Lawsuit against Melissanidis – Spoliation of evidence

By Eleftherios Charalampopoulos

Part 2

In the first two parts we examined extensively the lawsuit filed in Luxemburg against Dimitris Melissanidis, his son Georgios, Grady Properties Corporation SA (based in Luxemburg), Leveret International S.A, Oil Tank Engineering and Consulting Ltd (OTE) and both Leveret liquidators; this lawsuit has been filed by the Aegean Litigation Trust and refers to matters of mismanagement in Aegean Marine Petroleum Network – AMPNI (henceforth Aegean).

The third herein will consider, as argued in the lawsuit, the issue of spoliation of evidence and the obstruction of investigation into Aegean Group with regard to the cases found of accounting frauds, that led to its bankruptcy and restricting.

Interference with evidence

The lawsuit argues that while the Aegean investigation was under way, “Dimitris Melissanidis sought to frustrate the investigation and the potential recovery of stolen funds in several ways”; it also argues that “these actions have hindered the investigation, including the discovery by investigators of evidence and recovery of assets”.

Erasure of email accounts and digital files by means of “military-grade deletion software”

According to the lawsuit, said obstruction initially pertained to erasure of email accounts and digital files.

As per the lawsuit, “in May 2018, EY (Ernst & Young) remotely accessed imaged copies of the custodial files of eighteen Aegean executives and employees of interest, many discussed herein, including DM. When collecting these files, EY discovered a military-grade deletion software running on the server. EY ultimately stopped the software from running and recovered some of the deleted data. It also obtained a copy of Aegean’s disaster recovery files in the event data continued to be deleted”.

According to the lawsuit, a forensics exam showed that 53,4 GB of data (approximately 254,016 documents in total) had been erased.

It is pointed out in the lawsuit that “the Aegean server was located in building in Piraeus owned by Aegean Oil and so controlled by Dimitris Melissanidis”.

Invocation of “data protection” to obstruct investigation

According to the lawsuit there had been “sham data protection proceedings”. In particular, reference is made to the report filed by Aegean’s subsidiary, Aegean Bunkering Services, to the Hellenic Data Protection Authority (HDPA), also to the reports filed by 11 individuals, amongst whom Dimitris Melissanidis, to this Authority, as well as the Melissanidis request for “a suspension of all processing of his personal data”.

As mentioned, this issue had to do with the fact that server infrastructure was loavated in Greece and used also by Aegean Oil, and also with whether there was an issue of personal data to consider with regard to personal communications of AMPNI employees, which the auditors wanted to have access to search for evidence in the context of Aegean’s mismanagement issues.

We remind that the HDPA, by means of its decision no. 44/2019, imposed a EUR 150,000 fine to AMPNI and asked process the date on the server in a GDPR compliant way.

The lawsuit argues that “thus it was not until late 2020 that review of server data finally commenced, or nearly three years since A&P had initiated their investigation. This 3-year gap significantly hampered the ability of investigators at a critical stage of the investigation to examine key documents, including email accounts, contracts, and payment records. Additionally, this hampered the ability of investigators either to identify witnesses, or to be able to effectively examine them”.

“Dimitris Melissanidis threatened or assaulted employees”

It is argued in the lawsuit that “Dimitris Melissanidis threatened or assaulted company or EY employees who cooperated with the investigation”. We quote below the lawsuit on the matter.

Following an interview with Mr. Thomas on July 17, 2019, it was revealed that when he found out that the latter had helped EY to gain access to AMPNI’s server, Dimitris Melissanidis confronted him and demanded that Mr Thomas give him details regarding EY’s investigation. Dimitris Melissanidis then assaulted Mr Thomas who subsequently went to the hospital and then went into hiding for weeks, fearing for his physical safety. Mr Thomas filed a police report.

A few weeks after this, on 26 July 2018, Dimitris Melissanidis abused members of the EY team working on the investigations. The following is apparent from a report of the incident provided by Pavlos Papageorgiou, then an employee of Aegean, to Donald Moore, one of the newly appointed directors of Aegean. EY had rejected the writing off a debt owed by Aegean Oil to Aegean of $12.5 million. That write off was to the benefit of Dimitris Melissanidis, who owns and controls Aegean Oil personally. Dimitris Melissanidis became irate with and threatened the EY team who had challenged the write off of this debt. Notably, Dimitris Melissanidis also suggested the debt had in any case been a sham and that “Aegean Oil does not owe a penny to anyone”.

