Scot Young divorce case: Court hears of 'sham' property deal 'Project Moscow'

 

Investigations Reporter

A corporate lawyer at the centre of Britain’s most high-profile divorce was accused of creating a “sham” property deal that allowed bankrupt tycoon Scot Young to hide his assets in offshore tax havens, the High Court heard on Monday.

Stephen Jones, from Jirehouse Capital, was questioned over his role in “Project Moscow”, a deal brokered by Mr Young, a real estate and telecoms magnate who claims to have lost a vast fortune just as his marriage collapsed in 2006.

The £100 million Russian property development linked to Mr Jones is alleged to have imploded causing Mr Young’s financial demise, but his estranged wife Michelle has told the court that he still beneficially owns up to half the shares.

The court heard that Mr Jones had a “conflict of interest” after acting for both Mr Young and for creditors that resulted from the deal, which included Ekaterina Berezovskaya, the daughter of deceased Russian oligarch Boris Berezovsky.

Documents were read out in court showing Mr Young signed over “power of attorney” to control interests held by the tycoon in offshore trusts in March 2006. Mr Jones said he was acting on “instructions from the creditors”.

The court also heard that £6 million from “Project Moscow” had been siphoned off into an offshore entity called the “SY Refinance Foundation” controlled by Mr Jones.

The lawyer, who denied separate allegations that he forged documents during another related legal dispute, told Mr Justice Moor this was used to pay off other creditors unrelated to Project Moscow.

The court has previously heard how several creditors to whom Mr Young owes millions of pounds as a result of Project Moscow are still funding his lifestyle.

The High Court heard companies and entities owned by Jonathan Brown, a smoked salmon tycoon who Mr Young claims he owes £3.3 million, and Stephen Kay have recently sent money to the 51-year-old through third parties.

Mr Jones had previously given evidence to the High Court in 2011 that Mr Young had lost “between ten and fifteen million pounds in cash terms” on Project Moscow. But on Monday, he agreed with Mr Young’s latest submission last week, that the businessman never lost any money on the deal at all. Mr Jones said: “He personally didn’t lose any money.”

Despite repeatedly claiming he never acted for Mr Young, the court heard the lawyer wrote a £2.9 million promissory note in April 2007 on behalf of Mr Young to his creditor, Ms Berezovskaya.

Rex Howling QC, acting for Ms Young, said: “This isn’t a debt owing at all and this is just a sham, isn’t it?”

Mr Jones replied: “Why would that be the case?” Mr Howling said: “Because Mr Young had the money all along.” Mr Jones denied the allegation.

Mr Justice Moor said he was “very troubled” by evidence that Jirehouse had assigned debts to itself, and had become a creditor to Mr Young’s hotly-disputed bankruptcy in 2010.

He said: “I just don’t understand it I’m afraid. I am really troubled by this and I don’t understand it. Why are you allowed to assign money to yourself? What has it got to do with you? It either goes to the creditors or back to Mr Young?”

Mr Jones replied: “It’s not exactly ours – we would be holding it on someone’s behalf.”

Scot Young owes his wife nearly £1 million in maintenance and £1.28 million in unpaid tax. Earlier this year, he was jailed for three months for repeatedly failing to disclose the mysterious disappearance of his extraordinary wealth.

The court also heard of an email dated September 2006, six months after Mr Young claims to have lost all his money.

Mr Jones emailed the penniless tycoon to say he was “making progress” on a deal but was “£650,000 short”. He added: “I cannot do this unless you sell me a villa now for, say, US$2.25 million (30 per cent discount to first phase market price) on spec to one of your mates. It has to make real commercial sense for me to do this. Over to you, buddy!”

Mr Jones denied it was Mr Young’s villa and said he was acting on behalf of the businessman’s creditors who “were trying to get Scot to use his great sale skills”.

Mr Howling QC said: “Isn’t the common-sense English interpretation of this is that he was going to sell you a villa, and that he owned multiple villas?”

Mr Jones replied: “No, it was written in the context of seeking a creditor settlement.”

The court also heard that the lawyer was present in a central London hotel room in 2008 when Mr Young said he had paid one of his creditors, Harvey Lawrence, up to £4 million in cash.

Mr Jones, who repeatedly refused to answer questions citing legal professional privilege, said: “I don’t know anything about that. I can’t recall that comment being made.”

The case continues.

