Expropriation + Ponzi + Hurricane = A Mess

VANCOUVER, B.C. (CN) — Firing shots in an international legal battle, U.S. shareholders sued Antigua and Barbuda for $22 million, claiming it expropriated a beachfront hotel and 108 prime acres after their holding company refused to sell out to Ponzi schemer R. Allen Stanford.

H.M.B. Holdings Ltd. filed two lawsuits last week in British Columbia Supreme Court, one against the Attorney General of Antigua and Barbuda and the other against Replay Resorts Inc., an Antiguan company incorporated in British Columbia, to which Antigua sold the land after expropriating it.

H.M.B. Holdings is an Antiguan holding company all of whose shareholders are U.S. citizens.

The complicated case was literally blown up in September 1995, when Hurricane Luis struck Antigua and destroyed the Half Moon Bay Resort.

HMB owned the "luxury resort hotel" on 108 acres of beachfront property from 1971 to 2007. Hurricane Luis damaged the hotel so badly "that the hotel had to be closed indefinitely," HMB says in its complaint against Replay Resorts.

HMB tried to find partners to redevelop the property, but says its "attempts to secure the necessary financing were impeded by the Government of Antigua and Barbuda."

"In October 1995, the Antiguan prime minister offered to broker a sale of the property to R. Allen Stanford," HMB says in the complaint against Replay Resorts.

Stanford, who is serving a 110-year sentence in federal prison, was not exposed as a criminal until 2009, when the SEC and federal prosecutors charged him with running a $7 billion Ponzi scam. He was convicted in 2012 and his sentence was upheld on appeal.

In 1995, however, Stanford had "extensive business and political connections in Antigua," and had loaned millions of dollars to the Antiguan government, HMB says.

After HMB refused to sell to Stanford, it says in its complaint against Antigua, the country expropriated the land in 2007. The country's Board of Assessment valued the property at more than $23 million (U.S.) at the time, but HMB appealed the assessment to the Eastern Caribbean Court of Appeal, which "substituted an even higher award" in December 2011, HMB says.

The Antiguan government appealed to its own Judicial Committee of the Privy Council, which rejected the appeal.

"HMB has spent years in protracted litigation with the Antiguan Government to obtain the court-ordered compensation," the company says in the complaint. "The Antiguan Government has tied its ability to compensate HMB to selling the property, asserting that there are no public funds available to satisfy the debt."

Nor does HMB like the government's proposal to settle the debt by paying it off over 346 years.

Vancouver's Replay Resorts bought the land in 2015 for $23 million, and paid HMB $20 million in December 2015 on the government's behalf, according to the complaint against Replay. But HMB says it's still owed more than $22 million.

"The purported purchase price is well below market value and the Antiguan Government has structured the sale to Replay in order to avoid its obligations to HMB," the company says in its claim against Antigua.

In fact, HMB says, Antigua has admitted that it "negotiated the sale of the property for $31 million," and a real estate publication reported that Replay bought it for $30 million.

Since Replay bought the land, HMB says, the holding company "has sought continued cooperation and disclosure from the Antiguan Government to no avail. Therefore, HMB requires a disclosure order from [Replay Resorts]," because, HMB says, it "has reason to distrust any information that would be provided directly by the Antiguan Government."

HMB asks the court to enforce the $22 million judgment under the Foreign Money Claims Act, plus interest, and order Replay to disclose information related to the sale.

HMB is represented by Lincoln Caylor and Brigeeta Richdale with Bennett Jones LLP in Vancouver.

Both lawsuits were filed on Oct. 25.

Subscribe to Closing Arguments

Sign up for new weekly newsletter Closing Arguments to get the latest about ongoing trials, major litigation and hot cases and rulings in courthouses around the U.S. and the world.

Email *

Submit