'It's political smear' – Groupe Nduom on $63m fraud, money laundering suit

Dr Papa Kwesi Nduom and his Groupe Nduom are fighting off money laundering and fraud claims made against them by the US-based Birim Group.

In a motion filed on 5 April 2021 for the dismissal of the case in a court in Illinois, United States, Groupe Nduom said the aspersions and innuendos contained in the suit were a calculated political smear.

The equity fund and securities investment company sued the former flag bearer of the Progressive People’s Party and Groupe Nduom, which mothers about 60 subsidiary companies, accusing them of laundering a total of $63,000,000.

“The Nduom family defendants, by and through their ownership, control and use of defendants GN Bank, Gold Coast Fund Management and over 60 under-capitalised inter-related companies, collected several million dollars of depositors’ savings, investment contributions and insurance premiums and, in violation of U.S. and Ghana laws, illegally laundered approximately $63,000,000 of depositors’ funds through its Virginia-based sham ‘procurement and consulting service’ company, International Business Solutions,” portions of the writ read.

The writ, which averred that Dr Nduom’s operations were one that would “put Bernie Maddoff to shame”, said the alleged “criminal scheme” involved “international money wire system – of inflated, over-invoiced and above-market rate fees disguised as payment for ‘management service’”.

Named as defendants are Dr Nduom, his wife Yvonne Nduom, and their children Nana Kweku Nduom, Edjah Nduom and Nana Aba Nduom.

“Plaintiff further alleges that [the] Nduom family defendants dominate and control the Corporate Defendants and the related 60 or more companies, and in so doing, these entities commingle their funds and other assets and fail to segregate the funds of the separate entities. There is also the unauthorised diversion of corporate funds or assets to non-corporate uses”.

The plaintiff, Birim Group LLC also claimed that Groupe Nduom engaged in these illegalities for the “sole personal financial benefit of the Nduom family” and used his businesses as a conduit to “facilitate the unlawful acts”.

The plaintiff claimed “a substantial portion” of GN Bank loans were “illegally made to Nduom-related entities without the benefit of appropriate risk assessments, managements or determinants”.

“Groupe Nduom-GH (GN-GH) is wholly-owned, dominated and controlled by Nduom and his family for the sole personal benefit of Nduom. Having failed to meet its regulator’s qualifying criteria, defendant GN-GH was initially downgraded and reclassified from a commercial banking house to a Savings and Loans Company”.

“On or about August 16, 2019, its licence was formally revoked by its regulator, the central bank of Ghana”.'

However, the Nduoms, in their response to the suit in court, averred that Birim Group, LLC’s complaint amounted to “misusing” the court “to smear a Ghanaian entrepreneur” and politician, arguing: “Birim Group itself is a murky LLC, whose members the complaint does not identify”.

“It does not claim to have had any dealings with Dr Nduom or the other defendants”, the Nduoms pointed out.

“Rather”, they noted, “Birim Group claims to have paid for the claims of two Ghanaian citizens, Mavis Amanpene Sekyere and Nana Kwame Twum Barimah (the “Assignors”), who have what, at most, amounts to breach-of-contract claims under Ghanaian law against Ghanaian bank GN Bank and Ghanaian investment firm Gold Coast Fund Management (“GCFM”) (collectively, the “Ghanaian Defendants”)”.

The counsel for Groupe Nduom further noted that “Birim Group plainly did not buy these claims to recover Ghanaian deposits but rather, for a pretext to malign Dr Nduom, his family and anyone who does business with him”.

They said: “In lieu of factual allegations as to each defendant, the complaint alleges that all corporate forms should be disregarded and each defendant should be deemed an alter ego, not just of each other defendant, but also of each employee of each corporate defendant, including the Ghanaian Defendants. No facts are alleged to support this extraordinary conclusion. Instead, the complaint.”

Birim Group LLC, acting as assignors, are praying the court for treble compensatory damages plus consequential, exemplary and punitive damages in an amount to be determined by trial.

Further, they want the court to order disgorgement of all profits, benefits and other compensation obtained by defendants including all ill-gotten gains from their illegal and criminal activities.

Groupe Nduom, however, averred that the complainant “ultimately fails against the US defendant because no US defendant is alleged to have done anything to cause either the Assignor harm – and the focus must be on the Assignors.”

“Birim Group had no business with the defendant but says it paid assignors’ claims so it could file this case.”

They believe it is “a political smear and not a legitimate use of the court to resolve a legal dispute” since, according to them, the Assignors losses are $52,219 and $30,000, respectively.

“The complaint, in this case, is an object lesson in why Rule 9(b) exists and applies to RICO and fraud-based claims. Birim Group bought and paid for the right to bring this complaint, including on behalf of an Assignor, who is pursuing the same substantive claim where it belongs — in a Ghanaian court against a Ghanaian defendant.

“The Assignors losses are $52,219 and $30,000, respectively. So, why did Birim Group buy the claims and file such an overblown complaint, invoking RICO, multiple frauds and tort theories? The answer was stated at the outset: because this case is a political smear and not a legitimate use of the court to resolve a legal dispute.”