Case Background
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Entity: GreyMountain Management Ltd (GMM)
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Activity Period: 2014–2017
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Nature of Case: Binary options trading scheme
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Estimated Investor Losses: €150–250 million
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Court: High Court of Ireland
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Key Finding: David Cartu and Jonathan Cartu acted as informal controllers (shadow directors) of the company.
Court’s Key Conclusions
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Financial Mismanagement
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Substantial sums removed from GMM accounts.
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Only €600,000 remained available for obligations.
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Liability Assignment
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David Cartu and Jonathan Cartu held personally responsible for losses.
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Irish directors Ryan Coates and Liam Grainger also found liable due to insufficient oversight.
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Corporate Veil
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The Court ruled that the traditional protection for directors does not apply in this case.
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This is considered a precedent in Irish law.
Roles of Key Individuals
|
Name |
Role |
Compensation |
Court Finding |
|
David Cartu |
Shadow director, operational control |
Not specified |
Personally liable for investor losses |
|
Jonathan Cartu |
Shadow director, operational control |
Not specified |
Personally liable for investor losses |
|
Ryan Coates |
Student, appointed director by his mother |
€1,000/month |
No active role, still liable for dereliction of duty |
|
Liam Grainger |
Director, signed banking agreements |
€10,000/month |
Limited activity, liable for lack of supervision |
Timeline of Events
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2014 – GMM begins operations under Cartu Brothers’ control.
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2014–2017 – Approx. €150–250 million collected from investors.
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2017 – Scheme collapses; investor claims initiated.
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Powers v. GreyMountain Management Ltd filed, involving 35 investors with combined claims of $4+ million.
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High Court Judgment – Cartu Brothers declared shadow directors; Coates and Grainger found jointly liable.
Directors’ Defense and Court Response
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Defense Argument: Coates and Grainger claimed they were “directors in name only.”
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Court Response: The Court determined they failed to obtain adequate knowledge of business operations and ceded control to others.
Broader Implications
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Directors must maintain active knowledge and oversight of corporate activities.
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Liability may extend to passive directors if duties are neglected.
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D&O Insurance can provide coverage, but exclusions apply in proven fraud cases.
Conclusion
The GreyMountain Management ruling represents a significant step in Irish jurisprudence by holding both shadow and formal directors personally accountable for investor losses. It illustrates that failure to meet directorial obligations may result in liability, even without direct involvement in fraudulent activities.
Source: Scam-Or Project, lexology.com