New York: Be it legendary investor Warren Buffett or the infamous ponzi operator Bernie Madoff, both have become examples in court proceedings of a USD 350-million lawsuit seeking attachment of the crisis-ridden Indian group Sahara's two prized hotel assets here.
Sahara, on its part, has told court that it has been wrongly dragged into the dispute between two entities over "a potential business relationship gone sour".
Seeking an immediate rejection of the plea by Hong Kong-based JTS Trading to attach Sahara's Plaza and Dream Downtown hotels here, the Indian group has submitted before the Supreme Court of the State of New York that the "plaintiff is attempting to attach property that falls outside of the jurisdiction of this Court."
Sahara, along with two others, has been dragged into this USD 350 million (Rs 2,200 crore) lawsuit filed by JTS Trading Ltd, which claims to have proposed to partner UAE-based Trinity White City Ventures and arrange loans from Swiss banking giant UBS to acquire Sahara's three overseas hotels - Grosvenor House in London and the two in the US.
In the lawsuit filed against Trinity, Sahara and UBS, JTS has alleged that Trinity cut it off from the deal for direct negotiations with Sahara.
JTS has also accused Sahara and UBS of having "aided and abetted" the UAE firm in breaching its "fiduciary duties" under their agreement.
The court has begun hearing the case, while the transcript of the proceedings released by the Court shows interesting arguments and examples being cited of Madoff and Buffett.
Madoff, a former stock broker, ran a ponzi scheme that is still considered the biggest financial fraud in the US history. He was sentenced in June, 2009 to 150 years in prison.
On the other hand, Buffett is among the most respected investors, figures among the richest persons across the world and is also known for his philanthropic works. His Berkshire Hathaway manages all these investments and operates through a large number of subsidiaries.
Pushing for JTS' plea, its lawyer has now alleged in the court that Sahara was running the "largest international ponzi scheme since Bernie Madoff" and it was now trying to sell its three overseas hotels "to raise funds to post bail" for its jailed chief Subrata Roy.
In its submissions made before the court through its counsel here, Sahara has, however, said that JTS was seeking "to attach property owned by entities over which this court has no jurisdiction, and property owned by non-parties that are not accused of any wrongdoing, in the context of claims that are tenuous at best".
Seeking to understand the organisational flow-chart of the Sahara group and its ownership interest in the hotels, the court, however, observed what first needs to be understood is who actually owns the hotels.
"... Because you know what Berkshire Hathaway has lots of subsidiaries and I bet you Warren Buffet rarely comes into court as the parent. That's the whole point.
"You know that, I know that and we all know that. That's why we have subsidiaries to isolate liabilities and profits, too," the judge said.
Further into the arguments, the JTS counsel said that the 'flow chart' provided by the Sahara group was not "supported" by any evidence.
"All it shows is a corporate shell game. Its not supported by, as I am sure Buffett's corporations (do)."
