Caledonia Clients Action Plan

Friday, November 12, 2010

Caledonia's $25 million collapse resulted from allowing a now-convicted fraudsters to trade on margin as part of a 'Pump and 'Dump' stock manipulation, using other clients' assets - without their knowledge - as collateral for his activities. When the margin became unsustainable, the Canadian correspondent broker sold off innocent clients' assets to cover the hole, something that has been admitted by a former senior Caledonia executive in sworn testimony.

Yet the Securities Commission, at least publicly, appears to have taken no action in more than two years against the principals at Caledonia.

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To read the petition "Click the above link

"Comments "

Posted By: END GAME On: 12/18/2010

Title: Tony Baloney!

I hope the rumors that Mr.Anthony Kikivarakis is being investigated are true!

Posted By: Mr Hair Cut . On: 12/18/2010

Title: All about fees

"Despite Sir Michael previously expressing hope that the Caledonia liquidation could be wrapped up by year-end, Mr Kikivarakis said some cases involving client ownership of assets would "carry over into the New Year".

At the end of the day this Pseudo liquidation will be one of the slowest and most expensive transfer in history.

Posted By: Mr. Never Forget On: 12/17/2010

Title: A true amateur

I have done business in the Bahamas almost 20 years, and I am leaving because of this kind of corruption....

Kikivarakis needs to stop screwing the clients of Caledonia (and his female assistants), building big new houses with other peoples money and filing these meaningless reports. A first year accounting student could have handled this "liquidation" in 3 months.....dozens of clients agree that Kikivarakis is a microcosm of what is wrong with the Bahamas...

Posted By: Mustache Trimmer On: 12/17/2010

Title: Always about the Fees

Seems Kikivarakis has spent more time writing liquidator reports and deducting his own fees than returning assets to the fisuciary clients.

Posted By: kikifullocrapis On: 12/17/2010

Title:

This was not a complicated liquidation. Kikivarakis has been dragging his feet for 3 years. It is estimated that his costs will be in excess of $4m by the time he has completed the simple task of returning less than $70m of depleted fiduciary assets to the clients.

Perhaps this liquidation would have been completed a long time ago if it wasn't for:

The Liquadator’s policy of non-communication with clients or client’s lawyers unless forced to do so.

The liquidator’s lack of understanding of Caledonia’s methods of operations.

The liquidator’s disregard of the efficiency or cost of his method of liquidation.

The liquidator’s lack of accurate documentation of his work performed.

- The liquidator’s failure again and again to comply with the orders of the court.

- The liquidator’s inability to reconcile or identify the reason for shortfalls in client portfolios.

No methodical action plan has ever been prepared to guide the liquidation (as far as the clients, the client attorneys, or the members of the client monitoring committee are aware) and after almost 3 years of work, the Liquidator has still not provided a proper explanation of the $25m loss that caused the firm to enter liquidation. He has not explained it in his official reports to the clients nor has he explained in his numerous Affidavits to the Court.

What has made matters even worse:

- The Clients were unable to manage, sell or transfer their assets for a period of more than one year in a time of global recession.

- The Securities Commission has been conspicuous by their absence throughout the entire liquidation process.

- $25m has vanished into thin air and no one has been held accountable. After nearly 3 years, the liquidator has taken no steps to address the certain illegal activity that took place. Someone needs to be held accountable. Who was trading the omnibus account using other client’s assets as margin? Someone transgressed the injunction that: “No registered or licensed individual shall make improper use of a customer's securities or funds, such as borrowing, lending or pledging of funds or securities without the customer's written authorization.”

Since day one, the fiduciary clients have had very few options and certainly no choice but to negotiate with an expensive Liquidator that they never hired. The negotiations have always centered on one issue – how the Liquidator is to be paid.

Even today, there is no legitimate explanation as to why ALL the fiduciary assets, whether involved or not with the omnibus brokerage account that suffered the loss, have been included in the firm’s liquidation other than for the purpose of generating more fees for the Liquidator.

Jitney/Penson did not follow “Know Your Client” policies (“KYC”).

Jitney/Penson knew or ought to have known that a broker-dealer's clients do not automatically pledge their investments for the benefit of strangers. Jitney neglected to perform a basic due diligence exercise and KYC that is mandatory in the Canadian and Bahamian investment industry. They have made a mockery of the KYC rule and the laws of their own jurisdiction.

