Solicitor sues sister over disputed property portfolio

Solicitor sues sister over disputed property portfolio




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A lawyer from New Town, Scotland, is suing his own sister and brother-in-law for at least £11 million, in order to reclaim assets he transferred in 2005.

Michael Karus, 50, who was released from jail earlier this year, is seeking to recover assets which he transferred into their names to protect his property empire. He has admitted that he carried out the transfer in order to conceal his real worth from his estranged wife, to stop her launching a divorce claim for part of his fortune.

Karus was jailed in October 2009 for three-and-a-half years for embezzling £413,052, while acting as executor of the estate of Edith Hampton, 89, to pay off his own law firm’s debts.

After being banned from acting as a company director at Arrowbay in November 2004, after it went bust with debts of £274,000, he moved the said assets to his relatives.

His firm Micmal went into receivership in 2004, when assets worth £11 million were sold to pay off debtors, while another firm in which he owned 50 per cent, Millbraid also entered receivership in 2005.

Karus admitted that he did not want the remaining assets of Micmal handed back to him by the receivers in an effort to prevent a potential divorce pay-out to his wife, and agreed to make transfers to his sister instead.

After his release he set up Playfair Investments Ltd, through which he launched legal action at the Court of Session in Edinburgh.

Karus reportedly had investments worth several milliom pounds back in 2004. He was later banned from practicing as a solicitor and his lawyers claim that due to suffering “a number of cash and liquidity difficulties” at the time, his marriage broke down.

Karus is claiming that his sister, Anielka McElvogue, 52, and her husband, Anthony McElvogue, 51, are refusing to give back his money. Lawyers for Karus allege in other court documents that the couple were “refusing to acknowledge that they hold, or even held, any assets in trust for Michael Karus,” the Scotsman reports.

The McElvogues are also alleged to have sold a number of properties from the portfolio which Karus had transferred to them while also pocketing rental profits. Karus is claiming that he transferred the assets of firms Scotstone Ltd, Cordfelt Ltd and Mako Property Ltd to his sister in 2005 after being banned as a company director, as well as 51 properties still owned by Micmal and a cash sum of £1,286,942.30.

Karus's lawyers maintain that his sister never paid any money for these assets, and was meant to hold them "in trust" until Karus wanted them back. He is demanding their return along with any rents which have been collected and a full accounting of the assets. A minimum payment of £11.1m has been set in the case.

Karus alleges that the McElvogues have sold 34 of the properties without his knowledge, and bought other properties in Edinburgh, including his own home in Gloucester Place.

But the couple’s lawyers say Mr McElvogue mortgaged properties, including the Gloucester Place address, to lodge £500,000 at Edinburgh Sheriff Court and help Karus following his embezzlement conviction. The money was allegedly used to pay back funds stolen by Karus in a bid to reduce his jail term.

Mr McElvogue has now launched his own legal action to recover his £500,000 from Karus.

One of his former business associates told the Scotsman: "For someone who has made money cheating other people, it's good to hear Karus got his comeuppance for trying to hide it away. Karus is trying his usual trick of suing everyone to cover his tracks, even his own sister.”

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