Men induced dozens to invest over €5m in ‘Ponzi scheme’

Two men ran a “Ponzi scheme” in which they induced scores of people to invest more than €5 million in a forestry investment scam, a court has heard.

Garret Hevey (43) and David Peile (42) were involved in Arden Forestry Management (Arden FM) between January 2014 and mid-2016 during which 143 foreign investors were induced to deposit some €5.5 million with the company.

Det Insp Catharina Gunne told Dublin Circuit Criminal Court the investments would have required around 858 acres of land to be serviced but the company only owned 30.2 acres when the fraud came to light.

The court heard that in company documentation sent to investors, Hevey used the pseudonym James Baker and Peile went by David Marshall.

Hevey was in charge while Peile was second in charge and there were a number of others employed to attract investors. Accounts showed that out of a sum of €501,332 transferred to Hevey, €281,613 was spent on Google Ads.

Gardaí­ began investigating the company in June 2016 when investor Kari Wahlstrom discovered that Arden was not the registered owner of the land he had invested in.

Mr Wahlstrom, a Finnish national, had invested €52,000 in February 2016 and in May he contacted the company and asked to visit what had been identified as his investment. He also asked to be taken to the Land Registry.

On May 17th, 2016, Peile emailed Hevey saying “shit, he wants to visit the Land Registry, how do we get over that?”

Det Insp Gunne told the court the victim came to Ireland and met Hevey and Peile. He was taken to a forest in Frenchpark, Co Roscommon and was happy with it but was told there was no time to go to the Land Registry.

‘Dismayed’

On returning to his home in Greece, Mr Wahlstrom carried out his own inquiries with the Land Registry and was “dismayed” to find the land was registered to someone else.

Hevey, who set up the company in November 2013, pleaded guilty to dishonestly inducing investment in it between January 1st, 2014 and June 13th, 2016. Hevey, of Brookdene, Shankill, Dublin, also pleaded guilty to three charges of inducing individuals by deception to make payments on dates between September 2015 and May 2016.

The court heard that Peile, of Avondale Court, Ballyguile, Co Wicklow, joined the company in 2015. He pleaded guilty to dishonestly inducing investment in the firm and pleaded guilty to two charges of of inducing individuals by deception to make payments on dates between September 2015 and May 2016.

Insp Gunne told Dominic McGinn SC, prosecuting, that investors received a welcome pack which promised returns on their investment on the basis of income received from government grants, thinning of the forest and the potential future sale of the forest.

Not eligible

Det Insp Gunn said there was only 32 acres of forest that was purchased for €61,000 and the company was not eligible to a grant as the trees were more than 20-years-old. She said investors received a total of €271,000 in pay outs and when the company account was ultimately frozen by gardaí­ as part of their investigation, a total of €1.98 million remained.

She said €1.5 million was transferred from Arden to a bank account in Dubai of which both defendants were beneficiaries.

After a freezing order was placed on the Arden FM Ltd account, Peile opened up an account with Barclays Bank. A further €817,000 was lodged to it by 35 investors.

Det Insp Gunn disagreed with Sean Guerin SC, defending Hevey, that she was wrong about describing the offence as a Ponzi scheme.

Judge Melanie Greally adjourned the case to Wednesday for mention when she will set a date to hear a plea in mitigation on behalf of the two accused. She remanded both men on bail.