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Bank Gets Bombed on Wine Scam Scandal

Barclays bank has been sucked into a legal battle brought by hundreds of Americans who claim they were defrauded in a $20m investment scam.

The High Court in London has ordered the bank to pay compensation to investors after some of the allegedly stolen money passed through a Barclays account in the UK.

Barclays denies it is to blame and is appealing the decision.

The case relates to an investment scheme marketed to US citizens, who were invited by Cayman Islands-based Architects of Wine (AOW) to subscribe to a fund investing in the international wine market.

The scheme was not licensed by US financial regulators and investors claim they were defrauded by AOW, which allegedly funnelled their money into foreign accounts.

The fund's Cayman operations were shut down after the US authorities issued an alert about its activities in 2004. But AOW continued to use its Barclays Bank account to transfer investors' money.

That account has since been emptied and investors have accused Barclays of negligent conduct for allowing the alleged fraudsters to use its services despite the US regulatory action.

At the High Court, Mr Justice Steel found in favour of the investors. How much Barclays will have to pay in compensation has not yet been determined, but investors are pressing for $1.3m, which represents the amount of money that AOW channelled through its Barclays account.

No criminal proceedings have yet been brought against AOW, or its apparent owner, an Australian citizen called Robert Middlemiss. But in his judgment Steel said the 'inevitable inference' was that investors had been treated 'fraudulently'.

Seamus Andrew, lawyer for the investors, said the court victory would help pay for legal efforts to recover funds elsewhere in the world.

Barclays said it was appealing but declined to comment further.

The Observer - UK

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