Michael Carsley, a U.S. fund manager who claims he was owed A$28 million ($25 million) when an Australian horse betting club collapsed in December, plans to drop a lawsuit aimed at recovering his losses, a court was told.
New South Wales Supreme Court Registrar Andrew Musgrave said at a hearing in Sydney today that he was advised yesterday by e-mail the proceedings filed by Carsley’s Aloga Ltd. would be discontinued. Simon Keizer, a lawyer for an accounting firm which received a subpoena to turn over financial records, said he was told the same thing.
The wagering club known as Edge, run by William Vlahos, a former Australian horse owner who claimed to have had returns of 70 percent annually, collapsed after Carsley sued in state court in Sydney in November. At the time Vlahos said he had A$200 million of investors’ money in his bank account, according to Carsley’s court filings. Vlahos filed for bankruptcy on Dec. 16 and now claims he has no money.
Since the club’s collapse, Victoria state police said Vlahos was beat up, his Mazda truck was set on fire and blown up, and that they’ve begun criminal investigations into the assault and possible fraud. The truck apparently contained Vlahos’s computer that had the club’s financial details on its drive, Robert Dick, a lawyer representing Aloga, said at a Dec. 12 court hearing.
“When he gets asked to produce it, it gets blown up. Analogies about homework come to mind,” Dick said at the hearing. “We treat with utmost suspicion anything that Mr. Vlahos says.”
Victoria police said today their investigation is continuing, with 30 syndicates having come forward. A police spokeswoman, who asked not to be identified, said she couldn’t elaborate on the syndicates and whether they filed complaints or were owed money.
Vlahos, based outside of Melbourne, didn’t reply to requests for comment sent to two of his e-mail addresses cited in court documents. He told court officials on Dec. 19 that he’s broke and worried about his safety and so couldn’t attend a court hearing that day in Sydney, according to Justice Michael Slattery.
Lauren White, a spokeswoman at DLA Piper in Sydney, said she wasn’t in a position to comment. DLA Piper represents Aloga. Carsley didn’t respond to two e-mails seeking comment.
Carsley said in his November court filing that he’s been involved in the funds management industry since 1994, working for Red Kite Management and Advisors Ltd. from 2007 to 2010, and then establishing Bluewater Global Ltd. He said he’s also had dealings with investors who participate in U.S. horse-racing syndicates.
“I am familiar with quantitative analysis undertaken in betting in the horse industry,” he said in the filing, while expressing concern about the Australian club. “It struck me as unusual that investors would pay funds directly to Mr. Vlahos personally and I had concerns that without proper management in place, including at an operational level, the club would not be sustainable in the long term.”
Claims of large returns from betting clubs have come under scrutiny elsewhere, with the Brisbane-based Sunday Mail newspaper reporting in October that the England-based Sports Trading Club falsely attributed promotion comments to a deceased Princeton University economist.
Carsley, on behalf of himself and his associates, said in the court filing he gave Vlahos A$3.83 million from 2009 to 2013.
He said he received quarterly statements showing returns, which ranged from a 0.26 percent loss in the fourth quarter of 2011 to a 45 percent gain in the fourth quarter of 2012.
Aloga had 21 shareholders including Carsley and Bluewater. As of Nov. 26, Aloga was owed A$27.8 million, as costs and interest continue to accrue, Carsley said in the court document.
The case is Aloga Ltd. v. William Vlahos. 2013/357628. Supreme Court of New South Wales (Sydney).