Seven-year disqualification for director of precious metals ‘Ponzi scheme’

The shareholder and director of a gold and silver investment company has been disqualified from holding a directorship for seven years after a judge found he presents a danger to creditors.

The High Court heard that a liquidator believes the Irish Gold and Silver Bullion Limited defrauded customers and operated as a “Ponzi scheme”.

In a ruling on Monday, Mr Justice Brian O’Moore said Nicholas Wickham was not honest with investors in the company and his business model involved “repeated misrepresentation” to the firm’s customers about how their funds were being used, adding that his behaviour makes it clear he presents a danger to creditors.

He gave a “headline” sanction of 14 years. This was halved based on mitigating factors such as Mr Wickham’s acceptance of a disqualification order and his £310,000 payment to the liquidator in settlement of proceedings, said the judge. The court also noted Mr Wickham (61) reversed his original policy of not co-operating with the liquidator.

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The disqualification order, made under section 838 of the 2014 Companies Act, came in response to an application by Miles Kirby, the liquidator of the firm, which has an address at The Crescent, Monkstown, in south Co Dublin.

Mr Kirby, as liquidator, secured court orders in July 2022 to freeze assets of Mr Wickham and a firm he owns and controls called Hamden Development Homes UK Ltd.

Mr Kirby’s counsel, Arthur Cunningham, later informed the court in May that Mr Wickham had begun to co-operate with the liquidator. The proceedings, seeking various orders including judgment of €1 million against Mr Wickham and Hamden, had settled, he said. All previous court orders were lifted.

Mr Justice O’Moore said in his judgment that the liquidator’s investigations found Mr Wickham pooled customer funds, which should have been used to purchase precious metals as investments, with company money. This pooling enabled Mr Wickham to operate what Mr Kirby described as a Ponzi scheme over several years.

By the time Mr Kirby was appointed, there was no stock of metal and the company’s bank account contained €3,900. The firm’s deficit was €1 million, said the judge.

Mr Justice O’Moore pointed to the company’s “wholly inadequate books and records”, the concealing of the firm’s deficit and the diversion of company funds for improper purposes. These, he said, were reasons enough to warrant imposing a period of disqualification on Mr Wickham.

Mr Justice O’Moore said Mr Wickham’s payment of £310,000 to the liquidator, as part of the settlement, was “significant” but “nonetheless inadequate”, given the company’s deficit and the cost of the court proceedings.

It was “slightly arch” of Mr Wickham to claim he willingly forwarded all his assets to the liquidator when the settlement of the claim came after six months of litigation being strongly pursued by Mr Kirby, the judge added.

He noted Mr Wickham had stated his intention to set up a new business, and does not express regret for his actions.

“Instead, the thrust of Mr Wickham’s submission is that he is left in a very difficult position as a result of the discovery of his dishonesty, and that his ability to support his son at college ‘will be impacted’.”

The judge had no evidence about the effect the loss of money has had on investors, but it could be that some, such as those who lost their life savings, are now facing “real grinding hardship because of the behaviour of Mr Wickham”.

His conduct puts him into the category of “particularly serious cases” warranting consideration of a disqualification period exceeding 10 years.

As creditors are ultimately most interested in reducing their losses, the return of some money to the liquidator should reduce the overall disqualification period. The judge imposed a seven-year disqualification.