The High Court has held four Greymountain Management Limited directors personally liable to William Powers for $124,027, finding that the Irish company was used to defraud him through a purported binary-options investment scheme. The court said it was an exceptional case for piercing the corporate veil.
In a judgment delivered on 28 October 2022, Mr Justice Twomey found on the balance of probabilities that Greymountain and the Glenridge Capital website operated as one enterprise, and that there was no evidence that binary-options trades had been made for Powers. He found that Powers paid Greymountain $130,072 and received $6,000 back. The judgment gives his net loss as $124,027, although one passage calculates it as $124,072.
Powers had been led to believe that Glenridge was based in Dublin and that his money would be traded. The court found that Greymountain processed payments and passed funds on, while its Irish registration and payment arrangements helped give the operation an appearance of legitimacy. The judgment records that evidence of the alleged fraud was not challenged by the defendants at the hearing.
The court found that David and Jonathan Cartu were shadow directors and that David Cartu was Greymountain’s beneficial owner. It concluded they controlled the company’s use in the scheme and syphoned off funds, leaving it unable to meet its obligations to Powers. The court held both brothers personally liable for his loss.
The court also held the company’s directors, Ryan Coates and Liam Grainger, personally liable, but on different grounds. It found no evidence that either knew of the fraud or directly benefited from it. However, it concluded that both had failed to carry out their duties as directors and had handed control to the Cartu brothers without adequate oversight. It described Coates’s role as nominal and found that Grainger had signed payment-processing agreements and handled other company matters without making sufficient inquiries.
The judgment concerned the claim of Powers, one of 35 plaintiffs whose claims in the proceedings total about $4.6 million. The hearing addressed only his case. Greymountain was in liquidation, and no order was sought against the company in this hearing. The court provisionally listed the matter for mention one week later to finalise the terms of the orders sought. The judgment does not state the final terms settled at that later mention.