By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The liquidators for a “failed” Bahamian bank are battling a Florida law firm as part of efforts to recover a $15 million loan, with their target alleging they should “stop wasting time and creditors’ money chasing non-existent claims”.

Maria Ferrere and Alison Treco, the Supreme Court-appointed liquidators for Rural International Bank, are pursuing the Carlton Fields Jorden Burt law firm and its attorney, Robert Macauley, for alleged legal malpractice in their representation of the bank.

Legal documents filed on behalf of the FT Consultants duo, and which have been obtained by Tribune Business, allege that Rural International Bank - prior to its liquidation - was induced to pay more than $1 million in “unauthorised legal fees” for work the Florida law firm did on behalf of others.

And they also claim that Carlton Fields Jorden Burt, without the Sandyport-based bank’s knowledge, provided legal advice to the parties that borrowed more than $13 million from it and which they have refused to repay.

As a result, Ms Ferrere and Ms Treco have initiated a separate legal claim, also in the southern Florida courts, against the borrower, Key Financial Investment Group, and its subsequent purchaser, Geofinance Ltd.

They are alleging that Key Financial “was used as a mere conduit or ‘straw borrower’” to obtain credit from Rural International Bank, with the $13 million obtained then lent on to other parties.

The Bahamian liquidators are alleging that Key Financial, Geofinance and their key executives, Monique Merriam and Bruno Junqueira, had “no intention” of repaying the money to the Bahamian bank, with the situation amounting to fraud.

However, they are claiming that without advising Rural International Bank or terminating their engagement with it, Mr Macauley and Carlton Fields Jorden Burt provided an April 17, 2014, opinion to Geofinance’s Bahamian attorney on the Key Financial transaction.

The letter, to Marco Turnquest, an attorney with the Lennox Paton law firm, said it was “substantially accurate” to say Key Financial’s debts had been discharged because Geofinance had assumed the obligations to Rural International Bank.

Mr Macauley, in documents filed with the Florida courts, also said “no harm” had been done to the Bahamian bank.

The Bahamian liquidators, though, are alleging that Carlton Fields Jorden Burt and its attorney are hopelessly conflicted by their joint representation of Geofinance and Rural International Bank - two parties on opposite sides of the same lawsuit.

“As a fiduciary, at all times Carlton Fields owed Rural International Bank a duty of care and a duty of loyalty,” the accountant duo of Ms Ferrere and Ms Treco alleged.

“Carlton Fields, as its fiduciary, owed Rural International Bank the duty to refrain from self-dealing, the duty of loyalty, the overall duty to not take unfair advantage and to act in the best interest of Rural International Bank, and the duty to disclose material facts.

“Carlton Fields, as its fiduciary/attorney, owed Rural International Bank the duty not to have a conflict of interest between Rural International Bank and another client..... [and] between itself and Rural International Bank.”

Carlton Fields Jorden Burt and Mr Macauley are urging the south Florida district federal court to dismiss the Bahamian liquidators’ action on the grounds that they have failed to produce any evidence of sub-par work, or that the bank suffered any damage from the law firm’s actions.

They are also alleging that the Rural Bank International liquidators have failed to show “a breach of duty that caused” harm to the Bahamian bank - an essential element in any legal malpractice lawsuit.

The FT Consultants duo are, not surprisingly, resisting the Florida law firm’s efforts to have the case dismissed. They say that their efforts to collect on the $15 million now owed by Key Financial/Geofinance were undermined, and harmed, when Mr Macauley copied the latter’s attorneys on a letter he wrote to Rural International Bank’s US legal counsel.

The December 2015 letter, which has been obtained by Tribune Business, argues that the Bahamian liquidators are pursuing the wrong target in their efforts to recover the $15 million loan owing.

Mr Mcaculey’s letter confirmed that Rural International Bank’s loans were then “re-loaned in Brazil”, with some of the money going to affiliates of its parent in a related party transaction.

Rural International Bank is part of the Brazilian banking group, Banco Rural, which was placed into liquidation in its home country in 2013 after being tied to the corruption scandal that brought down ex-president, Dilma Rousseff, and tarnished her predecessor, Luiz Inacio ‘Lula’ Da Silva.’ It was accused of forging loans as part of a ‘vote buying’ scandal during the latter’s presidency.

Acknowledging the $15 million debt, Mr Macauley said Rural International Bank’s liquidators needed to recover two loan portfolios owned by Geofinance - and for which the Bahamian bank is the collections agent - rather than go after the loans directly.

“Despite Geofinance’s repeated requests, and despite the fact that it is in all parties’ interests to promptly collect on these accounts, the Rural International Bank liquidators [Ms Treco and Ms Ferrere] have blocked these efforts for over a year,” he wrote.

“The collectible value of these portfolios is approximately $10-$20 million, subject of course to exchange rate risk.”

Mr Macauley then hit out at the Bahamian liquidators for chasing $41 million in Rural International Bank loans that were booked to Geofinance in transactions involving an Austrian bank, Bank Winter.

He argued that this was “an accounting issue, not a payments issue”, as the money had all been returned to the Bahamian bank and its Brazilian parent.

“The liquidators’ focus on the Bank Winter transactions is a waste of time and money, which has [been] explained repeatedly to the liquidators and their Bahamian counsel,” Mr Macauley wrote.

“Please note that the liquidators are working for the Rural International Bank creditors, the vast majority of whom are Rural Group affiliates and allies.

“Consequently, the liquidators should immediately take the necessary steps to collect the Geofinance receivables and stop wasting time and money chasing non-existent claims.”

Given that both their Florida actions have been ongoing for six months, and remain current, it is clear Ms Ferrere and Ms Treco disagree with Mr Macauley’s assessment.