KPMG and Citco Fund Services in the Netherlands Antilles have been involved into litigation regarding a failed BVI-registered hedge fund, Dobbins Offshore Ltd.
On July 11, 2007, nearly 13 months after KPMG and Citco were dismissed on jurisdictional grounds from a previous action at the U.S. District Court for the Northern District of Texas, a new lawsuit was filed against them at the same court.
Back to history. On March 23, 2004 the Securities and Exchange Comission filed an action (Civ. Action No. 3-04-CV-605(H)) in the United States District Court for the Northern District of Texas and was granted emergency relief against J. Robert Dobbins, investment advisers under his control and hedge funds, Dobbins Partners, L.P. and Dobbins Offshore, Ltd. registered in British Virgin Islands on May 1997.
The SEC alleged that, since at least January 1, 2000, Dobbins raised at least $50 million from more than 50 investors from around the world. It was said that Dobbins made false statements to Dobbins Hedge Funds investors concerning the funds’ performance, especially those concerning thinly-traded and non-publicly traded securities.
In 2005 the group of plaintiffs was: Able Fund, Able Euro Fund, Bank of Bermuda Guernsey, Banque Cantonale Vaudoise, Banque de Luxembourg, Banque Privee Edmond de Rothschild Limited, Blazer Calpital Inc., Credit Suisse Private Banking, Ferrier Lullin & Cie S.A., Heracles, The Kerrosen Global Fund Ltd., Pictet & Cie Banquiers, Db Lux Special Opportunities Investing, KGH Neptune, KGH Saturne, Martinex Ltd, Societe Europeene de Banque, Somers Dublin Limited and UBS SA sued J. Robert Dobbins, BVI hedge fund Dobbins Offshore Ltd, as well as KPMG and Citco Fund Services (Curacao) N.V.
Most plaintiffs were institutional investors with wide spectrum starting from French and Irish companies to Swiss, Luxembourg, French and Cayman Islands funds and investment managers.
Plaintiffs stated that they have invested over 20 million USD in BVI hedge fund Dobbins Offshore Ltd and from January 2000 to March 2004 J. Robert Dobbins who managed the BVI hedge fund perpetrated a valuation fraud on plaintiffs. He systematically overvalued the Fund’s portfolio consisting of thinly traded and non-publicly traded securities.
KPMG as auditor of the fund and Citco Fund Services (Curacao) N.V. as BVI fund’s administrator were sued for the reckless and negligent conduct when presenting Monthly Net Assets Value statements and annual audited reports.
In 2005, KPMG and Citco tried to dismiss the complaints filed by Dobbin’s investors. They seeked to dismiss the complaints on the reason that the court lacks personal jurisdiction over them. Citco further argued that advocates have not stated valid claims for fraud or negligence.
Now, after 1 year timeout the KPMG and Citco Fund Services (Curaçao) N.V. should defend their money and reputation in Dobbins Offshore Ltd hedge fund case again. By the way, the hedge fund with the name Dobbins Offshore Ltd is still listed on BVI FSC website under Professional Funds section.