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Note: Anthony Luu contacted California resident, Michael Chen Kang Huang (Investor), claiming that he and Peter Lit Ma (Defendant) had been able to make considerable profit from investing funds in issuing Standby LCs. Defendant represented himself as an employee for North America Consultants & Management Group where he claimed to arrange the issuance of standby LCs. He described an investment opportunity in a Standby LC for US$2,500,000 purportedly to be issued by Deutsche Bank in New York to finance the construction of a Guangzhou, China pharmaceutical laboratory. Defendant claimed that a return of 23.5% of the amount invested could be realized. Investor paid Defendant US$970,000 from personal funds and those of his wholly-owned business.

After months of excuses and explanations, Investor investigated Defendant's claims and discovered that numerous representations made by Defendant were not true. In particular it was discovered that banks that were to play a part, First National of America Banc, North-West Private Bank, did not exist or had had their licenses revoked at the time and that a Cypriot company that was to play an important role had been deleted from the Cyprus Companies Registry at that time.

Investor commenced an action to recover his funds suing Defendant for false representation to induce him to pay money. Defendant claimed that "all of these very serious allegations, even if true, cannot and should not be laid at the Defendant's door. He is an innocent investor just like the Investor and their team of investors."

A Mareva Injunction was granted against Defendant, securing "a considerable portion of the total sum of US$970,000 in the Defendant's Hang Seng Bank account" by the High Court of the Hong Kong Special Administrative Region, Sakhrani, J. Later, in two matters before the same court, Carlson, J. refused Defendant's request to discharge the Mareva Injunction. Defendant applied to discharge the Mareva Injunction or require the investor to post security, Carlson, J. denied the application and did not require security.

The court concluded that it was "highly likely" that Investor would succeed on the claim, noting that the case was, "very well documented and it demonstrates 'dodgy dealing' of the lowest possible order (if I may be permitted to express it [in] this way) in which the Defendant and Mr. Luu are very closely involved. The Defendant will have much to explain at any trial of this action in showing that he is not in the know so far as the purported use of the struck-off banks and a de-registered Cypriot company are concerned. And even if he can provide a clean bill of health for himself, he [will] find himself in an almost unanswerable position when it comes to resisting the action on the basis of a claim for money had and received."

[JEB/tjb]

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