CDSC hunts down American who stole woman’s Sh13m stocks

Politics and policy

Brokers monitor trading at the Nairobi Securities Exchange. PHOTO | FILE 

By BRIAN WASUNA, bwasuna@ke.nationmedia.com

In Summary

• Hillary Gabriel Erculiani has an account at Standard Chartered Bank’s Westlands branch which is believed to hold proceeds of the fraudulent sale of shares belonging to a female namesake - Hillary Gabrielle Erculiani.
• Mr Erculiani allegedly impersonated his namesake and transferred shares that the female investor held through NIC Securities to stockbrokerage firm Genghis Capital.

The Central Depository and Settlement Corporation (CDSC) is pursuing an American suspected of stealing an elderly Caucasian lady’s identity as part of a share ownership scam worth millions of shillings.

The agency has filed an application in the High Court, seeking to freeze the suspect’s bank account believed to hold the proceeds of the theft.
Hillary Gabriel Erculiani, the suspect, has an account at Standard Chartered Bank’s Westlands branch which is believed to hold proceeds of the fraudulent sale of shares belonging to a female namesake - Hillary Gabrielle Erculiani.

Mr Erculiani allegedly impersonated his namesake and transferred 279,400 Barclays Bank shares, 24,207 Nation Media Group (NMG) shares, and 100 Standard Chartered Bank shares that the female investor held through NIC Securities to stockbrokerage firm Genghis Capital.

The suspect then used Genghis Capital to sell the shares for Sh13 million. The CDSC says Mr Erculiani’s whereabouts are unknown, leaving the bank account as his only known asset that should be frozen to recover the funds.

“Upon investigations by the CDSC and the Capital Markets Fraud Investigation Unit, it became apparent that Mr Erculiani managed to carry out his illegal transactions by identity theft of the lawful trader.

“I am advised by David Farah, the investigating officer, that he has not been able to trace Mr Erculiani for purposes of pressing charges against him,” says Hilda Njeru, CDSC’s legal manager. The Capital Markets Authority (CMA) has been pursuing Mr Erculiani for criminal charges, but has been unable to find him. Mr Erculiani is yet to respond to the suit.

The CDSC says it fears Mr Erculiani may flee the country after draining the Standard Chartered Bank account if left without sanctions.

“The defendant is a fraudster and a flight risk. The CDSC therefore prays for an order directed at Standard Chartered Bank, Westlands branch, to release and pay all the money in the suspect’s account in satisfaction of the amount due from Mr Erculiani,” the CDSC says.

The amount of money in the account is not known.

Justice Charles Kariuki has allowed the CDSC to serve Mr Erculiani with the court papers through an advertisement, but declined to issue a temporary order blocking transactions regarding the American’s account.

The CDSC had argued that the matter is urgent and that it should be allowed to serve Mr Erculiani either through his last known address or through any other means that will allow the parties to prosecute the suit quickly. The matter will be mentioned on February 3.

The CDSC was in 2013 forced to pay Sh2.2 million to Ms Erculiani in an out-of-court settlement after her brokerage firm, NIC Securities, filed three suits accusing the agency of negligence that allowed the fraudulent share transfer.

A CDSC employee alleged to have schemed the fraud, Simon Kabata Ngethe, was arraigned in a Nairobi court in March 2012 and denied defrauding customers shares worth Sh15 million.

Mr Ngethe was the custodian of electronic investor share accounts and headed the help desk at CDSC. Mr Ngethe denied seven counts of making electronic records, conspiracy to defraud and stealing.

NIC argued that CDSC negligently created and operated internal procedure and systems that allowed fraud to be perpetrated by its employees in contravention of its regulatory obligations.