Alleged Ponzi scheme funds frozen wrongfully, court rules
The ponzi scheme has been under investigation for almost a year now and no one has been charged in the case so far.
By
Aman Haleem
Civil Court on Tuesday ruled that Bank of Maldives (BML) had wrongfully seized the account of King's Capital Holdings, which is alleged to have run a Ponzi scheme by extorting huge sums of money from people in the name of forex trading.
The bank deactivated King's Capital's account on the ground that it was illegal for the company to do online trading business without obtaining a licence as an investment fund. The bank temporarily withdrew the account after 14 days.
Kings told the court that the bank had acted in violation of the agreement between the two parties. The Kings company requested the court:
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To declare that the account was deactivated illegally without popular legal reason or court order
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To declare that online trading is not required to be done by obtaining permission under the Financial Securities Act
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To declare that the company was reported wrongfully under the Prevention of Money Laundering and Terror Financing Act
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To declare that a suit can be filed to recover damages caused due to deactivation of the account
In court, the bank denied the entire charge. The bank sought that Kings charges be declared as "baseless". The court, however, weighed heavily on the Kings.
Civil Court Judge Mariyam Waheed noted in her ruling that accounts can be frozen under the Prevention of Money Laundering and Terrorism Financing Act only if there is a court order. Since no such order has been obtained in the present case, the bank cannot deactivate the company’s account, the court said.
"There is no legal basis for temporary deactivation of the [bank account of] of King's Capital by the Bank of Maldives Plc without a court order and withholding the money in the account," the court said.
The judge also ruled that the company could seek compensation for breach of contract from the bank. The court, however, ruled that there was no need for the trial court to decide on the other two objections filed by kings.
Police recently raided Alhan's office and residence. Without giving much details about the operation following a court order, the police confirmed that only a search was conducted in connection with an ongoing case.
The alleged Ponzi scheme has been under investigation for almost a year now and no one has been charged in the case so far.
