A BGC Partners employee in London has admitted he owes the company £14.7m after the US broker-dealer sued, alleging a years-long fraud.
Michael Viney, a tax adviser who the company has suspended, said in a court filing that he was liable to repay BGC the cash but did not address whether he improperly received the funds.
The interdealer broker is suing Viney, his girlfriend Hallelujah King, and a senior BGC partner, Xavier Alcan, to recover the assets of an alleged $35m fraud it claims it discovered late last year.
In a civil case brought in London’s High Court, the US company has alleged the men funnelled cash due to or from the UK tax authority into their own pockets. Some of the money may have been spent on property in England, holidays, or luxury jewellery, the broker has further alleged.
BGC, whose brokers negotiate trades between investment banks, disclosed the alleged fraud in its February earnings but did not reveal any further details. Howard Lutnick, BGC chief executive, said at the time it was “an unfortunate event” but told investors the loss was not material.
In his defence papers, filed in May and not previously reported, Viney admitted that King had received or bought property using funds he provided. BGC listed 18 properties in England in its claim, including a £1.2m property in St Albans in King’s name.
“The exact origin of the funds used to purchase each asset will be a matter for detailed forensic analysis,” Viney’s defence said, adding that the monies Viney owed should be set off against any property proceeds.
Viney also admitted receiving almost £5m in cash and payments on his behalf from Alcan, which he said “derived or are likely to have derived from monies wrongfully received/retained by Mr Alcan”.
He denied any breach of contract, destroying evidence, or that he misled HMRC, the UK’s tax authority, with relation to the monies BGC had owed or been owed.
Viney said he had been authorised by BGC’s chief operating officer, Sean Windeatt, to select a nominated partner for tax affairs in the UK.
Viney said he had chosen Alcan “as a long-serving and senior member who was likely to remain with the business for a number of years and would be readily available to sign documents as required”.
“As nominated partner, Mr Alcan was responsible for dealing with the partnership’s tax affairs and was entitled to and did give certain instructions to Mr Viney in relation to those tax affairs,” said Viney.
Viney said he was liable to reimburse BGC £14.3m plus an additional $665,000. He claimed Alcan was liable for £8.7m plus $586,000.
A lawyer for Alcan did not respond to a request for comment. A lawyer for Viney and King declined to comment. BGC declined to comment.