Bizarre Tale of $33 Million, & Where it Went

WHITE PLAINS, N.Y. (CN) – The heir to a multimillion-dollar fortune claims a couple defrauded him of more than $33 million by persuading him his computer had been hacked by foreigners and intelligence agencies and that his family’s life was in danger.

     Roger Davidson claims Vickram Bedi and Helga Ingvarsdottir conspired with Wachovia Bank to invest more than $10 million from his family trust into a risky hedge fund without his permission.
     Davidson sued Bedi, Ingvarsdottir and their Mount Kisco computer business, Datalink Computer Products, in New York County Court. He also sued Wachovia Bank, its successor Wells Fargo Bank, and seven asset management corporations.
     According to the complaint: “On November 4, 2010, the Harrison, New York Police Department arrested Bedi and Ingvarsdottir as they were preparing to leave the United States. The Westchester County District Attorney’s Office correctly stated the following facts (incorporated herein) at the arraignment of Bedi and Ingvarsdottir on felony charges of grand larceny in connection with stealing money from Davidson.” (Parentheses in complaint.)
     Davidson describes himself as “a noted pianist and composer” and “the great-grandson and great grand-nephew of the two brothers who founded Schlumberger Ltd. [a] multi-national oilfield services company.” (Brackets in complaint.)
     He says Bedi and Ingvarsdottir “extorted” millions of dollars from him during 6 years.
     He claims the couple, “acting in concert, were able to defraud the victim by fabricating various security threats and scenarios using non-existent foreign nationals and false affiliations with government intelligence agencies to further the security schemes. They also instilled the fear of bodily harm to the victim, his family and the destruction of the victim’s life’s work: computers containing various musical compositions.”
     Davidson says the scheme started in August 2004, when his computer contracted a virus and he took it to Datalink for repair. Davidson says he feared his documents, photos and compositions would be lost.
     He says that “Bedi confirmed that [Davidson’s] computer had a virus and indicated that the virus was extremely virulent and had also damaged Datalink’s computers.” (Brackets in complaint.)
     The complaint continues: “Bedi told [Davidson] that he had the facility, the contacts, and the means of tracking down the source of this virus that specifically targeted [Davidson’s] computer and that he and his family were in grave danger. As a result, Bedi convinced [Davidson] to not only begin paying for computer data retrieval and security, but also to begin paying for necessary personal protection.” (Brackets in complaint.)
     The alleged scheme becomes increasingly bizarre, as the complaint continues: “Bedi subsequently advised [Davidson] that he successfully tracked down the source of the computer virus to a remote village in Honduras. Bedi informed [Davidson] that the hard drive was the source of the worm that had invaded the computer and advised [Davidson] that Bedi’s uncle, who Bedi contended is an officer in the Indian military, flew to Honduras in an Indian military aircraft during a reconnaissance mission and obtained the hard drive.
     “Bedi further related that his uncle obtained information that Polish priests affiliated with Opus Dei [a conservative Catholic religious group] were attempting to possibly harm [Davidson]. Bedi also advised [Davidson] that the Central Intelligence Agency had subcontracted with Bedi to perform work which would prevent any attempts by the Polish priests associated with Opus Dei to infiltrate the U.S. government.
     “Bedi convinced Davidson that he needed a bodyguard, at a cost of $30,000 a month, to protect him from Opus Dei and the United States government. Bedi told Davidson that he had hired a former member of the Israeli Mossad named ‘Massoud’ who would protect Davidson, although Davidson was never to look for him or expect to see him. Davidson paid Bedi thousands of dollars every month for Massoud’s alleged protective services, through charges made by Bedi on Davidson’s American Express (‘AMEX’) cards, to which Bedi and Ingvarsdottir had been given access.” (All brackets as in complaint.)
     Davidson adds: “Among other threats, Bedi falsely told Davidson that his children were in danger of being kidnapped, but that Bedi had devised an elaborate plan to protect them, which would cost Davidson $3 million, and could be paid in ‘small’ installments of $25,000 per week to Datalink, which would transfer the funds overseas. Such lies were used by Bedi to justify additional charges on Davidson’s AMEX cards. Over a nearly five-year period, the Datalink charges for hundreds of unspecified services placed on Davidson’s AMEX cards would eventually exceed $7 million.”
     Davidson claims that Ingvarsdottir, an Icelandic national, “aided Bedi in his efforts to convince Davidson that his life and those of his wife and children were in serious, imminent danger from dangerous and powerful individuals and international organizations.”
