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Former IEQ directors leave a path of debt in their wake

Sep 10 2003
London, England -- ( -- 09/09/03 -- On behalf of the creditors and shareholders of IEQ PLC, Kingston Smith Chartered Accountants is pursuing two High Court claims against some of the company's former Directors relating to their conduct in approving a number of questionable transactions and investments.

The former directors, lead by Sir Richard Needham, failed in their fiduciary duties owed to the company in approving and making these investments and are therefore legally liable to reimburse the company for the losses it has suffered from the write offs reported in the last accounts, totalling over £3 million.

In fact, there are currently two IEQ lawsuits pending before the High Court:

-- IEQ PLC v. Sir Richard Needham, others, Case No. HC02-C00065
-- IEQ PLC v. John Shaw, others, Case No. HC03-C01527
The full list of defendants is:
Sir Richard Needham
Anthony Caplin
John MacKay
John Shaw (two lawsuits)
Christopher Foster
Seymour Pierce Private Equity Limited
Jonathan Wright
EMCEE Nominees Limited
Memery Crystal Solicitors
The first case involves significant breaches of fiduciary duty by the former directors that resulted in the loss of more than £3 million in shareholder funds. The second case involves the very basis upon which IEQ obtained its certificate of trading and admission to AIM and includes the company’s former solicitors, Memery Crystal as defendants. In the second claim, the Liquidator seeks to recover £49,998, plus 4 years' interest and costs.

Significant breaches of fiduciary duty are associated with each of the following investments:
Lord Newry, son of Sir Richard Needham, a former director of IEQ brokered a sweetheart deal for his school-chum—encouraging IEQ to loan MadeForChina US$750,000 for twelve months at 20 per cent interest (up from 8 per cent the day before the deal was concluded). Without having met, or communicated with the directors of MadeForChina directly, Sir Richard and Anthony Caplin approved the loan which was never repaid. Within a few months MadeForChina offered equity claiming they would be unable to repay the loan. Since acquiring the shares, the directors have refused to provide IEQ with audited accounts or anything which would demonstrate that the investment is not fraudulent, as it appears.

Video Networks Limited
Former IEQ directors invested £450,000—acquiring shares from Baron Steven Bentinck—shares held by PLSL Nominees Limited. John MacKay, a former director of IEQ owns 1,843,300 ordinary shares in Video Networks, was appointed a director of Video Networks in September 2002 and is a corporate representative for PLSL Nominees Limited. Video Networks has recently restructured its capital, resulting in a 98 per cent devaluation of its stock.

2020Me Holdings Limited
Anthony Caplin became a director of 2020Me in February 2000. According to the company's audited accounts, he is also a major shareholder. On Anthony Caplin's recommendation, IEQ invested £250,000 in 2020Me, part of the over £9 million the company raised from investors. The directors of 2020Me claimed independent valuations for a Patent application (£17 million) and the company (£76 million), but since pocketing investor's money the company has produced nothing, achieved nothing and is worth nothing. 2020Me's managing director, Colin Frost is hiding out in Australia, reportedly still drawing money from the company. IEQ attempted to sell its 2020Me shares, but directors of that company refused to allow the transfer.

Isle of Wight Cable & Telephone Company Limited
Seymour Pierce lead by John MacKay and Keith Harris (at the time), arranged a £7 million loan for the failing cable provider, in which Harris had/has a major investment. A total of £650,000 of IEQ's funds were loaned and or invested in the company. Seymour Pierce received £500,000 for arranging the loan. 2 months after providing the money—a loan scheme which was unwritten by Seymour Pierce—the company was in liquidation. Seymour Pierce was able to obtain a floating charge over the 'phoenix company' that resulted, and so their investment is preserved, at the expense of other investors.

Radio First PLC
Another Seymour Pierce client, Keith Harris former chairman of the Football League and John MacKay, both football-mad, invested £200,000 of IEQ's funds in the company shortly before the company was suspended from AIM for failing to provide proper reporting. IEQ was able to recover just £25k of the original investment before it was suspended. Radio First plc is now in liquidation.

Object Support Limited
John Linney was working with Williams de Broë on a public offering for Object Group PLC (formerly Object Group Limited), when his adviser left to join Seymour Pierce. The new offering (private placement) was reduced to just £500,000—the number of investors limited to just three; Intermediate Equity PLC (now called IEQ PLC) which acquired 565,517 ordinary shares for £250,000, Talisman First Venture Capital Trust Limited which acquired 565,517 ordinary shares for £250,000 and SP Investments Limited which acquired 508,965 ordinary shares in exchange for "Professional services". According to Linney, "Seymour Pierce had helped to raise £500,000 from two investors [sic], but that they (Seymour Pierce) hadn't taken a fee for their services." In fact, Linney agreed to use Seymour Pierce services in future and handed over a large stake of the company for that privilege. Shortly after the money was handed over, Linney transferred the assets of the company to another company—Object Group Limited—and placed Object Group in liquidation.

Ebop Media PLC
The former directors of IEQ invested £250,000 in this company, and before the ink had time to dry on the cheque, the company was in liquidation and the investment was deemed a total write-off.

Bibliotech Holdings PLC
Anthony Caplin, a director of Bibliotech approved an investment of £250,000 of IEQ's funds without disclosing his involvement. Bibliotech was over a year and a half late in filing their first Annual Report with Companies House, and has since resorted to using one of the company's director's bank account to settle its debts, with money borrowed from the founder's Dad. The company failed to disclose a claim being made by a U.S. company who have prior trademark rights to the name "SchoolMaster", which is the name they chose for their product. The directors entered into a scheme with a North East Lincolnshire Council employee, Rupert Collins, whose family also appears to be a large shareholder of the company—which can only be described as an investment scam—despite numerous letters, the Council in house legal department refuses to comment, choosing instead for these matters to come out in open Court. IEQ was recently able to sell its shares for just £2,500., Inc.
The former directors of IEQ invested £125,000 in the company and like Ebop Media PLC, before the ink had time to dry on the cheque, the company disappeared and the investment was deemed a total write-off.
Within a very short period of time, the former directors of IEQ PLC shot through over £2.9 million of shareholder's funds, investing in companies in which they had investments themselves, for which they were directors, or companies to which they provided advisory services in some professional capacity or other. Investments were made without disclosure of these related party transactions, and almost without exception, the investments are worthless today—with no consideration for IEQ's shareholders.

Seymour Pierce, headed by John MacKay and Keith Harris (at the time), operated a self-serving investment programme designed to provide funding for clients (AIM Nominated Adviser, brokerage or otherwise) on a quid pro quo basis.

Before them, Needham and Anthony Caplin invested in and loaned money to companies in which they had an interest or as favours without any consideration or due diligence as would be expected from directors charged with investing other people's money.

These companies share a common element, in that they have stolen money from investors, with the help and assistance of unscrupulous directors, whose sole purpose was self-serving greed at the expense of IEQ investors.

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