A Washington DC lawyer who formerly represented the Virgin Islands government now faces a lawsuit seeking up to $11 million in damages for alleged conflicts of interest when he helped strike a deal for the failed BVI Airways project that initially had promised to deliver direct flights between Beef Island and Miami.
Government is claiming full damages for “fraud and deceit” from Lester Hyman related to the $7.2 million of taxpayer money invested in the now-defunct airline; funds from Mr. Hyman’s alleged “secret commissions” worth at least $212,500; any “illicit profits” he received related to the airline; the $305,000 government paid him from 2014- 2017; court costs for related arbitration proceedings in New York; and interest, according to a Jan. 19 High Court claim form filed on behalf of government by VI asset-recovery attorney Martin Kenney.
Mr. Hyman worked as legal counsel to the VI from the United States for 30 years and was paid $2.5 million for his services over that period, according to the claim.
In 2013, he introduced real estate developer Bruce Bradley and then-Premier Dr. Orlando Smith, according to a ruling filed last year in a related case in a Washington DC court.
Mr. Bradley, the owner of the DC-based real estate investment firm Castleton Holdings LLC, sought support and financing for the BVI Airways project. And he got it.
At Mr. Hyman’s urging, the government agreed to pursue the proposal in spite of warnings from experts about the risky nature of the investment.
Government signed an agreement with BVI Airways, Castleton Holdings and another firm called Colchester Aviation in December 2015.
But after receiving $7.2 million from government, the airline failed to launch a commercial air service by its October 2016 deadline.
Government terminated the contract in November 2017 amid finger-pointing and public acrimony as residents called for answers about how the millions could have been spent with no flights to show for it.
In October 2018, Dr. Smith’s administration hired Martin Kenney & Co. Solicitors to probe the deal and attempt to recover the $7.2 million.
As part of that effort, MKS soon turned to a Washington DC court for help in gathering evidence for a planned civil lawsuit back in the VI. Firm attorneys told the court that while representing the VI, Mr. Hyman improperly took secret payments from the airline and also acted as the company’s lawyer at times.
But Mr. Hyman said in court filings that he did nothing wrong: He claimed that he never hid the payments from government or otherwise acted unethically, and that contradictory statements he made about the payments amounted to a mistake caused by a memory lapse.
Last May, the court ruled that the VI government could depose and subpoena information from Mr. Hyman. He turned over about 1.000 pages of documents, some of which MKS plans to use in the new VI lawsuit for the alleged fraud.
In that lawsuit, MKS doubled down on its claim that the 89-year-old attorney had a conflict of interest in representing the VI government in the BVIA deal.
“It emerged that Mr. Hyman — who should at all times have been representing the [government’s] interests in the negotiations with the operating parties — had in fact been appointed as a director of BVIA (and possibly Colchester and/or Castleton) and had been paid substantial monies by (and offered stock options in) BVIA and/or Colchester in 2014 through 2016,” the claim states.
The claim adds that representatives from BVI Airways or Colchester promised Mr. Hyman money and stock options totalling at least $212,500.
“They constituted secret commissions or bribes which were paid by BVIA and/or Colchester to Mr. Hyman and received by him dishonestly, in breach of his fiduciary and contractual obligations to the [VI government],” according to the claim.
In addition, government is claiming interest for the years since it paid the $7.2 million, which alone could amount to about $2 million. But the majority of the damages sought would be for the $7.2 million itself.
MKS filed the claim on behalf of Attorney General Dawn Smith, who “recused herself from this matter due to an apparent conflict of interest,” according to the filing.
Attempts to contact Mr. Hyman and his attorney Barry Pollack were not immediately successful.