Russell Crumpler and David Standish v Exential Investments Inc. ((in Liquidation))

JurisdictionBritish Virgin Islands
CourtHigh Court (British Virgin Islands)
JudgeJack, J [Ag.]
Judgment Date29 September 2020
Neutral CitationVG 2020 HC 73
Date29 September 2020
Docket NumberBVIHC (COM) 81 OF 2020




BVIHC (COM) 81 OF 2020

In the Matter of Exential Investments Inc (In Liquidation)

And in the Matter of the Insolvency Act, 2003

Russell Crumpler and David Standish As Joint Liquidators of Exential Investments Inc (In Liquidation)
Exential Investments Inc (In Liquidation)

Determined on paper with written submissions from Alex Hall Taylor QC, Richard Brown and Paul Griffiths of Carey Olsen

Jack, J [Ag.]

This is an application by liquidators made under section 186(3)and (5) of the Insolvency Act 2003 1 (a) for sanction to bring information disclosure proceedings and (b) for a direction, sanction and/or permission to drawdown on a funding agreement between the Liquidators, the Company and a litigation funder dated 20 August 2020 on the basis that it is in the best interests of

the creditors as a whole, does not offend the principles of maintenance and champerty and is a lawful and enforceable agreement as a matter of BVI law

As to (b) this Court has granted such sanction of funding agreements in other cases, but counsel for the liquidators tell me that there is no written judgment in this jurisdiction confirming the power of the Court to grant such relief. I shall state my reasons briefly, but I observe that I have heard no adversarial argument. The authority of this judgment is thus likely to be weaker than if the matter had been heard contentiously.


The facts, which are set out in the witness statement of David Standish, the second applicant, are set out in the skeleton argument submitted on behalf of the applicant liquidators as follows:

“15. The Company is a BVI company, incorporated on 26 April 2012. It was struck off the Register of Companies on 23 February 2017 until it was restored to the Register on 30 July 2020.

16. The Ponzi scheme operated from around 2011, until it was finally shut down by the authorities in Dubai in July 2016. Investors were induced to invest by promises of low/no risks and high rewards. The premise of the investment was summarised in one of the Exential Group's standard form contracts which provides:

‘The risk of loss in trading currencies in FOREX can be substantial However, Tadawul ME Forex Managed Accounts Program uses a very low degree of leverage, which works well for investors. We assure you complete protection of your initial capital investment of $20,000 in our Managed Account Program at all times. There is no reckless or unsustainable leverage taken to achieve these performances. Even better, our managed accounts also use sophisticated proprietary methodologies to follow short-term trends. We continuously research and develop our trading models to always perform better.’

17. The scheme at first paid some returns out to investors as ‘profits’. Money flowed in and out of the scheme between 2011 and 2015 and this incentivised some investors to invest further and greater amounts into the scheme. The face of the Exential Group, Mr. Sydney Marshal Agnelo Lemos (‘Mr Lemos’), was keen to promote the image of success and he was often seen in expensive cars, threw lavish parties and rubbed shoulders with some of the world's elite sportsman, which all garnered attention (and therefore investors) into the scheme operated by the Exential Group. The scheme appears to have peaked in late 2015.

18. In early 2016, the Exential Group ceased paying out investors' withdrawal requests, with an array of excuses being offered over the course of that year as to why money could not flow out. [The Dubai authorities] ordered the Exential Group to stop trading in July 2016 and in December of the same year, two of the ringleaders of the fraud, Mr. Lemos and Ryan Fernandez were arrested and subsequently sentenced to 513 years in prison. Mr. Lemos' wife, Valany Cardoza, was also sentenced to 513 years although as she had fled to Goa, India, her sentence was pronounced in her absence.

19. The Exential Group's own marketing material placed the Company at the centre of the Exential Group and it was represented to investors that the Exential Group: ‘was based in the BVI and the Seychelles, with a representative office in Dubai’ and ‘consists of three companies; Tadawul ME UAE (responsible for all automated trading), Exential Mideast UAE (marketing arm of the Exential Group) and “Exential Investments” (our offshore unit based in BVI and Seychelles).’

20. This alone establishes a prima facie case that the Company was integral to the Exential Group and, as with many frauds of this nature, it is likely the Company will have been used interchangeably with other entities in the Exential Group to perpetrate the fraud and the evidence obtained to date bears this out.

21.. During the relatively short time the Liquidators have been in office, they have undertaken investigations which evidence that:

a. Mr. Lemos was a director of the Company between 28 June 2013 to date and its sole shareholder from 27 June 2013.

b. Mr. Raymond Anthony Thomas (‘Mr. Thomas’) served as director of the Company between 31 May 2012 and 1 July 2014 and was its sole shareholder between 31 May 2012 and 27 June 2013, when he transferred his shares to Mr. Lemos.

c. Mr. Lemos was granted a wide-ranging Power of Attorney on 25 September 2012 authorising him to ‘act as the true and lawful Attorney of the Company for and in the name of and on behalf of the Company’ in relation to a very wide range of matters including, amongst other things:

(i) to represent the Company in connection with the registration and establishment of branch offices anywhere under the name ‘Exential Investments Inc’ (or such other similar name as may be approved);

(ii) to manage in the sole discretion of Mr. Lemos the financial affairs of the Company; and

(iii) to open, maintain and operate bank accounts in the name of the Company or in the joint names of the Company and any other person, firm or companies at any bank. These arrangements are suspicious on their face for obvious reasons.

d. The Company operated a bank account with Investec Bank (Mauritius) Limited between October 2012 and August 2013 through which it received US$11,588,155.36 from individual investors in the Ponzi scheme and made payments to Exential Mideast Commercial Brokers LLC (‘Exential Mideast UAE’) (US$6,690,634.43), BT Prime Ltd (US$ 2.02 million), FX Primus Limited (US$ 1.6 million), Bancodebinary Limited (US$310,000), Capital Control (US$ 2,524) and Mr. Lemos (US$ 13,747.25).

e. The Company operated a bank account with Emirates Islamic Bank in the UAE.

f. A financial institution in the UAE is understood to be holding a significant sum of money relating to the Exential Group.

g. Capital Control ME Limited (‘Capital Control’), a BVI company incorporated on 24 April 2013 also appears to have formed part of the Exential Group and actively targeted investors in Hungary (and, possibly, other countries in Eastern Europe) which, according to the front sheet of a contract was the ‘official representative of’ the Company, although the investors were directed to pay their investments to other entities in the Exential Group. The Company transferred Capital Control the sum of US$2,524 shortly after it was incorporated.

22. The Liquidators have identified the following steps that they believe it may be necessary for them to take, in order to further their investigations into the Ponzi scheme and recover assets for the benefit of...

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