Sydney lawyer ordered to pay back her share of millions over suspicious carbon offset scheme

Bankruptcy proceedings have begun in Sydney against a solicitor who owes part of $34 million after a British based company persuaded investors to plough their savings into reforestation in Australia and the Amazon and rice farm harvests.

Exclusive: A Sydney solicitor has been ordered by the British High Court to pay back to investors her share of more than $34 million fleeced in an international carbon credit con.

Bankruptcy proceedings have begun in Sydney against Marcia Dominique Hargous, 44, to claw back money after the schemes persuaded thousands to plough their savings into native forest regeneration in Australia, a rainforest in the Amazon, and rice farm harvests and forests in Sierra Leone.

“We harvest — you profit,” boasted the flashy brochures put out by Capital Alternatives, for whom Ms Hargous was a director and had a small office above a shop in Grosvenor Crescent, Summer Hill, before moving to London.

Marcia Dominique Hargous. Picture: Facebook

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Ms Hargous has not been charged with any criminal offence and said on Monday night that the British authorities had gone “after low-hanging fruit, ruined lives, careers and reputations of genuinely honest, hard working people” while “all of the real culprits are still out there having hidden their money”.

In Australia, global law firm Dentons has been engaged by an insolvency company from Britain to chase any assets she may have here.

The University of NSW graduate — who worked for several Sydney commercial law firms before moving to the UK in 2007 — became in-house counsel in London for the Capital companies.

Her boss there was the notorious bitcoin fraudster Renwick Haddow, who is barred from being a director in the UK and is awaiting trial in the US over an alleged $55.9 million scam. Bankruptcy proceedings against Ms Hargous began in the Federal Court in Sydney last month.

Renwick Haddow.

Haddow was extradited from Morocco to the US in 2017, where it’s alleged he had funnelled money from a Ponzi scheme not related to the carbon credit companies.

The High Court in London last year ordered that Capital Alternatives Limited, Ms Hargous, Haddow and five other directors should pay a total of £18.7 million ($34 million) for their roles in four unauthorised collective investment schemes.

It said the schemes were unlawfully promoted to the public from 2009-2013 by the use of false, misleading and deceptive statements. They were not marketed as “collective schemes” — which can only be run by licensed firms and individuals as they are so risky — and there was no way to work out how many carbon credits each investor should get.

A brochure of the African Lands Ltd put out by Capital Alternatives.

“It was only after a four-to-five-year ongoing investigation that the (UK’s) Financial Conduct Authority issued proceedings … claiming Capital Alternatives required a FCA licence. The issue of whether its activities required a license went to the UK Court of Appeal and a similar issue went to the Supreme Court,” Ms Hargous said on Monday.

“How could the regulators permit a company to continue to trade for so long if they were illegally unlicensed? I was an in-house lawyer but the external lawyer was not even questioned, even though he gave all the advice regarding whether a licence was required.”

The Australian Securities and Investments Commission (ASIC) has moved in to help identify local investors who may be eligible for restitution but warned it will be a long process.

“ASIC declined to take the case forward against me as they realised I was just an easy target,” Ms Hargous said.

The schemes involve the sale to investors of subleases or licences, on the basis that the operators would seek accreditation by a relevant body, resulting in tradeable carbon credits which could be re-sold at a profit.

The Australian scheme involved a 320ha area in Victoria’s Gippsland region with investments in half-hectare plots for 15 years. Ms Hargous told the London court the tree heights and types would be determined by satellite imagery so as to give each plot of land a carbon credit value.

The court found the land qualified under Australia’s Carbon Farming Initiative because it had been cleared before 1990. This is a carbon offset scheme relating to reforestation said to incentivise landowners “to return cleared, unutilised land to native woodland and earn fully registered and tradeable (carbon credits) in the process”.

The brochure described “Australian reforestation” as “an investment that brings real, ethical returns in the secure legal environment of Australia”, but there was no way to work out the individual carbon credits for each plot.

The High Court — which described Ms Hargous as a “straightforward and truthful witness” — found the Brazil scheme was “virtually non-existent” and there was no “clear evidence” as to the progress of attempts to obtain carbon credit accreditation in Sierra Leone

MILLIONS MISSING IN FAILED SCHEMES

Marcia Hargous was involved in several companies linked to two high flying English businessmen accused of swindling millions of dollars out of investors across the world.

One of the men, Robert McKendrick was jailed for six months for breaching financial orders relating to his role in a carbon credits scheme and rice farm investment and ordered to pay more than $20 million in compensation.

Bankruptcy proceedings have begun against Marcia Dominique Hargous.

Authorities in the UK have been unsuccessfully trying to recover the money for investors. The High Court in the UK heard McKendrick hid assets in his wife’s name in contravention of an order freezing his wealth. “One doesn’t know how much money was diverted,” Justice Marcus Smith said.

McKendrick, who has now been declared bankrupt, was the major shareholder in a company called African Land and was also involved in another company Capital Alternatives Limited with Ms Hargous and others including Renwick Haddow.

Haddow was Hargous’s boss when she became in-house counsel in London for the Capital companies.

Haddow is currently awaiting trial in the US over allegations of fraud involving Ponzi scheme type operations. Middle East newspaper The National reported that a court ruled the schemes were unlawfully promoted to the public by “false, misleading and deceptive statements”.

It said UK legal papers show Haddow was disqualified from serving as a director of any UK company for eight years in 2008, and five years later the UK financial conduct authority pursued a civil action against him.

In 2015, the British court of appeal upheld a ruling that Haddow had been running unauthorised investment schemes.

Ms Hargous has not been charged with any criminal offence.