A lawyer for one of America's wealthiest hedge fund managers has accused Irish financier Dermot Desmond of trying to avoid a multimillion dollar lawsuit by shifting responsibility between investment companies in the Cayman Islands and Dublin.
David G Trachtenberg, whose client, Stanley Druckenmiller, invested millions of dollars in Mr Desmond's $175 million (€145.6 million) hedge fund company, told a Manhattan court on Friday that it was "irksome" that Mr Desmond considered himself to be untouchable by US law, even though he set up a Cayman Islands hedge fund especially for US investors.
The hearing heard arguments over where and under what jurisdiction's law the case should be tried.
Describing Mr Desmond as "a well-known, successful, wealthy Irish entrepreneur", Mr Trachtenberg said that Mr Desmond "apparently thinks that he is not bound by United States law when he sets up an investment vehicle that is exclusively and expressly for US investors".
Druckenmiller and other high-profile investors withdrew their funds from Desmond's Cayman Islands-controlled Macro Fund after Desmond fired his star manager, David Morrison, for allegedly harassing a chambermaid at Desmond's luxury Barbados hotel.
Desmond's IIU Capital company has argued that it did not breach its contract with Mr Druckenmiller by firing Mr Morrison and was allowed to keep a 10 per cent cancellation fee because Mr Druckenmiller withdrew his funds.
In an impassioned courtroom debate with Mr Desmond's lawyer, Marc Reiner, Mr Trachtenberg said that his client, a manager and friend of billionaire George Soros, had agreed to invest millions in Mr Desmond's Cayman Islands-based Macro Fund and that he now wanted to sue for breach of contract, interference with a business relationship, conspiracy and deceit.
Mr Trachtenberg accused Mr Desmond of trying to avoid responsibility by claiming that the Macro Fund fed into a company called the Master Fund, which fed into Mr Desmond's Irish investment company, International Investment & Underwriting (IIU), based in the IFSC.
"The Macro Fund says: 'You can't sue us' because it delegated its duties to the Master Fund; and the Master Fund says: 'You can't sue us' because it delegated its duties to IIU; and IIU says 'You can't sue us because our duty only extends to the Master Fund and Macro Fund'," Mr Trachtenberg complained.
He said that this deliberate shifting of responsibility "obscures the fact that we invested in the Macro Fund, not in the Master Fund, not in IIU."
Mr Trachtenberg was in the US district court in Manhattan on Friday wheMr Desmond attempted to block the lawsuit by Mr Druckenmiller, who is listed by Forbes as one of the richest people in the world.
He argued that if the case was to go ahead, it should be judged under New York law and not under Cayman Islands law, as Mr Desmond's lawyers have argued.
Mr Desmond's lawyer, Marc Reiner, said that Cayman Islands law would be the natural choice and that the Druck Corporation was happy to avail of the islands' tax laws when it suited.
"If you want to talk about inconsistent positions and walking away from prior arguments, the plaintiff invested in the Cayman Islands fund because of those tax advantages and now that it that it didn't work out the way that they wanted, they want to find fault," he said.
Deutsche Bank and JP Morgan Chase have also taken cases against IIU to win back the redemption fee. The matter was adjourned until a date to be announced.
