THREE former associates of the embattled Stocks and Securities Limited (SSL) and its SSL Growth Equity Limited are facing a hefty $4.2-billion lawsuit from businessman George Lloyd Chai over fraud and breaches of trust and breach of fiduciary duty.

Chai, a retired businessman, bakery owner, and SSL shareholder, filed the lawsuit with the Supreme Court against former SSL Chairman Hugh Croskery, Mark Croskery and Jean-Ann Panton for fraud, misrepresentation, breach of trust, unjust enrichment and failure to account for all sums owing to Chai. He is seeking US$24.38 million (J$3.79 billion) and $380 million in special damages against the defendants and is seeking orders to trace their bank and investment accounts along with an injunction to prevent them from selling or transferring any assets.

This is the latest in a series of events surrounding Chai and SSL which was put under temporary management in January 2023 following the revelation that an account with WellJen Limited, a company connected to Usain Bolt, was allegedly defrauded of more than US$12.8 million. More details surrounding the relationship between Chai and the defendants came out this week during the trial between the Financial Services Commission (FSC) versus SSL and Caydion Campbell.

During the first day of the trial on Monday, it was revealed that an agreement was reached in August 2022 for SSL to have a business restructuring that would take place in multiple steps. One of these steps was for US$1,137,256 in debt owed to Chai to be converted into equity or ordinary shares before the company’s eventually planned initial public offering (IPO). This business arrangement was communicated to the FSC which acknowledged the proposed plan.

It was also during this month that Panton, a former SSL client relationship manager, was provided with a notice of suspension without pay for fraud allegations involving Chai, who is also an SSL client. The allegations included in the letter referenced generation of fraudulent statements, ongoing manipulation of fictitious statements over a period of several years, and breach of policy. This letter was provided by Anya Hylton, SSL’s head of human resources at the time to Panton, who had the right to appeal. Panton is currently in remand pending her trial on a 22-count indictment, which begins on May 27.

Hugh and other SSL principals tried to settle debts owing to Chai during 2023, which included an intention to transfer a villa in Discovery Bay, St Ann, to Chai, his nephew Mark Andrew Chin and Cristina Chin valued at US$3.2 million (J$480 million). However, Coral Cove Management Limited filed an injunction in the Supreme Court against Hugh and Mark Croskery along with Sarah Meany to block the transfer and have a right of first refusal enforced to purchase the property for $225 million. It was stated in a previous
Gleaner article that Hugh borrowed US$1 million from Chai in 2014 which was secured by the villa and his home in Norbrook, St Andrew.

SSL Growth Equity is the primary shareholder in the beleaguered investment firm which has been marred by myriad of lawsuits prior and after the discovery of fraud allegations at the firm. The Financial Investigations Division (FID) published in a December update that over 200 SSL accounts to the tune of US$30 million have been affected in the purported fraud.

Spectrum files suit against Chai and SSL

During the cross examination of the FSC’s director of Karene Blair on Monday, it was highlighted that part of the business restructuring plan was to involve Spectrum Capital Partners Limited injecting US$4 million into SSL. However, that deal fell through when the FSC assumed control of SSL in January 2023 and temporary manager Kenneth Tomlinson reversed the payments back to Spectrum.

In her opening remarks on Thursday, King’s Counsel Carlene Larmond notified Justice David Batts about an e-mail from Tomlinson surrounding a lawsuit filed on December 8 by Spectrum Capital Partners Limited against SSL, SSL Growth Equity and Chai.

That claim form is seeking US$1.1 million or $172.59 million along with interest of $13.87 million for a breach of contract under an October 2022 agreement. The claim noted that Spectrum was to subscribe for 228.08 million shares for 53 per cent of SSL, but that agreement fell through later on. That claim has not been heard as yet with Justice Batts putting a stay on all other SSL cases in October 2023 in order to settle the trustee situation and who has control of the firm.

However, that order did not preclude claims filed prior to his order, some of which were revealed during the week’s proceedings. There was a mention of three contingent claims in early 2023 during the cross examination of Brian Hackett, territory leader of PricewaterhouseCoopers (PWC) Trinidad and Tobago, who spoke on the expert report signed by him. Apart from the claim by WellJen, there was mention of a claim by Jean Elizabeth Forde and Robert Clarke. Forde is seeking US$830,000 against several former SSL principals.

Clarke, Brian Clarke and Tanya Wildish filed a claim against SSL in March 2023 over SSL accounts. One account had a portfolio of American securities valued at US$301,118 at the time of the claim and the other account had a portfolio of fixed income securities, including a 9 per cent United States dollar (USD) SSL promissory note.

SSL is also the subject of other lawsuits by Deborah Franz, Mae Elaine Tapper, Jamaica Small Loans and Microfinancing Limited (t/a Boost Financial Services) and Robin De Lisser. The trial continues into its fifth day today at the Supreme Court in downtown Kingston.