The Citizen (KZN)
Law firm ordered to pay victim
Ten years after a Durban attorney’s suicide revealed he had been running a multimillion-rand ponzi scheme, the law firm he was running it from has been ordered to pay up for the crime.
KwaZulu-Natal High Court Judge Jerome Mnguni yesterday found Garlicke and Bousfield liable for R7 million Durban businessman Merlin Stols ended up losing to what was originally punted as a “bridging finance scheme” by the firm’s former executive consultant, Colin Cowan.
And Mnguni’s findings are expected to open the floodgates for other victims to lodge claims against the firm, too, with the amount they were collectively left out of pocket said to be about R100 million.
Cowan shot himself in 2010, leaving a note effectively admitting to his crimes and absolving the firm of any responsibility.
In court, the firm claimed too, to have been duped by Cowan.
But Stols put up letters of undertaking bearing the Garlicke and Bousfield letterhead.
And Mnguni yesterday said this meant their contents constituted undertakings “given by Garlicke and Bousfield”.
“Garlicke and Bousfield cannot in law deny the binding effect of the letters of undertaking issued,” he said.
He found Stols invested with Cowan “bona fide and on the basis that he was contracting with Garlicke and Bousfield”.
“This was not a case where the investors were in equal guilt,” Mnguni said.
The judge was scathing of some of the firm’s witnesses, describing director David Ramsay as having been “entirely unsatisfactory”.
Of Stols, meanwhile, Mnguni said he was “a very good witness, who did not wilt despite being subjected to intense and penetrating cross-examination”.
The judge ordered Garlicke and Bousfield to pay Stols back the R7 million he had lost to the scheme – with interest. He also slapped the firm with the costs of the suit.
Garlicke and Bousfield, meanwhile, said in a statement yesterday that it was “in the process of considering the judgment of the high court with a view to appealing this decision”.