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Izodia Plc: Gerald Smith

On 24 April 2006, following an SFO investigation, Gerald Smith pleaded guilty to misappropriating over £34 million belonging to Izodia Plc, a plea which covered ten counts of theft and one count of false accounting. This followed his conviction and two-year prison sentence in November 1993 for stealing £2m from a pension fund.

Smith acquired a stake in Izodia through his Jersey-based Orb Group, using it as a cash shell and ultimately transferring over £34 million of Izodia’s cash assets to Jersey, where Smith took it for himself.

He was sentenced to eight years’ imprisonment on 11 September 2006.

On 13 November 2007, Smith was ordered to pay £40,956,911 within 12 months or face a default 8-year sentence. At the time, it was the largest order to be made in criminal proceedings. With interest, the total amount owed by Smith now sits at just over £72 million.

The SFO, working to enforce his confiscation order, was one of several parties with a claim to the realisable assets of Smith. These competing proprietary claims were dealt with at a seven-week trial which began on 19 January 2021 and was conducted on a wholly remote basis.

The origin of the trial came from disputes related to dealings between Smith and Andrew Ruhan, who was not a party to proceedings. Both Smith, who has been twice convicted of multimillion-pound theft, and Ruhan were opaque in these business dealings, which were apparently designed to veil or nullify their true effect.

The subsequent task of tracing and establishing proprietary claims to Smith’s assets was therefore incredibly complex. Presiding over the trial, Mr Justice Foxton said that the nature of Smith and Ruhan’s dealings resulted in “a dispute of labyrinthine complexity, in which matters are rarely what they appear to be, and which has offered a near-infinite possibility for disputation.”

In the trial, the SFO advanced a common position alongside the Enforcement Receivers, the Viscount of the Royal Court of Jersey, Harbour Fund II LLP, Stewarts, and the Joint Liquidators on behalf of a number of BVI and Manx Companies.

Handing down judgment on Tuesday, 18 May, Mr Justice Foxton upheld the SFO’s claim in respect of any realisable property of Smith which has not been found to be subject to the proprietary rights of other parties. The SFO’s claims all succeeded, and the SFO continues to progress enforcement action against Smith and his realisable assets to pay this order.

Notice of claim to non-parties

Court Ordered Notice in Relation to Claims in Certain Property in Commercial Court Proceedings (In the matter of Gerald Martin Smith, CL-2017-000323).

This Notice is served pursuant to the Order of Mr Justice Foxton dated 20 May 2020.

TO: ALL NON-PARTIES TO THE ABOVE-MENTIONED PROCEEDINGS TAKE NOTICE THAT:

  1. Proceedings have been commenced in the Commercial Court (QBD) of the High Court of Justice, Business and Property Courts of England & Wales under Claim No CL-2017-000323 (the “Claim”). The Claim will determine proprietary claims and claims under the Criminal Justice Act 1988 which are advanced against the following assets (the “Identified Underlying Assets”):

 

 

IDENTIFIED UNDERLYING ASSET

DETAILS OF LEGAL OWNER (IF AVAILABLE)

1

Flat 1 Hamilton House, 81 Southampton Row, London, WC1B 4HA (“HH”)

Ms Imogen Laura Smith

2

Flat 2 Hamilton House, 81 Southampton Row, London, WC1B 4NH

Graig Holdings Limited

3

Flat 3 HH

Diversified Group Limited

4

Flat 10 HH

Hamilton House Property Limited

5

Flat 11 HH

Future Investments Limited

6

Flat 12 HH

Blackwood Investments Limited

7

Flat 14 HH

Hamilton House Property Limited

8

Flat 17 HH

Great Eastern Street Investments Limited

9

Flat 18 HH

Future Investments Limited

10

Flat 19 HH

Dewr Holdings Limited

11

Flat 20 HH

Mynydd Holdings Limited

12

Flat 21 HH

Sarn Investments Limited

13

Flat 22 HH

Merch Holdings Limited

14

Flat 23 HH

Bryanstone Square Investments Limited

15

Flat 24 HH

Ingenuity Capital Limited

16

Leasehold HH

Hamilton House (Southampton Row) Management Limited

17

Flat 4, 58/59 Montagu Square, London, W1H 2LS

Ms Sinead Catherine Irving

18

32 Moor Lane, Rickmansworth, WD3 1LG

Ms Sinead Catherine Irving

19

£500,028.80 fund held on trust (and/or investment proceeds)

Mr Kevin Philbin and Mr Mark Williamson

20

Flat 9, 54-57 Goodwood Court, Devonshire Street, London, W1W 5DZ

Ms Alison Hollis

21

Flat 19 Walham Court, 109-11 Haverstock Hill, London, NW3 4SD

Mr Nicholas Greenstone and Mrs Patricia Greenstone

22

Dr Cochrane’s Diamond Bracelet

Dr Cochrane (acting by the Viscount of the Royal Court of Jersey)

23

Diamond Earrings 1

Dr Imogen Laura Smith

24

Diamond Earrings 2

Ms Iona Smith

 

  1. You are or may be one of the persons who are interested in the Identified Underlying Assets.
  2. On 20 May 2020, Mr Justice Foxton gave directions in relation to how non-parties can assert an interest in the Identified Underlying Assets. You may, by 4pm on 3 July 2020, make an application to be joined to the Claim in order to make a proprietary claim or a claim under the Criminal Justice Act 1988 in relation to the Identified Underlying Assets, or to make any argument in relation to a claim asserted by any other party. Any such application shall be supported by a properly particularised statement of case identifying the relief which is sought or the argument which is sought to be raised.
  3. If you do not make such an application by 4pm on 3 July 2020, you will (i) be bound by orders and judgments made by the Court in relation to the Identified Underlying Assets, (ii) be debarred from contending that you have a proprietary claim or claim under the 1988 Act that takes priority to such claims as are established to the Identified Underlying Assets by persons who make applications by 3 July 2020, and (iii) be debarred from otherwise challenging the Court’s judgments or orders in relation to such claims.
  4. Further information in relation to the Claim (including the statements of case filed by all parties thereto) can be obtained by sending an email to IZO.Litigation@sfo.gov.uk and orbharcus@harcusparker.com.

The full court order can be found here.

Page published on 2 Jun 2020 | Page modified on 18 May 2021