As a consequence, Jitney has cleared all of Caledonia's liabilities by using cash belonging to clients of Caledonia and also by selling a sufficient amount of securities belonging to clients of Caledonia to satisfy the Caledonia debt.

Jitney knew that Caledonia is a broker-dealer dealing in securities for clients and that the cash and securities deposited with them in Caledonia’s account were client assets and could not possibly have been pledged as collateral for any debt. A basic cursory review of Caledonia’s balance sheet by Jitney’s management and compliance department would indicate that the assets deposited with Jitney could not possibly be Caledonia’s own funds.

More Comments

"Caledonia's almost two-year liquidation process by year-end,"

(You mean three yeas)

It will be three years in Jan 2011

90% of assets return can be misleading.

It is 90% of what was left after Jitney sold close to 25 millions of Caledonia clients assets that where pledged or used as collateral without any clients express consent or knowledge. All this in order to pay for an unrelated 25 millions black hole coming from an unsecured Caledonia client that used margin "with out" proper collateral if any. “Understatement.”

More Cooments from the Tribune

Posted By: disgusted On: 3/12/2010

I find it very interesting that the Tribune never mentions the connection of Bahamian broker dealer Alliance International Management Ltd. to the Georgiou fraud. It has now been revealed in the US court transcripts. Why has it never been mentioned in the Bahamian Press. WHY?????? It is starting to look like a cover up to protect their Bahamian Directors which include...

Reno Brown

Julian Brown

Clifford Culmer

Sandra Knowles (former exec. director of Securities Commission)

According to Alliance's website, These Directors of Alliance are responsible for Benchmark Bahamas which is a publicly traded investment company listed on The Bahamas International Securities Exchange. The company actively seeks attractive investment opportunities to invest capital in public and private companies, during the year 2000 the company made its initial public offering.

Since inception, Benchmark has been a complete disaster...

I invite you to read a reader's response to a recent article on Benchmark that was published by the Tribune.

http://www.tribune242.com/searchresults/11132009_Benchmark_business_Page1-Lead

Hmmm... Is there a connection?????

Exactly how was Georgiou defraud Alliance and who actually lost money?

How about the truth?

Comments from the Tribune

Posted By: Kevin Hunter On: 11/4/2009

Title: Financial Pirates of the Bahamas
As one of the Portfolio of Funds (POF) investors who lost money I would take issue with your coverage of the liquidation which appears to be grossly one-sided. No effort has been made, apparently, to interview the victims or to cover the incompetence, inexcusable delays, deceit, arrogance (in defying or ignoring Court Orders) and greed on the part of the liquidator and his agents. I have followed with great consternation and frustration the snail's pace of "progress" regarding the resolution of the aforementioned. I believe much more needs to be told. Through these very difficult economic times it has been my experience, and I am not alone, that the liquidator has been uncooperative, displaying a lack of communication with the concerned parties and a lack of understanding of the word "fiduciary". In October of 2008 the court-supervised liquidator stated that it would take less than a month (21 days) to return the fiduciary assets to the clients. At that time, the clients were required to pay a fee of 2% of the value of their assets to cover the costs of the liquidation to date and the return of their fiduciary assets to them. The clients later discovered that the liquidator’s fees and expenses from February of 2008 to the end of 2008 totaled approximately $1.5 million – on average, that’s $150,000 per month or $5,000 per day!!!!! By December of 2008 the situation had not been resolved and concerned parties did not know where and how their money (2%) was being spent. The Court Order of October 2008 was later amended in December 2008 because the liquidator requested an additional withholding (8%) which was granted by the court while the liquidator investigated an “unexplained” shortfall. Ten months later, the shortfall has still not been explained. This is outrageous. Either the liquidator has gotten in over his head and/or sees this situation as a long-term "cash cow". Mind you, all this time and up to the present, everyone's investments have been left totally unmanaged to flounder through or sink into some very stormy economic seas, even though pleas were made to appoint someone on an interim basis to captain the ship until the assets were back under investors' control. I find this lack of caring and concern totally unacceptable. The liquidator needs to be held accountable. When two parties enter into a contractual agreement, one of the parties should not be allowed to readjust the terms of said contract in order to further benefit his or her needs at the expense of the other party. Allow me to sum all this up by using this analogy; I (the investor) decide to go to a restaurant (Caledonia) located in the Bahamas. I park my car (my assets) in a nearby parking lot (the custodian of my assets) and pay the attendant (my account manager) $5.00 to look after my car. While in the restaurant I learn that the parking lot owner has incurred some financial difficulties and his parking lot has been seized by the authorities (the Liquidator). My car is considered a fiduciary asset, and as such, I (the owner), should be able to drive it away unencumbered and unhindered at any time from the parking lot in question without being forced to leave behind my front bumper (the 2%) and my rear bumper and gas tank (the 8%). But wait, in my case it gets better. My car was actually parked in an entirely different parking lot (a different custodian from where Caledonia incurred the loss). What has happened to me and my fellow investors is a travesty of justice and must not be allowed to continue or be repeated, but must be corrected. If not, I believe you will see a tidal wave of doubt and concern washing through the banking industry of the Bahamas among investors worldwide, thinking their fiduciary assets are not safe there and can be attacked and garnished. Perhaps prospective investors should be given this admonition: "Welcome to the Bahamas and the Pirate Bank & Trust Co., Ltd., an offshore banking haven. If you have money in our bankrupt Bahamian financial institution, your fiduciary assets are not protected. The word "fiduciary" is meaningless here. Your assets will be treated like any other assets of our institution. Liquidation fees will be debited regardless of the fact that your assets are held in trust in your name. They can also be taken from you to be held as a reserve to cover other clients' or corporate shortfalls. Unfortunately, this is fact, not fiction. Greedily yours, Captain Blackbeard, CEO and President

