Four family members involved in a medical equipment distribution company that went into liquidation following what a judge described as ‘gross and long-running fraud’ have been disqualified from serving as administrator.
Judge Senan Allen imposed director disqualifications on the four people involved in Dublin-based Eurosurgical Ltd.
He imposed a 15-year disqualification on Eurosurgical Ltd majority shareholder Ray Kane, a 14-year-and-three-month ban on his sons, Alan and Gary Kane, and a nine-year-and-nine-month ban on their sister, Alison Kane.
Alan had been a director until 2015, while his two siblings were directors and minority shareholders.
The court had been asked to consider whether certain disqualification periods, agreed as part of a settlement between the four and liquidator George Maloney, were sufficient.
Judge Allen also entered judgment against the four for €18 million subject to a stay of certain conditions.
A July 2015 Prime Time Investigates program on RTÉ made revelations about the company’s business practices, including that senior hospital staff the company dealt with received expensive gifts and vacations while Eurosurgical received commercially sensitive information about the company’s competitors. Around the same time, it became known that the father, Ray Kane, had fraudulently embezzled millions of dollars from the company’s funds.
Judge Allen said Mr Maloney was appointed liquidator of Eurosurgical in May 2016 at the request of the three Kane children. The liquidator then sought disqualification orders and orders making them personally liable for the company’s debts for failing to keep proper accounts.
In June 2016, Ray Kane was declared bankrupt. He denied the claims of the liquidator against him.
The judge said Gary Kane downplayed his role and ability to act as a director and “blamed” his father, Ray.
He denied liability for fraud, although he admitted failure to keep proper books and records. He appealed to the court not to find him personally liable for the company’s debts, neither he nor his brother or sister, or to issue a disqualification order against one of them. ‘between them.
Ray Kane flatly rejected his children’s testimony as to the extent of their involvement in the offending cases, the judge heard.
Following talks with the liquidator, an agreement was reached last November to settle all issues on terms, including certain disqualification orders against all or for terms that the court may decide. The proposed periods of disqualification were as follows: 15 years or more against the father, 12 years or more against the two sons and not less than seven against their sister.
They have also agreed to accept judgments of €18 million against them subject to a stay of certain conditions.
Judge Allen said that among a number of admitted facts uncovered by the liquidator’s investigation, some $57,000 (€41,000) which was recorded as having been paid by the company for supplies, was in fact paid for medical treatment in the United States for a member. of Alan Kane’s family.
The company also claimed to transfer substantially all of its assets to a company called Gemini Surgical Innovations Limited for what is now known to be materially undervalued and while it knew a $3.4 million tax claim euros was about to be lifted against the company.
The judge said that, until the very last minute, the three children sought to lay all the blame for the way the company’s business was conducted on the father and to downplay their own roles and responsibilities. However, they had belatedly recognized the seriousness of their fault and the consequence of the disqualification which was inevitably to follow.
He does not believe that the proposed disqualification periods for the three children take sufficient account of what was done immediately prior to the filing of the liquidation petition.
This was not simply a case in which the three children facilitated and participated in “flagrant and long-lasting fraud until they were exposed”, but a case in which, when they could see the writing on the wall for the company they brought with almost 75% of the value of his company in order to, at least, preserve or replace their jobs.
He saw no evidence of repentance or effort to redeem themselves, and the three children “do not seem to me to have really acknowledged their responsibility but rather persist in pointing out that the first defendant, their father, had the lion’s share loot”. ”.