Start your day with The Independent, sign up for daily news emails
PROMOTED VIDEO
Have you tried new the Independent Digital Edition apps?
ebooks
ebooksA special investigation by Andy McSmith
News
Starting the day with a three-egg omelette could make people more charitable, according to new research
science
News
Top Gun actor Val Kilmer lost his small claims court battle in Van Nuys with the landlord of his Malibu mansion to get back his deposit after wallpapering over the kitchen cabinets
people
News
Comedian Ted Robbins collapsed on stage during a performance of Phoenix Nights Live at Manchester Arena (Rex)
people
News
The actress Geraldine McEwan was perhaps best known for playing Agatha Christie's detective, Miss Marple (Rex)
peopleShe won a Bafta in 1991 for her role in Oranges Are Not The Only Fruit
News
newsPatrick Cockburn was able to update his agenda-setting 'The Rise of Islamic State' while under attack in Baghdad
News
Robert Fraser, aka Groovy Bob
peopleA new show honours Robert Fraser, one of the era's forgotten players
Life and Style
Torsten Sherwood's Noook is a simple construction toy for creating mini-architecture
tech
Sport
David Silva celebrates with Sergio Aguero after equalising against Chelsea
footballChelsea 1 Manchester City 1
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs General

Recruitment Genius: Online Media Sales Trainee

£15000 - £30000 per annum: Recruitment Genius: Now our rapidly expanding and A...

Recruitment Genius: Public House Manager / Management Couples

£15000 - £20000 per annum: Recruitment Genius: Are you passionate about great ...

Recruitment Genius: Production Planner

£20000 - £30000 per annum: Recruitment Genius: This fast growing reinforcing s...

Recruitment Genius: General Factory Operatives

£18000 - £35000 per annum: Recruitment Genius: This fast growing reinforcing s...

Day In a Page

As in 1942, Germany must show restraint over Greece

As in 1942, Germany must show restraint over Greece

Mussolini tried to warn his ally of the danger of bringing the country to its knees. So should we, says Patrick Cockburn
Britain's widening poverty gap should be causing outrage at the start of the election campaign

The short stroll that should be our walk of shame

Courting the global elite has failed to benefit Britain, as the vast disparity in wealth on display in the capital shows
Homeless Veterans appeal: The rise of the working poor: when having a job cannot prevent poverty

Homeless Veterans appeal

The rise of the working poor: when having a job cannot prevent poverty
Prince Charles the saviour of the nation? A new book highlights concerns about how political he will be when he eventually becomes king

Prince Charles the saviour of the nation?

A new book highlights concerns about how political he will be when he eventually becomes king
How books can defeat Isis: Patrick Cockburn was able to update his agenda-setting 'The Rise of Islamic State' while under attack in Baghdad

How books can defeat Isis

Patrick Cockburn was able to update his agenda-setting 'The Rise of Islamic State' while under attack in Baghdad
Judith Hackitt: The myths of elf 'n' safety

Judith Hackitt: The myths of elf 'n' safety

She may be in charge of minimising our risks of injury, but the chair of the Health and Safety Executive still wants children to be able to hurt themselves
The open loathing between Barack Obama and Benjamin Netanyahu just got worse

The open loathing between Obama and Netanyahu just got worse

The Israeli PM's relationship with the Obama has always been chilly, but going over the President's head on Iran will do him no favours, says Rupert Cornwell
French chefs get 'le huff' as nation slips down global cuisine rankings

French chefs get 'le huff' as nation slips down global cuisine rankings

Fury at British best restaurants survey sees French magazine produce a rival list
Star choreographer Matthew Bourne gives young carers a chance to perform at Sadler's Wells

Young carers to make dance debut

What happened when superstar choreographer Matthew Bourne encouraged 27 teenage carers to think about themselves for once?
Design Council's 70th anniversary: Four of the most intriguing prototypes from Ones to Watch

Design Council's 70th anniversary

Four of the most intriguing prototypes from Ones to Watch
Dame Harriet Walter: The actress on learning what it is to age, plastic surgery, and her unease at being honoured by the establishment

Dame Harriet Walter interview

The actress on learning what it is to age, plastic surgery, and her unease at being honoured by the establishment
Art should not be a slave to the ideas driving it

Art should not be a slave to the ideas driving it

Critics of Tom Stoppard's new play seem to agree that cerebral can never trump character, says DJ Taylor
Bill Granger recipes: Our chef's winter salads will make you feel energised through February

Bill Granger's winter salads

Salads aren't just a bit on the side, says our chef - their crunch, colour and natural goodness are perfect for a midwinter pick-me-up
England vs Wales: Cool head George Ford ready to put out dragon fire

George Ford: Cool head ready to put out dragon fire

No 10’s calmness under pressure will be key for England in Cardiff
Michael Calvin: Time for Old Firm to put aside bigotry and forge new links

Michael Calvin's Last Word

Time for Old Firm to put aside bigotry and forge new links