Perry v Esculier: Ponzi Scheme, Tracing, and Choice of Law in Cross-Border Investments
In Perry, Tamar and another v Esculier, Bonnet Servane Michele Thais and another, the Singapore International Commercial Court addressed a dispute between investors in funds administered by Lexinta, a group of companies operating a Ponzi scheme. The Plaintiffs, Tamar Perry and Solid Fund Private Foundation, claimed that the Defendants, Bonnet Esculier Servane Michele Thais and Jacques Henri Georges Esculier, received funds originating from the Plaintiffs' investments. The court, presided over by Simon Thorley IJ, ruled in favor of the Defendants, finding that the payments made to them discharged Lexinta's obligations under their asset management agreement, and that the Plaintiffs were not entitled to recover the funds.
1. Case Overview
1.1 Court
Singapore International Commercial Court1.2 Outcome
Judgment for Defendants
1.3 Case Type
Civil
1.4 Judgment Type
Judgment
1.5 Jurisdiction
Singapore
1.6 Description
Singapore court addresses a Ponzi scheme dispute, tracing funds, and choice of law in cross-border investments. Judgment for the Defendants.
1.7 Decision Date
2. Parties and Outcomes
| Party Name | Role | Type | Outcome | Outcome Type | Counsels |
|---|---|---|---|---|---|
| Tamar Perry | Plaintiff, Defendant in Counterclaim | Individual | Claim Dismissed | Lost | |
| Solid Fund Private Foundation | Plaintiff, Defendant in Counterclaim | Trust | Claim Dismissed | Lost | |
| Jacques Henri Georges Esculier | Defendant, Plaintiff in Counterclaim | Individual | Judgment for Defendant | Won | |
| Bonnet Esculier Servane Michele Thais | Defendant, Plaintiff in Counterclaim | Individual | Judgment for Defendant | Won |
3. Judges
| Judge Name | Title | Delivered Judgment |
|---|---|---|
| Simon Thorley | International Judge | Yes |
4. Counsels
4. Facts
- Both Plaintiffs and Defendants were investors in funds administered by Lexinta.
- Lexinta was directed by Bismark Badilla, a Spanish citizen resident in Switzerland.
- Defendants invested in April 2014 and sought to realize their assets in April 2016.
- Plaintiffs deposited over US$24 million with Lexinta between April 2016 and August 2017.
- Plaintiffs claimed Lexinta dissipated their funds to earlier investors, including the Defendants, as part of a Ponzi scheme.
- Disputed Monies were credited to the Defendants' bank account with DBS Bank Ltd in Singapore.
- Plaintiffs assert transfers were the result of back-to-back transfers of some of the Plaintiffs’ Fund.
- Defendants were repaid in three tranches from LGL’s account at DBS in Hong Kong, and credited to BE’s DBS account in Singapore.
5. Formal Citations
- Perry, Tamar and another v Esculier, Bonnet Servane Michele Thais and another, Suit No 4 of 2020, [2022] SGHC(I) 10
6. Timeline
| Date | Event |
|---|---|
| Defendants made initial investment with Lexinta. | |
| Asset Management Agreement signed between Esculiers and Lexinta. | |
| Defendants agreed to realize assets of their investment. | |
| Initial investment of USD1,000,000 made in the IPO Program. | |
| US$7,439,004.77 credited to Defendants' bank account. | |
| US$1,499,488 credited to Defendants' bank account. | |
| €164,841.26 credited to Defendants' bank account. | |
| US$1,302,250.92 credited to Defendants' bank account. | |
| Plaintiffs obtained ex parte discovery orders from Hong Kong courts against DBS. | |
| Plaintiffs' lawyers demanded DBS transfer Disputed Monies. | |
| Defendants became aware funds in DBS account had been frozen. | |
| OS 1016 first came on for hearing before Dedar Singh Gill JC. | |
| Leave given for Mr Jacques Esculier to be joined as the fourth defendant in OS 1016. | |
| Further Proceedings commenced in the High Court. | |
| Writ of Summons and Statement of Claim were amended to include SFPF as the second Plaintiff. | |
| DBS commenced Interpleader proceedings in the Singapore High Court. | |
| Trial began. | |
| Judgment reserved. |
7. Legal Issues
- Ponzi Scheme
- Outcome: The court found that a Ponzi scheme was in operation by 2016 but could not determine when the activity started.
- Category: Substantive
- Tracing
- Outcome: The court determined that the Plaintiffs were not entitled to trace the funds to the Defendants.
- Category: Substantive
- Choice of Law
- Outcome: The court determined that Swiss law governed the relationship between the parties.
- Category: Jurisdictional
- Breach of Trust
- Outcome: The court found that the sums transferred to LGL were held pursuant to the terms of the AMAs and were not held by them on trust for TP or BGNIC.
- Category: Substantive
- Bona Fide Purchaser for Value Without Notice
- Outcome: The court found that the Defendants would have made out the defence of “bona fide purchaser for value without notice”.
