A founder of Texas-based private equity firm Delos Shipping has launched a scathing attack on his partner Brian Ladin, calling him a “scam artist” who has diverted millions of dollars from the venture for his own purposes.
The explosive charges come in a Texas state court lawsuit filed by Richard Squires, who co-founded Delos with Ladin but now seeks to recoup some $4m he alleges Ladin diverted from the company to fund his own lavish lifestyle.
"Defendant Ladin seeks to present himself as a respectable member of the business and financial community, but in reality, Ladin is a scam artist, who has engaged in fraudulent conduct through most of his adult life,” the lawsuit charges.
“Indeed, the facts show that Ladin ripped off both business associates and family members for millions of dollars, and he cannot be trusted in any capacity.”
Ladin has issued a blanket denial of Squires’ allegations in a reply brief filed with the Dallas court.
Ladin said he had filed a counter-suit against Squires and would supply a copy of the brief imminently.
Delos may be best known for providing funding in advance of Euroseas’ 2012 initial public offering in New York. It also acquired a piece of German owner Koenig & Cie in 2013 and sold out in 2016.
More recently, the firm has been linked to failed attempts to seal a July 2018 order for six 93,000-cbm ethane ships last July for long-term charters to Zhejiang Satellite Petrochemical (STL).
TradeWinds has reported that the deal for three VLECs from Hyundai Heavy Industries and three from Samsung Heavy Industries for about $123m each collapsed due to financing probems.
Squires claims in his lawsuit that even though Ladin was supposed to keep him abreast of new opportunities for shipping investments, he learned of the project only after “reading a shipping news article.”
“Ultimately, Ladin was unable to consummate a final transaction, as he could not raise enough capital to even pay for the deposit to start construction of the ships,” the lawsuit states. “The shipyards eventually canceled the contracts and the Delos Shipping name received significant reputational damage in the shipping industry.
“ Had Ladin not chosen to steal the opportunity from Squires and Delos Shipping, Squires had the personal ability, with or without his network of investors, to fund the deposit, equity, and an entire construction program for the ships and complete the contract. Representations made by Ladin to potential investors showed that the deal could have returned almost 400% to investors over the life of the transaction.”
Squires claims Ladin began diverting funds from Delos investments as early as 2013, according to the findings of GlassRatner, an advisory firm that specialises in forensic accounting.
The investigation, performed by two former FBI agents, found some $3.7m in funds that Ladin allegedly diverted to himself or his wife across several shipping deals, the lawsuit charges.
Ladin at times created fraudulent “fees” or “commissions” that steered money owed to Delos into his private bank accounts, the complaint charges.
Funds were diverted across deals that involved the likes of Chembulk, Koenig, the cruise vessel Deutschland, and the Megacore joint venture between Omega Navigation and Glencore.
Squires also claims that Delos had failed to turn a profit through mid-2017 and that he grew tired of funding further obligations while Ladin would not do so.
The lawsuit indicates Squires met Ladin in 2006 when the latter was an analyst at Bonanaza Capital and Squires was an investor.
In 2008, Ladin agreed to settle insider-trading charges brought against him by the US Securities and Exchange Commission for $330,000 without admitting guilt.
Squires says he gave Ladin an opportunity to redeem his reputation by forming the 50-50 partnership in Delos, to which Squires contributed financial backing and Ladin would source shipping deals.
“Ladin responded to this business opportunity, however, by repeatedly abusing and betraying the trust that Squires placed in him,” the lawsuit alleges.
Ladin has failed to make good on Squires’ demands for full restitution, the complaint states.
