By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

A Bahamian broker/dealer has been ordered to pay $850,000 plus interest in compensation to a trustee and its client after all fell victim to an e-mail fraud that caused a $1.5m loss.

Sir Ian Winder, in an April 25, 2025, verdict awarded damages to Fidgen SA, trustee for the Three-Year Grat Trust, over its claim “for breach of statutory and contractual obligations and/or negligence” against Lydda Capital involving the inadvertent transfer of trust funds to a fraudulent imposter.

Fidgen, which has its own Bahamian financial and corporate services provider affiliate, cut its claim to $1m after Lydda Capital paid it $500,000 in early 2021. The Bahamian broker/dealer had asserted the payment was not an admission of culpability, or “acknowledgement of any sums due”, but merely an “inter-related payment”.

And the Chief Justice further slashed the compensation demanded by 15 percent in finding that Fidgen was “not blameless” for the loss “as, with vigilance, it too could have uncovered the fraud” given that the bogus e-mail that facilitated the scam first appeared in exchanges with its Bahamas-based managing director, Desiree Terrell.

Detailing the background to the dispute, Sir Ian recorded that the Three-Year Grat Trust was established on June 17, 2020, by Carlos Piani as its settlor. However, the trust document named Alexandro Ferraresi as the authorised signatory for the trust and its accounts, with Maria Fernanda Ferraresi identified as its sole investment director.

Fidgen, as trustee, was already an existing client of Lydda Capital. It opened an account for the trust with the Bahamian broker/dealer on the same day that Mr Piani settled it, with some $3.7m in trust assets initially deposited. Around three weeks later, Mr Piani instructed Fidgen to transfer $1.5m from the Lydda Capital account to a US firm, HPX Capital Partners, via an account owned by Pershing LLC at Bank of New York.

The Bahamian broker/dealer was “expressly reminded and instructed” that it was required to “call back” to verify the transaction’s legitimacy, and the relevant details, before it executed the transfer of the funds. However, one day letter, on July 9, 2020, Mr Piani instructed that the $1.5m transfer “be put on hold” and Lydda Capital was duly informed.

Then, on July 13, 2020, Mr Piani issued new instructions for the $1.5m to be transferred to the same HPX Capital Partners - this time via another entity, Southgate Culhan SA, which owned an account at Santander Bank. However, the transfer - which was supposed to be effected by July 14, 2020 - was delayed after Lydda Capital queried several details.

“Unbeknownst to the plaintiff at the material time, the e-mail communication was evidently being fraudulently monitored by a third party,” Sir Ian wrote. “The third party in turn seemingly created a bogus e-mail address.” This was cpiani@admin-icloud.com, instead of Mr Piani’s actual e-mail address of cpiani@icloud.com.

“In response to the queries raised in the clarification e-mail, on July 13, 2020, the unknown third party purporting to be Mr Piani wrote to both the plaintiff [Fidgen] and to the defendant [Lydda Capital] via the said bogus e-mail address and purported to address the queries and provide bogus instructions,” the Chief Justice added.

“The bogus e-mail also included a PDF attachment of a trust letter of direction with a false signature, which purported to be the signature of Mrs Piani, giving instructions to debit the account and transfer the sum of $1.5m.” The funds were duly transferred to a different account held with Santander Bank.

Fidgen launched legal action against Lydda Capital over the transaction on September 1, 2021, alleging that the latter acted “negligently” in failing to verify “the true identity” of the person sending the instructions. It also claimed that the fraud resulted from the latter failing to exercise “the skill and care expected of a reasonable broker/dealer”.

Lydda Capital, though, in rejecting these allegations denied that it had breached any obligations to Fidgen, the trust and Mr Piani. It argued that it had “no reasonable means” to suspect the e-mail and instructions were bogus, and instead blamed Fidgen’s failure to “safeguard its communications network” from cyber criminals.

“On July 18, 2020, a second but unsuccessful effort was made to transfer $1m by the unauthorised third party using the fictitious e-mail address,” Sir Ian added. “The fraud was reported to the authorities but efforts to recover the funds were unsuccessful.

“On February 11, 2021, Lydda transferred to Fidgen $500,000. Fidgen claims in this action the balance of $1m which it says remains outstanding. Lydda contends that the payment of $500,000 was not an acknowledgment of any sums due and owing to Mr Piani and/or to Fidgen but was an inter-related payment.”

Ms Terrell, managing director for Fidgen Corporate & Fiduciary Services (Bahamas), in her evidence alleged that Lydda did not follow the agreed “two-fold procedure” that involved the latter calling back to check the instructions and details for outgoing fund transfers were correct.

She claimed that when she checked on the status of the July 13, 2020, transfer, she was informed by Alicia Curry, client relationship manager at Lydda Capital, that the necessary instructions had already been sent to the bank. “This was done by the defendant without reference to the claimant, and in breach of its statutory, contractual and fiduciary duty to the claimant,” Ms Terrell asserted.

Prescott Adderley, Lydda Capital’s compliance officer, asserted that the broker/dealer had “performed a call back” to confirm the transfer instructions and that it had “no reasonable basis to suspect or conclude” that these and the $1.5m transfer were being manipulated by a fraudster. 

“In the circumstances, Lydda Capital performed its obligations under the account opening agreements,” he added. “At no time did Lydda Capital agree or covenant to protect the plaintiff’s account from fraud. Lydda Capital’s obligation was to manage the funds in a prudent fashion.”

Under cross-examination and re-examination, Mr Adderley said Ms Curry had complied with the “call back” obligation by obtaining confirmation for the transaction on What’s App. He denied that she should have identified the difference between the email address of Mr Piani, and that of the fraudsters, and thus detected and stopped the scam.

Fidgen, though, challenged the assertion that a “call back” was made. Describing this as a breach of contract, it added that the failure to spot the bogus e-mail amounted to negligence. And it also disputed Lydda Capital’s assertion that a Letter of Indemnity protected the latter from liability by waiving all claims related to instructions sent electronically, as the fraud was perpetrated by a third-party not covered by such protection.

Sir Ian, in his verdict, agreed there was “a two-fold procedure” for verifying financial transactions and that Lydda Capital was obliged to perform a “call back” to check. He added that this was not a contractual duty, but based on the parties’ prior dealings and financial services industry practices, and there was “sufficient information” to alert the Bahamian broker/dealer that something was amiss.

This included the fact the transfer instructions did not come from Mr Ferraresi, the only authorised signatory, and that the two e-mails - those of Mr Piani and the fraudster - were markedly different. As a result, Lydda Capital should not have executed the transfer “as they ought to have been put on inquiry that something was “untoward”.

The Chief Justice also found there was no evidence provided to support Lydda Capital’s assertion that a “call back” took place. “I find that Lydda was obligated to conduct a call back and did not do so,” Sir Ian said, also dismissing the broker/dealer’s bid to hide behind the letter of indemnity.

However, the Chief Justice added: “I accept that Fidgen is not blameless as, with vigilance, it, too, could have uncovered the fraud... It appears that it was in correspondence with Terrell that the bogus e-mail first emerges on July 13, 2020, when Terrell forwards questions from Lydda to it. Fidgen also does not seek to confirm the validity of the new transfer instructions attached to the bogus e-mail.

“While Mr Piani may not have been party to the e-mail, other agents of Fidgen, including Mr Ferraresi, were copied on the e-mail and ought to also have been alerted that it was fraudulent, and therefore could have avoided the loss ultimately sustained.”

As a result, Sir Ian found there was “some contributory negligence on the part of Fidgen”, although it was minimal compared to Lydda Capital’s, and thus cut the former’s damages award by 15 percent from the claimed $1m.