Posted By: John Henry On: 11/3/2009

The Government of the Bahamas conspired with Kikivarakis to rip off the portfolio of funds clients of Caledonia. Remember, these portfolio of funds clients had zero to do with the trading side and every cent was clearly in funds held in trust. Kikivarakis did zip to manage the investments after take over and then had the nerve to charge a 10%+ fee to hand over assests that were so clearly recorded that a school child could have done the work with a fourth grade education in math. This is a sorry result for the Government, the Courts, and Deloitte.

Posted By: One of many On: 11/2/2009

Lately, it seems the Press has had a difficult time reporting any information other than what has been printed in the Liquidator’s reports. As a result, the articles for the most part have been very one-sided, pointing out all the problems that the liquidator is experiencing. The reality is that most of the problems are the direct result of the Liquidator’s own poor decisions on how to carry out the liquidation and the lack of understanding of the simple and efficient way to deal with fiduciary assets. How can charging over $1,000,000 in liquidation costs over a 6 month period even be considered a "simple matter" if you don't accurately document your work? Of course the fiduciary clients were going to question such excessive charges. The sheer arrogance to justify incompetence for having to spend time defending excessive fees just blows me away. In October of 2008 the fiduciary clients agreed to pay 2% or more than $1,200,000 to a security account to pay the liquidator’s costs to release their assets and to pay the creditors of Caledonia. The liquidator himself agreed that this amount would be sufficient and that he would release the clients assets within a matter of 4 days following a reconciliation exercise that he stated would be completed within 21 days of the Court Order. The billing for more than $1,000,000 covers the liquidators fees and costs to 31 December 2008 ONLY. It is revealed almost a year later, that the release process has been "long and arduous" to say the least. The public should know that the October Order was amended in December requiring the liquidator to withhold 8% or more than $5,000,000 of the clients assets to cover an unexplained shortfall, yet after 10 months and 2 liquidator's reports there has been no evidence of any investigation of the unexplained shortfall carried out by the Liquidator and no results concluded. Although requested, no documentation or evidence to support the withholding ruling has ever been presented to the client attorneys that would justify this ruling. The presiding judge has since resigned. Months later, no new judge has been appointed but the liquidator continues to work away at his rate of $500 per hour. Who is going to pay his bill from December to now? Draw your own conclusions. During a time when the Country needs to attract capital, the protracted mishandling of this liquidation is a poor advertisement for the efficiency of our much touted financial services industry. The Bahamian Court has failed to protect the innocent, the Regulator is conspicuous by his absence and the victims have been forced to pay more than a million dollars to a Liquidator that they didn't hire to simply return their fiduciary assets to them.

Caledonia Clients Action Plan

Friday, November 12, 2010

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