WEST PALM BEACH (CN) - An investment firms claims it paid $243,500 in consulting fees for its bid to buy the Phoenix Coyotes NHL team, but the consultants "kept the money and failed to deliver any services."
Martina Holdings sued The Crimson Group aka Crimson Financial, its president James McEvoy and employees Charles Demicher and Allan Zinman, and Zinman's company, Recover and Reclamation, alleging fraud and civil theft.
Martina says it began doing business with Crimson in July this year after Crimson said it could get Martina a 500 million euro bank guarantee.
Crimson requested an upfront fee of $225,000 - $8,000 of which Martina paid to a bank account in the name of Recovery & Reclamation, according to the complaint in Palm Beach County Court.
"On August 22, 2011, Crimson sent [Martina owner Garry] Jamieson a letter indicating that, in addition to the BG [bank guarantee], it was capable and would do a bond issuance of $500,000,000.00, the proceeds of which would be used by a newly formed company to purchase the Phoenix Coyotes professional hockey team and the Glendale (Jobing.com) Arena," according to the complaint.
"Three days later, on August 25, 2011, after Jamieson confirmed that he was wiring an additional $30,500.00 ($25,000.00 for the BG and $5,500 for fees related to the bond issuance and account setups), McEvoy stated that the BG would be ready the following week, meaning that MHI would have monies available to it through its accounts on hand with Crimson. ...
"On August 27, 2011, after receiving the $30,500.00 wire transfer, McEvoy emailed Jamieson stating that $25,000,000.00 would be available to MHI on September 19, with the remaining $475,000,000.00 from the bond issuance available within three weeks after that.
"Relying on these representations, Jamieson informed the National Hockey League that he would be able to proceed with the purchase of the Phoenix Coyotes three weeks after September 19, 2011."
Martina says it wired an additional $200,000 in upfront fees to Recovery & Reclamation on Sept. 13.
"At this point, MHI had wired $238,500 to Zinman at Recovery for services that Crimson was to provide. Meanwhile, other than verbal and written assurances from McEvoy and Demicher, there was no evidence Crimson had performed on any of its representations and obligations," the complaint states.
"Having its money from MHI in hand, Crimson then began to try and have MHI pay it more money and assets by assigning to Crimson Collateralized Mortgage Obligations (CMOs). Martina wired an additional $1,500.00 to Recovery as transfer fees for these CMOs.
"Over the next days and weeks, though, even though MHI was to have millions of dollars of funds available to it through the BG and bond offering, Crimson continually delayed and made excuses as to why funds were not available to MHI, including new procedures that needed to be followed and issues regarding wiring funds to MHI's outside bank accounts.
"Crimson even went so far as to provide MHI with access to online accounts that allegedly reflected that MHI had in excess of $75,000,000.00 on account with Crimson, as well as alleged copies of receipts of wire transfers evidencing that $20,000,000.00 had been transferred from MHI's account at Crimson to MHI's outside bank accounts.
"However, despite of all of Crimson's assurances through emails and telephone conversations with McEvoy, Demicher and Zinman, despite the fact that MHI had wired $243,500.00 to Zinman's company Recovery in Boynton Beach, FL, despite all of the signed letters and agreements, and despite the access to online accounts that allegedly reflected almost $75,000,000.00 that MHI had in an account with Crimson, and despite the alleged wire transfer receipts signed by McEvoy evidencing that $20,000,000.00 had been wired to MHI's bank account, MHI has, to this day, received no monies from Crimson, there has been no BG of ¬ 500,000,000 [euros] to purchase the MTNs [medium term notes], and there has been no bond issuance for $500,000,000.00.
"The truth of the matter is that Crimson was never able to perform the services and procure the funds that it represented to MHI. McEvoy, Demicher and Zinman, have, from the inception of the relationship with MHI, used Crimson as a front and made misrepresentations regarding Crimson's capabilities in order to induce MHI to pay significant upfront fees. Once MHI paid the fees, McEvoy, Demicher and Zinman kept the money and failed to deliver any services." (References to exhibits deleted.)
The National Hockey League bought the Phoenix Coyotes, fka the Winnipeg Jets, of Manitoba, Canada, after it incurred several hundred million dollars of debt after its move to Phoenix and filed for bankruptcy in 2009.
Martina seeks treble damages.
It is represented by Michael Freed and Brain Krulick with Brennan, Manna & Diamond of Jacksonville.
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