- June 20, 2016
- Posted by: Josiah Hincks Solicitors
- Category: Litigation Updates
High risks yield high returns but it is always vital for investors to check the bona fides of those to whom they entrust their money. In one case, members of the public backed the work of an inventor who turned out to be a convicted fraudster and who did his best to deny them their just deserts after he struck gold.
The inventor was an engineering genius but was a deceitful man who had served an eight-year jail term for fraud. A number of members of the public invested in his invention of a device used in vacuum cleaners and washing machines. An electrical goods manufacturer that he had accused of exploiting the invention without his permission agreed to settle his claim for $18 million.
The inventor had promised the investors a 500 per cent return on the money they had put into the venture and all or most of that had been paid. However, he had also guaranteed them ‘equity’ stakes in his invention and those had not been honoured. The investors eventually took legal action and obtained a judgment against the inventor for more than £2 million.
The inventor’s death intervened but the investors continued to take steps to enforce the judgment debt. The High Court found that the inventor had, via a family company, used part of the $18 million to pay off the £172,500 mortgage on a residential property. He had deliberately concealed that transaction from the investors and eight of them were entitled to trace the debt into the property. The ruling opened the way for the property to be sold and the proceeds used to at least partially pay off the investors.