazorak not Seed International Ltd. investdrinks' advice to any Seed International client, who receives an offer from New Wave Wines Ltd in Tortola, is to check the current market price on wine-searcher.com You may also wish to get an alternative view of the value of your wine as well as a possible alternative means of selling your wine by contacting uvine (universal wine exchange). If this is of interest, please contact Christopher Burr in London direct on +44 (0) 20 7089 2240 or chairman@uvine.com or Christopher.Burr@uvine.com. Naturally before uvine could consider selling your wine, you would need to show that you held title to the wine. investdrinks has no commercial relationship with uvine or its staff. Letter received from Russell Woolford of Shoosmiths on 10th May 2004: Dear Mr Budd, EASY DRINKING WINE COMPANY We act for the above companies. We refer to your website, in particular the article printed on it headed "Offer from New Wave Wines Ltd - keeping it in the family" (posted 29th April 2004). In this, you have made a number of serious errors. The New Wave Wines Ltd that you refer to by your own statement is based in the British Virgin Islands. There is also an English company called New Wave Wines Ltd, which is owned by our client. It is a dormant company and therefore it is impossible for it to be involved in the deal you suggest. It is not connected in any way to New Wave Wines Ltd of the British Virgin Islands. Proper research would have established these facts. Further, before making such insinuations, we suggest that it would have been sensible and courteous to approach our client to ask for their comments at which point the errors could have been pointed out. Rather, you have published these matters as if they were factually proven. Our client is justifiably concerned that these mistakes might cause or might in fact already have caused serious damage to their reputation. In light of the above, please remove the reference to our client from your website. Unless you rectify the situation by close of business on 14 May 2004, our client will have to consider all other remedies available. Yours sincerely Shoosmiths 08700 868434/ 863126 direct dial Two Seed investors take legal action against Architects of Wine On 19th April Dr Joel Birdwell and Dr Paula McBrine filed a civil complaint against the Bank of New York Company Inc, Architects of Wine Chris Els, Nadya Isack and Bob Middlemiss in the United States District Court, Southern District of NewYork. The plaintiffs alleged that Architects of Wine are collectively Ocean International Marketing BV, Seed International Ltd, Heros Global Marketing, Churchill Associates Ltd and Churchill Ltd. They allege fraud, civil conspiracy, negligence and aiding and abetting a breach of fiduciary duty against the Bank of New York. The plaintiffs applied for and were granted a temporary restraining order In response Architects of Wine issued the following formal statement: Statement of Architects of Wine regarding complaint filed by Paula McBrine and Joel Birdwell in the United States District Court, Southern District of NewYork: "On April 19, 2004, Joel Birdwell and Paula McBrine ("Plaintiffs") filed a motion ex parte in the United States District Court, Southern District of New York for a temporary restraining order and preliminary injunction. The court granted Plaintiffs' motion for a temporary restraining order (the "TRO"). Oral argument on Plaintiffs' motion for a preliminary injunction will be heard on April 29, 2004. The TRO is based on numerous erroneous statements and assumptions made by Plaintiffs in support of their motion, including allegations that AOW has been "doing business as" Seed, Ocean and others. This is simply untrue. AOW has always made clear that neither AOW nor any other member of the Paradigm group is affiliated in any way with Seed or Ocean and cannot accept any responsibility for the actions of Seed and Ocean. We have instructed our New York counsel to vigorously oppose the issuance of the TRO and Plaintiffs' motion for a preliminary injunction and we expect that, once the court has the opportunity to review the true facts, the TRO will be rescinded and Plaintiffs' motion for a preliminary injunction denied." Robert (Bob) Middlemiss [Architects of Wine] This statement can also be found on worldlawdirect.com/article/1711/Seed_International_and_Architects_of_Wine.html Brad Haskins is one of founders of worldlaw and investdrinks understands that Haskins started this action and is based in Prague. The action is New York where the plaintiff's attorney is Ariel Berschadsky, whose website is berschadsky.com Temporary restraining order lifted There was a hearing in New York on the morning of Friday 30th April. AOW were represented by Coudert Brothers of New York. The judge lifted the restraining order and investdrinks understands that she invited the defendants to make a submission for costs "in view of the vexatious nature of the action". Their submission will be heard on Friday 7th May. Both Birdwell and McBrine certainly invested in the Seed 'Bordeaux Wine program' during 2000.. It is possible that they have evidence that shows that Bob Middlemiss and AOW were always the central organisation and ran Seed, Ocean etc but this is not shown in their submission to the court. investdrinks has neither seen any evidence to back this assertion up nor have any of the various people investdrinks has contacted suggested this to be true. This includes Paul Freeman. To the best of investdrinks' knowledge AOW is an independent and separate company, although Middlemiss certainly worked for the Wine Corporation and later supplied Seed International Ltd with wine - mainly Italian but not fine Bordeaux. investdrinks emailed Ariel Berschadsky on April 28th asking 'what has led you to the conclusion that Seed, Ocean etc. are collectively Architects'. Although this message has been passed onto Brad Haskins, investdrinks has yet to receive a reply. The worldlaw site (worldlawdirect.com) has the following statement: Update: May 2, 2004 Statement by The Bank of New York in US Federal Court: After learning of the Arkansas Cease and Desist Order [see below], the Bank of New York stopped accepting electronic payments that were intended for the benefit of it correspondent's customer Architects of Wine, Ltd. The Bank of New York has been advised that the correspondent [bank] has [also] terminated its banking relationship with Architects of Wine, Ltd. Any additional electronic payments received by the Bank of New York are being denied acceptance and are being returned to their originators. investdrinks has been told by Bob Middlermiss that this statement is incorrect and was shown to be