The Tribune

• ArawakX issuer: 'I want to get out of this mess'

• Says 'innocent idea' has 'all gone pear-shaped'

• Crowd-fund 'waste of my time' as short of $3m

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

A Bahamian company that raised equity capital through the collapsed ArawakX platform has pledged to return all funds to investors once they are verified, its principal saying: "I want to get out of this mess."

Mark Newell, Nassau Gas & Tanks principal, told Tribune Business the crowd-funding raise had been "a waste of my time" because the total sum obtained was well short of the $3m target sought. He added that "an innocent idea" to provide customers with an opportunity to invest in his firm had "gone pear shaped" and he now wants to place "a mess, a whole mess" behind him.

Asserting it was "unbelievable" that ArawakX and its principals never informed him that its accounts were frozen by Bank of The Bahamas in mid-November 2022, right in the middle of his raise, Mr Newell said he was now waiting on the crowd-funding platform's liquidators to verify Nassau Gas' shareholder register and the size of each investor's outlay before refunding the monies.

"No. Zero. Nothing," he replied, when this newspaper asked if Ed Rahming, the Intelisys (Bahamas) chief, and Cheryl Simms, the Kikivarakis & Co accountant and partner, had been in contact over the shareholder verification exercise.

"I saw them at the end of January because I was pushing for a meeting and they said it was going to take a long time. Their words were: 'There's going to be a long tail in this process'. It's just a waiting game now."

Mr Rahming and Ms Simms, in their first report to the Supreme Court at end-February, said Nassau Gas appeared from the available records to have raised some $122,287 from investors via selling 14,830 shares in the firm.

Three of the four crowd-funding raises completed via ArawakX had yet to receive their shareholder registers when the platform was placed into provisional liquidation late last year, Nassau Gas & Tanks being one of those along with Tropical Gyros (Chef Kevin Culmer) and FootCare Rx (Dr Daniel Johnson).

“There are discrepancies with the share registers - investors are missing on the registers, etc,” the liquidators alleged. “We found irregularities with the four completed issuer raises.

“Investors have not received their share certificates, and the Issuers were assessed additional fees by the company not shown in their listing agreement. We have started a verification/reconciliation process for one issuer to ensure completeness of its share register and will undertake a similar exercise for the remaining issuers.

“Upon completion of this exercise, we will provide the updated share registers to the Bahamas Central Securities Depository to act as the registrar and transfer agent for the issuers.”

In a subsequent letter, dated March 4, 2024, Mr Rahming and Ms Simms added: "The liquidators will be communicating with the issuers to conduct a shareholder reconciliation/verification exercise of the issuer share register. This exercise will entail the examination and comparison of the records received by the issuers from the company to the records that are in the liquidators' possession.

"The purpose of this exercise is to produce a complete share register, for each issuer, so that the registrar and transfer agent services that would have been carried out by [ArawakX] can be transferred to The Bahamas Central Securities Depository. The liquidators consider the capital raises conducted by the company as completed, and the issuers should ensure all regulatory responsibilities and functions are carried out."

Mr Newell, though, said he regards Nassau Gas' offering as having failed to meet the minimum raise target and, for that reason, he plans to return all investor monies once identities and amounts are verified. "In the last 12 months, only three people have contacted me, the 'Mom and Pop' investors, and that's only $5,000 worth," he told Tribune Business.

"There's only three people that I know of who bought in. I've told them that when this process is done they'll get their money back. This whole process should not have been consummated. It's unbelievable. I didn't know they [ArawakX's bank accounts] got closed down in mid-November 2022 in the middle of my thing. I've learnt everything from you and your articles over the last 12 months.

"It's unbelievable. The whole thing's a mess. I can't believe they did this," Mr Newell continued. "Mine is very much under the minimum. I want to get out of this whole thing, and where they are legitimate investors, to give them their money back because it's a waste of my time. We asked for $3m, not $50,000.

"You know how much accountants are? I want to get out of this thing. It won't be much because only three people reached out to me in the last 12 months, and that's only $5,000 worth. It's a mess. It's a whole mess. I can't believe that I'm involved in it.

"The whole thing was an innocent idea. I was having a beer at Spritz. ArawakX was right in front of me. I thought I may as well knock on the door and give my customers a chance to invest in the business. It was an innocent idea. I meant well but it's all gone pear shaped."

Mr Rahming and Ms Simms, in their February 22, 2024, report to the Supreme Court revealed that ArawakX’s insolvency had almost doubled from the Securities Commission’s initial $2m estimate after they wrote-off more than $1m in assets listed on its balance sheet.

This left the platform and its parent, MDollaz Ltd, with just $508,665 in assets to cover $4.474m in total liabilities, thereby producing a $3.965m deficit with the provisional liquidator duo warning this gap is only likely to increase since “significant sums [are] owed to third parties”.

They said it was also impossible to cure MDollaz/ ArawakX’s “criminal violation” of the Securities Industry Act as a result of the unauthorised public offering that persuaded 134 investors to inject capital into the crowd-funding platform, while alleging there was “substantial commingling” of funds belonging to ArawakX itself and those entrusted to it by investors in the share issues it facilitated.

The latter should have been held separately by the crowd-fund platform, which would have been acting in a trustee or fiduciary capacity, but Mr Rahming and Ms Simms are alleging that “over $1m of fiduciary cash was used on company expenses”.

Their first Supreme Court report identified no fewer than 16 purported breaches of the Securities Industry Act, its accompanying regulations and rules by ArawakX. The alleged violations, according to the provisional liquidators, ranged from failing to safeguard, segregate and maintain proper controls to secure client funds; not obtaining Securities Commission approval for Board and corporate governance changes; and not paying distributions to investors on time or returning investor monies from failed crowdfund issues.