- Category: Substantive
8. Remedies Sought
- Monetary Restitution
- Tracing of Funds
9. Cause of Actions
- Breach of Trust
- Unjust Enrichment
10. Practice Areas
- Commercial Litigation
- Trust Litigation
- International Law
11. Industries
- Finance
- Investment Management
12. Cited Cases
| Case Name | Court | Affirmed | Citation | Jurisdiction | Significance |
|---|---|---|---|---|---|
| Perry, Tamar and another v Esculier, Jacques Henri Georges and another and another matter | Court of Appeal | Yes | [2022] 1 SLR 107 | Singapore | Cited for denying leave to amend SOC to include alternative claims which were not proprietary. |
| The Republic of Philippines v Mahler Foundation | Court of Appeal | Yes | [2014] 1 SLR 1389 | Singapore | Cited for the three-stage process for resolving a legal question with a foreign law element. |
| Macmillan Inc v Bishopsgate Investment Trust plc (No 3) | Unknown | Yes | [1996] 1 WLR 387 | England and Wales | Cited regarding the law of the place where the property is located. |
| Lightning v Lightning Electrical Contractors Ltd | Court of Appeal | Yes | Lightning v Lightning Electrical Contractors Ltd (23 April 1998, Court of Appeal) (England and Wales) | England and Wales | Cited to show that lex situs need not apply. |
| Rickshaw Investments Ltd and another v Nicolai Baron von Uexkull | Court of Appeal | Yes | [2007] 1 SLR(R) 377 | Singapore | Cited for the principle that characterising claims in equity is not always wholly straightforward. |
| Rappo, Tania v Accent Delight International Ltd | Court of Appeal | Yes | [2017] 2 SLR 265 | Singapore | Cited for the proposition that when seeking to determine the applicable law to claims in equity regard should be had to the foundational sources from which the equitable right had arisen. |
| Barclays Bank Ltd v Quistclose Investments Ltd | House of Lords | Yes | [1970] AC 567 | United Kingdom | Cited regarding Quistclose trust. |
| Fairfield Sentry Ltd (in Liquidation) v Migany and others and other cases | Privy Council | Yes | [2014] UKPC 9 | United Kingdom | Cited regarding investors who withdraw funds before a Ponzi scheme collapses. |
| In the Matter of Stanford International Bank Ltd (in liquidation) | Privy Council | Yes | [2019] UKPC 45 | United Kingdom | Cited regarding depositors who were paid by SIB prior to its ceasing to trade received the money as bona fide purchasers for value without notice. |
| MKC Associates Co Ltd v Kabushiki Kaisha Honjin | High Court | Yes | [2017] SGHC 317 | Singapore | Cited for the elements to establish the bona fide purchaser defence. |
| Midland Bank Trust Co v Green | House of Lords | Yes | [1981] AC 513 | United Kingdom | Cited regarding the requirement of good faith and its relationship to the aspect of notice. |
| Armstrong DLW GmbH v Winnington Networks Ltd | Chancery Division | Yes | [2013] Ch 156 | England and Wales | Cited regarding the same considerations applying to reaching a conclusion on good faith and notice. |
| Papadimitriou v Credit Agricole Corporation and Investment Bank | Unknown | Yes | [2015] 1 WLR 4265 | Unknown | Cited for the principles applicable to constructive notice. |
| Sinclair Investments (UK) Ltd v Versailles Trade Finance Ltd | Court of Appeal | Yes | [2012] Ch 453 | England and Wales | Cited for the test for constructive notice. |
| Macmillan Inc v Bishopsgate Investment Trust plc (No 3) | Unknown | Yes | [1995] 1 WLR 978 | England and Wales | Cited regarding the nature of constructive notice. |
| Carl Zeiss Stiftung v Herbert Smith & Co (No 2) | Court of Appeal | Yes | [1969] 2 Ch 276 | England and Wales | Cited regarding notice of a claim not being the same as notice of a right. |
| Gestmin SGPS SA v Credit Suisse (UK) Ltd | High Court of Justice | Yes | [2013] EWHC 3560 (Comm) | England and Wales | Cited for the approach a judge should adopt in the trial of a commercial case. |
| AstraZeneca AB v KRKA dd Novo Mesto | Court of Appeal | Yes | [2015] EWCA Civ 484 | England and Wales | Cited for the principles and approach applicable in assessing damages under a cross-undertaking. |
| Pilcher v. Rawlins | Court of Appeal in Chancery | Yes | [1872] L.R. 7 Ch. App. 259 | England and Wales | Cited as authority that good faith is a separate test which may have to be passed even though absence of notice is proved. |
| Berwick & Co. v. Price | Chancery Division | Yes | [1905] 1 Ch. 632 | England and Wales | Cited as confirming the proposition that honesty or bona fides remained something which might be inquired into. |
| Taylor v. London and County Banking Co. | Chancery Division | Yes | [1901] 2 Ch. 231 | England and Wales | Cited as confirming the proposition that honesty or bona fides remained something which might be inquired into. |
| Oliver v. Hinton | Chancery Division | Yes | [1899] 2 Ch. 264 | England and Wales | Cited as confirming the proposition that honesty or bona fides remained something which might be inquired into. |
| Barclays Bank plc v O’Brien | House of Lords | Yes | [1994] 1 AC 180 | United Kingdom | Cited regarding the doctrine of notice. |
| George Raymond Zage III and another v Ho Chi Kwong and another | High Court | Yes | [2010] 2 SLR 589 | Singapore | Cited regarding the defendant’s state of knowledge must be such as to make it unconscionable for him to retain the benefit of the receipt. |
13. Applicable Rules
| Rule Name |
|---|
| No applicable rules |
14. Applicable Statutes
| Statute Name | Jurisdiction |
|---|---|
| Rules of Court (Cap 322, R 5, 2014 Rev Ed) | Singapore |
15. Key Terms and Keywords
15.1 Key Terms
- Lexinta
- Ponzi scheme
- Asset Management Agreement
- Disputed Monies
- LGL
- Interpleader proceedings
- Bona fide purchaser
- Constructive notice
- Swiss law
- Hong Kong law
15.2 Keywords
- Ponzi scheme
- tracing
- choice of law
- investment
- Singapore
- Lexinta
- trust
- equity
17. Areas of Law
16. Subjects
- Investment Fraud
- Cross-Border Transactions
- Trust Law
- Financial Regulation