incorrect at the court hearing on 30th April. AOW's bank is the Caledonian Bank and it has not terminated its banking relationship with AOW, although it is correct that the Bank of New York has not been processing payments due to AOW. Wilcockian humour Following the posting (29th April) on investdrinks that looked at the offer from New Wave Wines Ltd, investdrinks has received the following reply from the urbane Mr David Wilcock. The response displays all the well-rounded humour that Wilcock is fittingly famous along with marvellous broad brush, knockabout slapstick. Facts, apparently, should never get in the way of a good jest. Witness the marvellously comic emails from Wilcock at in November 2003 over Paul Freeman's directorship with Ocean International Marketing. This time the amiable Wilcock cannot get beyond the third sentence before getting something wrong: I was not a 'star witness' at Stephen Jupe's recent fraud trial. I observed part of the trial from the public gallery. And so it continues... Please click here to view. Guernsey Court of Appeal judgment published The 28 page written judgment of the Court of Appeal, who delivered an oral judgment against Seed International Ltd and Ocean International Marketing on 18th December 2003, is now available. The court also awarded costs of the appeal and the proceedings since 6th December 2002 to the respondents (the American doctors). Seed International Ltd was the sole party from the defendants to appeal. The judgment is largely technical covering the nature and scope of a disclosure order and whether its scope can be wider than that covered by the accompanying freezing order. The appeal judges did attach two conditions: that the documents disclosed by the bank could only be used for the legal proceedings between the parties and that if the disclosed documents enabled the Respondents to start new proceedings in a foreign jurisdiction they would have to first seek permission from the Royal Court. Ocean's sales manual is cited. 'It is said that this manual is little used, and withdrawn quite soon. However, the methods set out in the manual tally with the methods described by the Plaintiffs.' The judgment also quotes quite extensively from Philip Beasley's first statement to Loyens & Loeff, a firm of Dutch advocates. The statement was later withdrawn by Beasley. 'Support is given to the Plaintiffs account of how they were treated by Ocean and Seed'. (Pages 9 to 11) "From what I understood at that time, the investors deposited their investments in a bank account in Rotterdam, from which the monies were transferred to bank accounts in Cyprus and Guernsey." "We would call these investors again after a few months. The purpose of these next calls would be to persuade them to invest more money. Only if they agreed to invest more money, we would let them know that we could sell their contracts with a profit, which profit could vary from 2 till 10%. The profit would only exist on paper since it would be used as a deposit for the new contract. The contract value of the new contract would be higher than the first contract value. Based on the procedure described above, it would not be possible for an investor to make the investment liquid. This would simply be impossible, because there would always be an unpaid balance if the investor was not prepared to pay more money. And as long as there is an unpaid balance, it would not be possible to sell the contract and therefore make the contract liquid. If the unpaid balance was not received in time, the investor would forfeit his investment. This would put pressure on the investor to make further payments. Furthermore, as mentioned above, the profits would not really exist. The employees of Ocean would be able to make up that the contract could be sold with a profit." "I remember that there was a yearly audit by the Dutch tax authorities. Before the Dutch tax authority visited the company, the employees were instructed to shred all the statements of the clients' accounts." "After two years of employment I came to the conclusion that the investors were disinformed and deceived and that the business that was run by Ocean was not legitimate. Therefore I decided to leave the company." The judgment also identifies Paul Freeman as the controller of Seed International Ltd. The appeal judges commented on the length of time the proceedings had taken in Guernsey. The full judgment can de downloaded from: bltguernsey.com/news.cfm/view_news_id/15 Letter from Nathan Thomas, senior attorney, Mississippi Secretary of State December 30, 2003 Re: Seed International, Ltd. (hereinafter "Seed")/ Ocean International Marketing, Ltd. (hereinafter "Ocean") Dear Mr. Budd: I am writing in order to update you regarding the above-referenced companies. You continually submitted helpful information that aided in our investigation. After a thorough investigation, our office concluded that Seed and Ocean: Neither Ocean, nor Seed requested a hearing to refute our findings, leading our office to issue a Final Order in this matter.Our office diligently pursued action against these entities. However, due to the fact that Seed and Ocean are not located within the United States and have not been responsive to the Division's action, our office has determined to close this case at this time as we eagerly await any attempts by either company to deal with this matter responsibly. It is important to note that our office does not recover money on behalf of individual investors. We encourage investors to seek private legal counsel for advice on protecting their rights. Once again, thank you for your submitted materials that significantly aided in both our investigation and our understanding of these companies and their conduct. We are sincerely sympathetic to the investors' situation and hope that you are doing well considering this unfortunate state of affairs. Please feel free to contact me at any time at (601) 359-6366. Sincerely, NATHAN THOMAS Seed's failed appeal: Note from Babbe Le Pelley Tastevin The Guernsey Court of appeal on the 18th December 2003 gave an oral decision on the appeal of Seed International from the decision of Deputy Rowland of the 3rd November 2003. The Court of Appeal has rejected the argument of Seed International and upheld the order for disclosure, which is to be produced by the Royal Bank of Scotland on or before the 29th December, 2003. A copy of the written judgment of the Court of Appeal will be placed on the Babbe Le Pelley Tostevin web site once received. Any questions or queries relating to this judgment should be addressed to Advocate Andrew Laws or Advocate Mark Helyar. Older Ocean-Seed/Heros news can be found in the Ocean-Seed Archive section. |