Dimitris Melissanidis similarly was abusive toward Ms Eleni Tourlotou, AMPNI’s Internal Audit Manager, as evidence by report prepared by Ms. Torlotou dated 20 September 2018181. Ms. Tourlotou was directed in September 2018 by the Audit Committee to obtain records generated by external auditors in support of the internal investigation. These records were maintained on the 3rd and 4th floors of AMPNI’s headquarters in Piraeus. Ms Tourlotou normally had access to these documents as part of her job duties. In this instance, Ms Tourlotou found her access to these files electronically restricted, obstructing the progress of the investigation. Moreover, when Dimitris Melissanidis learned of Ms Tourlotou’s efforts to cooperate with the investigation, he verbally abused her in the most offensive terms and threatened to assault her. He did this in the presence of multiple witnesses. Dimitris Melissanidis ultimately ordered that Ms Tourlotou be escorted from the building. Ms Tourlotou never was able to access the requested documents”.

“Destruction of hard copy evidence”

The lawsuit supports that printed documents have also been destroyed.

Firstly, it is mentioned that “based on Ms. Tourlotou’s incident report, hardcopy documents obtained by AMPNI’s auditors were stored on the fourth floor of AMPNI’s offices at DM’s building, in a locked cabinet. In the report, Ms. Tourlotou explained that in September 2018, when Aegean attempted to recover these documents, it found that the cabinets had been tampered with, and someone had pried open the top of the cabinets. The documents which had previously been inside the cabinets had been removed. Among the document that had been tampered with include important documents critical to AMPNI’s internal and external audit functions, including bank statements for AMPNI”.

It is argued in the lawsuit that “these actions were not the first time hard-copy evidence was destroyed”. Tellingly, one reads that “the internal investigation discovered that Giorgios Moustakas previously instructed AOTC employees to destroy hard-copy documents in the U.A.E., many of which related to transactions occurring at the time of the fraudulent transfers to OTE. Video camera surveillance footage from 15 June 2018 shows Mr Moustakas supervising AOTC employees taking documents and files from the Fujairah Terminal outside normal business hours”.

Dissipating assets

It is supported in the lawsuit that transfers of assets took place for the purpose of protecting them, while the investigation on the “heavy fuel oil fraud” was under way by the Aegean Group auditors.

According to the lawsuit, “when Dimitris Melissanidis realized that the frauds were about to be uncovered, he transferred Leveret into a Cyprus-domiciled trust, referred to as the “Gaia Settlement.”According to an affidavit by Stylianos Kostopoulos, a former director of Leveret, filed in the Cyprus proceedings, Leveret’s “book value” as of 31 December 2017 was $149,243,563”.

It is the opinion of the plaintiffs that “this transfer of assets worth almost USD 150 ml. at a moment when Dimitris Melissanidis was losing control of Aegean was executed for the sole purpose of protecting his assets”.

Afterword: developments…

In these three articles, based on the Luxemburg-filed lawsuit, we believe to have outlined a certain procedure. If claims in the lawsuit are true and reported evidence is confirmed, then this is equal to a ‘looting’ of  corporation by means of falsified transactions, accounting frauds and large transfer of assets, practices that go way beyond the limits of proper “entrepreneurship”.

Apparently, these are allegations in a lawsuit and, as mentioned in various points in the text, the defendants reject them or denied all responsibility for any reported wrongdoing; their position is also registered.

On the other hand, however, there is the fact that a company of significant international standing went bankrupt, and that serious problems have been found with its accounting statements that have triggered developments leading to its bankruptcy. These allegations have been the starting point for this lawsuit. Against this background, it is of particular interest that there has been information that the lawsuit itself, its contents and evidence have generated concern on behalf of the US embassy and the US Ambassador himself.

In that sense, developments and the outcome of the legal process in Luxemburg definitely become of wider interest.

See here the lawsuit filed in a Luxembourg court

Conclusions-Arendt_01_10_21_TAL1_R_le-TAL-2019-08836-c-2