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$125,000 Gone Just Like That, Couple Says

ATLANTA (CN) - A married couple claim in Federal Court that a broker took them for $125,000 with the promise he would use it to get a $500 million "bank guarantee."

Terry and Judy Kane claim the broker, Michel Galarneau, used fraudulent documents purporting to be from HSBC bank and promised to produce a $500 million bank instrument to trick them into handing over $125,000 to put into an "escrow account."

The Kanes sued Galarneau, his Bahamas-based business Oasis Group of Companies, and his partner John Diak. Also named as defendants are Atlanta architect David Hauseman and his companies The Hauseman Group and Tilghman Development Company.

The Kanes say Galarneau, a Canadian citizen, and his partner John Diak, who has "fled" to South America, claimed they could produce bank guarantees to help investors fund projects, in exchange for an upfront fee.

"In October 2010, the plaintiffs were approached by defendant Galarneau under the guise that Galarneau could and would produce a bank instrument in the form of a 'bank guarantee' or a 'stand-by letter of credit' from HSBC bank in England or Hong Kong," the complaint states. "The instrument would be usable for the purposes of monetization for a period of one year.

"In return for obtaining this bank instrument, Galarneau - along with his company defendant Oasis and his business partner defendant Diak - would receive a fee from the monetization of the instrument.

"Galarneau promised that the bank guarantee would have a value of $500 million from HSBC bank and would be delivered no later than Oct. 29, 2010."

The Kanes say Galarneau asked them to deposit $125,000 into an escrow account owned by Hauseman and to sign an escrow agreement.

"In the Oct. 28, 2010 escrow agreement, defendants Hauseman and TDC were named by Galarneau as the escrow agent to hold the $125,000 in funds," the complaint states.

"The purpose of the escrow of funds ostensibly was to provide the plaintiffs a sense of safety and specifically that in the event of non-performance of the contract by his co-defendants, plaintiffs' money would be returned to the attorney trust account of Erik Fitting, Esq. for the benefit of the plaintiffs.

"In fact, the MOU [memorandum of understanding] and the escrow agreement provided that should Galarneau fail to produce the above-mentioned bank instrument by Nov. 1, 2010, all monies placed in escrow by plaintiffs would be returned to the attorney trust account of Erik Fitting, Esq. for the benefit of the plaintiffs by defendants Hauseman, TDC or its subsidiaries, including defendant HG within five (5) banking days of the demand notice."

The Kanes say they deposited the money, but Galarneau and his partner failed to deliver. They say Hauseman released the money to Galarneau before any bank instrument was produced, in breach of his fiduciary duty.

They never saw the money again and never received an answer from Galarneau or Hauseman, according to the complaint.

The Kanes claim that "the defendants submitted false and fraudulent bank documents purporting to be from HSBC bank but which neither existed nor did the defendants ever intend to deliver."

The complaint adds: "Hauseman, in receipt of numerous demands for return of escrow and having been presented with substantial evidence of deliberate fraud in the transaction on the part of his co-defendants, and far from acting as an independent escrow agent, Hauseman refused to speak to the plaintiffs or their representatives and indicated in writing he would only take direction and act upon the word of defendants Galarneau, Oasis and Diak in a very clear and total violation of his responsibility to act as an escrow agent with his attendant fiduciary responsibilities. Instead he knowingly lied to the parties that the funds were 'still' in his escrow account.

"Upon information and belief and email confirmation from an officer at Sun Trust Bank, the funds placed in escrow were released by Hauseman and neither Hauseman nor TDC has the $125,000 in his possession at the Sun Trust bank account into which they were placed at the present time. The money's whereabouts are unknown to the plaintiffs at this time."

The Kanes seek compensatory and punitive damages for breach of contract, fraud, unjust enrichment, conspiracy and RICO violations, and want their money back.

They are represented by Michael Rothenberg with the Boyd Law Group.

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