     He says that “taking advantage of the illusion of danger he had fabricated, Bedi pressured Davidson to enter into a series of agreements between them under which Bedi would assume responsibility for the Davidson family’s personal security, and for computer security through protection arranged by Datalink.”
     He claims that Bedi persuaded him to enter into a “Complete Computer Solution Agreement,” which required Davidson to make a onetime payment of nearly $11 million for electronic and physical security services, which were never provided.
     “Bedi moved quickly thereafter to insure that Davidson would pay him the nearly $11 million for these alleged but worthless ‘services,’ as well as paying a gift tax of nearly $5 million for Bedi so he would pay no taxes on his windfall,” according to the complaint.
     Davidson says the millions came from his family trust at Wachovia and were handled by Bedi’s accountant.
     “Without any input from Davidson and without his knowledge, Bedi decided that his payment from Davidson was to be declared a ‘gift’ for federal gift tax purposes, even though the payment was for alleged security ‘services.’ This required Davidson to pay a large federal gift tax in addition to the $10.95 million he paid to Bedi,” the complaint states.
     In 2005, Davidson made Bedi a co-trustee of a $66 million family trust, according to the complaint.
     Davidson says Bedi conspired with Wachovia brokers to bring Davidson’s accounts to their bank and invest a portion of the trust’s assets in Wachovia securities.
     He says that though he had made it clear that he had no interest in hedge funds or derivatives, “around September 2007, the Wachovia brokers began to press Davidson to have the Davidson trusts purchase such an investment, called a ‘periodic reset option’. It was a complex, highly leveraged investment in a basket of funds of hedge funds (‘the hedge fund investment’). They suggested an initial $10 million investment from the Redwood Trust. …
     “Wachovia brokers, acting as agents for Wachovia Bank, claimed it would be ‘safer than U.S. Treasury bills’ and that Wachovia itself would ‘take all the risk.’
     “In reality, the risk was that any significant decrease in the value of the funds in the basket could quickly lead to the forced liquidation of the funds and the rapid decline in value of Davidson’s investment unless he were willing to pump more money into the hedge fund investment. Moreover, the funds were very illiquid and could take many months or years to sell, as eventually happened in this case. Davidson did not understand this proposed investment, made clear he had no interest in it and demanded that the Wachovia brokers never suggest it again.”
     Nonetheless, Davidson says, without his knowledge or permission, through documents he never saw, Wachovia and Bedi took $10 million from Davidson’s family trust and put it into the hedge fund: “Although Davidson had made his opposition to investing in this hedge fund product clear, and was readily available to the Wachovia brokers and Wachovia Bank officials, Wachovia Bank chose to work exclusively with Bedi on this transaction, even though it knew Davidson’s money would be funding the hedge fund investment.”
     He claims that Wachovia did not even get his signature on the investment documents, and that “After Davidson protested that he was put into the investment against his will, the group told him, falsely, that the hedge fund investment was a done deal and it would cost him a considerable amount of money to get out of it.”
     Davidson says that in 2008, Wachovia brokers ended their relationship with Davidson and Bedi “in an effort to protect themselves from liability.”
     The bank then liquidated Davidson’s investment and began an “early unwind” of the hedge fund investment, causing Davidson to lose much of the $10 million, Davidson claims.
     He says although Wachovia had knowledge of Bedi’s fraud, they continued to deal with Bedi as co-trustee of Davidson’s trust until late 2008.
     In 2009, Bedi joined Davidson in filing a lawsuit against Wachovia brokers, claiming the bank had “browbeat” them into investing in a “volatile basket” of hedge funds.
     By the time Davidson discovered Bedi’s hoax, he says, he had spent more than half a million dollars on the misdirected litigation.
     Davidson says Bedi and Ingvarsdottir bought a string of properties in Westchester County with the money they misappropriated from his trusts. He says the properties were transferred from Datalink to other corporations under Bedi’s control to protect the defendants from criminal and civil action.
     Davidson seeks compensatory and punitive damages for fraud, unjust enrichment, negligence, intentional infliction of emotional distress and breach of fiduciary duty.
     He is represented by Lee Wiederkehr with Delbello, Donnellan, Weingarten, Wise & Wiederkehr.

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