Trustee Says Exec ‘Pilfered’ $31 Million | Courthouse News Service
Wednesday, November 29, 2023
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Trustee Says Exec ‘Pilfered’ $31 Million

WILMINGTON, Del. (CN) - The liquidation trustee for bankrupt Actrade Financial Technologies claims one of its officers pilfered $31.6 million from the corporation and tried to cover his tracks with multimillion dollar loans to unaffiliated companies. The trustee sued former Chairman of the Board Amos Aharoni in Chancery Court.

In August 2002, Delaware-based Actrade began investigating anonymous reports of "possible irregularities or other alleged improprieties" in its operations, according to the complaint.

Before filing for Chapter 11 in December 2002, Actrade provided deferred-payment financial services to domestic and international markets. The company's largest customer defaulted just before its bankruptcy, according to the complaint.

Bankruptcy trustee Jonah Meer, the plaintiff in this case, says Actrade created an audit committee to investigate misconduct.

In August, the committee forwarded letters and subpoenas from the SEC and the U.S. Attorney's Office in Manhattan to Aharoni, according to the complaint.

Actrade claims Aharoni resigned that month and refused the company's requests for an interview. The trustee says Aharoni surrendered only selected documents through his attorney instead of all the documents that Actrade demanded.

In June, Aharoni allegedly authorized the transfer of $10 million from an Actrade account to a subsidiary in the Cayman Islands. Aharoni transferred another $21.6 million in July, then transferred all the money to a separate account not affiliated with the company, the trustee says.

By September, Actrade learned that had Aharoni drafted five loans worth $31.4 million to various companies, according to the complaint.

The trustee says the loans had "no underlying legitimate business purpose," and none of the loan recipients made interest payments.

Aharoni allegedly orchestrated the loans "to conceal his unauthorized and unlawful transfer of approximately $31.6 million from the Actrade Commerce Account."

The trustee seeks an accounting and an order sequestering all of Aharoni's stock. He alleges breach of fiduciary duty, conversion and fraud.

The trustee is represented by lead counsel Daniel Dreisbach with Richards Layton & Finger.

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