The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Investors are having “second thoughts” about pursuing a $1.1 million claim against a Bahamian attorney and his law firm in the courts, due to the expense and uncertain prospects of success.

Daniel D. Holliday, the Louisiana-based escrow agent for investors who placed money with an entity known as Canyon Acquisitions, told Tribune Business that both he and they were “extremely frustrated” over the progress of their dispute with Paul Moss and his Chester Chamber firm.

Emphasising that his clients did not have deep pockets, and were unable to finance lengthy Supreme Court actions, Mr Holliday said this had been “the big hold back” in advancing the lawsuit filed in August 2009.

And he added that attempts to reach an out-of-court settlement with Mr Moss over the past four years had been unsuccessful, despite reaching out to him on several occasions.

Supreme Court documents obtained by Tribune Business show the dispute relates to $1.1 million that Canyon Acquisitions raised from investors for an Arizona-based development named Bachmann Springs.

The latter was having difficulty raising the necessary construction financing, and instead sought to obtain bridge financing from a Bahamian company, Cresta Ltd.

Canyon Acquisitions agreed to put up the $1.1 million in investor monies as security for the Cresta Ltd loan. Via Mr Holliday, acting as escrow agent, the funds were allegedly supposed to be placed in an escrow account with Mr Moss and Chesters Chambers.

This transaction was conducted on the basis that, if Bachmann Springs defaulted, the $1.1 million would be returned to Canyon immediately following notice to Mr Moss and Chesters Chambers.

Tribune Business has seen documents showing that Bachmann did indeed default, a December 4, 2008, notice alleging it had failed to obtain the necessary construction financing/permits within six months of receiving 50 contracts and deposits from Canyon.

Mr Holliday’s 2009 statement of claim alleged that Chesters Chambers, and Cresta Ltd, were supposed to return the $1.1 million within 48 hours of receiving the default notice.

“In breach of the terms of the agreement, and despite having received the requisite notices as aforesaid, the second defendant [Chesters Chambers] has failed and/or neglected to transfer the transferred funds, as per its obligations under the agreement, thereby occasioning the plaintiff loss and damage,” he alleged.

“We sent the funds to Paul Moss, and he was supposed to hold on to them,” Mr Holliday told Tribune Business last week. “We’re $70,000 into the legal side of it, and this was not $1.1 million received from a big company.

“It [the court action] has really not gotten anywhere. To get where it is now, we’ve spent $15,000. It’s not moving very fast, is very expensive, and the clients are having second thoughts about pursuing it, not throwing good money after bad, as the saying goes.”

Implying that the financing for the Bahamian litigation was coming from a group of investors with limited means, Mr Holliday added: “We’re not sure how proceedings are going to go.

“The next stage is that we start to prepare a motion for default judgment. Ultimately, after having discussions with the lawyers and the guys footing the bill, we’re not sure we’ll be able to win a judgment at this stage of the proceedings.

“The estimated cost of pursuing it is greater than what we’ve spent so far, so we’ve kind of put it on hold. That’s been the big hold back. They’re estimating cost between $75,000 to $100,000 if we ended up having to bring this thing, and that’s a lot of money to ask these people to put up in addition to the money they’ve already lost, and there’s no guarantee they’ll be able to recover it.”

Mr Moss declined to comment when contacted by Tribune Business, referring this newspaper to his Freeport-based attorney, Maurice Glinton.

Mr Glinton confirmed that a defence had been filed on Mr Moss’s behalf, and that his client denied all the allegations against him.

He declined further comment, other than to say it was “a matter for the courts”, and expressed surprise that Mr Holliday would seek to ‘try the case by media’.

Mr Glinton suggested that the US attorney and his clients were seeking to use the media to damage his client’s reputation, and thereby force him into an unfavourable settlement.

Mr Moss is a relatively high-profile figure in the Bahamas, at one point running for the Progressive Liberal Party (PLP) leadership while the party was in opposition. He sought its nomination for the St Cecilia constituency, and has been an active political campaigner for many years.

Mr Moss has also carved out a successful career in financial services, being one of the offshore sector’s few Bahamian owners via his Dominion Management Services firm. He has also been something of a pioneer, having opened a Dominion office in Singapore, the first Bahamian provider to do so. He is now moving to do the same in Dubai.

E-mails obtained by Tribune Business show Mr Moss was initially concerned about returning the $1.1 million because Bachmann was “disputing the breach” of contract.

Mr Holliday replied the same day, December 8, 2008, to say he understood Bachmann had “withdrawn its objection” to releasing the escrowed funds held in Chesters Chambers’ client account. The exchanges continued, culminating in Mr Moss saying he was told all issues were resolved.

Then, in a March 30, 2009, e-mail, Mr Moss indicates he is waiting to receive the proceeds from an ‘asset sale’, implying that this will be used to repay the $1.1 million.

“I regret to advise that the sale of assets was not consummated on Friday, and will not before Easter,” he wrote. “I know that this is clearly outside the deadline set, and I am disappointed about this as well.

“I fell compelled, however, to ask your continued forbearance until that time, and hold off from litigation at this time. I am doing all that I possibly can to ensure the return of the funds.”

Mr Holliday told Tribune Business that he recently asked Mr Moss to “call me if he wanted to discuss a resolution. He said he was out of the country at the time, would be back on November 5, and I never heard from him.

“It’s been a very frustrating process to say the least. This is not money from a big company. This is 50 individual investors investing money in this pot, and they’re basically out of their money”.

Mr Holliday said Canyon Acquisitions had moved to compensate the investors itself by giving them an interest in another development.

He added that the investors’ impressions of the Bahamas and its judicial system had “not been very positive, although that may change depending on what happens with these proceedings against Moss”.