The trustees of two Irish-registered non-resident trust funds were ordered by the High Court yesterday not to reduce the value of the assets of each fund below five million dollars.

The interlocutory order - which applies until the hearing of the full action - was sought by Mr Lyndon McCann, instructed by William Fry solicitors, on behalf of 20 companies registered in Panama and Costa Rica against 12 defendants, who were sued in their capacity as trustees of and/or in a representative capacity on behalf of both the Genesis Trust Fund and the Exodus Trust Fund.

Giving judgment yesterday, Mr Justice O'Sullivan said each of the plaintiff companies was an investment vehicle for a client or clients of another company, namely Privacy Consultants International Incorporated, with registered offices in Panama and Costa Rica and a mailing address in Miami, Florida.

The principals behind Privacy Consultants were Mr George Sprague and his wife, Ms Rosibel Gonzalez Sosa, and the company provided international off-shore and management services to its clients. The affairs of each of the plaintiff companies were conducted by Mr Sprague, of Box 945, Centro Colon, San Jose, Costa Rica.

The judge said that, between 1994 and 1997, the plaintiffs invested various sums in the Exodus and Genesis funds. The founder of both of those funds was Mr John Lipton, who owns houses in California and Costa Rica. He noted the plaintiffs claimed Mr Lipton has used and insisted on the use of aliases and, although this was denied by Mr Lipton, it was more probable that Mr Sprague's evidence on the point was correct. The plaintiffs also claimed Mr Lipton had intimated the Exodus fund never operated as a separate trust fund and has been dissolved.

He said Genesis and Exodus were said to be involved in foreign exchange cash currency trading. According to their prospectuses, they are Irish domiciled and the difference between the two was that investments of less than $100,000 are made through Exodus and larger investments through Genesus. Both funds have accounts with International Bright Investments Limited (IBIL). It was claimed the address given for IBI turned out to be a handbag shop showing no sign of currency trading.

There were two IBIL companies, one in Macao and one in Hong Kong. Genesis and Exodus have master trading accounts with IBI which accounts in turn contain sub-accounts representing the investments made by the clients, including the plaintiffs, in Genesis and Exodus.

Up to December, 1997, the two funds gave monthly statements of accounts to Privacy Consultants in relation to the plaintiffs investments but since then no statements have been furnished, the judge said.

Earlier, in May, 1997, specific rules regarding withdrawal of monies from the funds were, according to the plaintiffs, unilaterally put in place. The defendants said the rules were by agreement.

A number of investment programmes, long term and short term, were introduced for which different notice periods for withdrawal applied. The plaintiffs opted for various programmes; some $300,000 due to five plaintiffs in November 1997 had not been paid.

The judge said the defendants said the monies had not been paid because they feared Mr Sprague would not pay those entitled to the monies and also said the plaintiffs have to disclose the identity of the beneficiary before payment is made.

Relations had deteriorated between the sides and the defendants had stated they would no longer accept instructions from Privacy Consultants but had indicated the plaintiffs funds would be "quarantined" and pleaded in court they would make funds available on a phased basis commencing with a payment of some $1.8 million in mid-September this year and further payments totalling more than $5 million in some 18 months time.

The judge said an interim order restraining the defendants from reducing the assets of the funds below $5 million was granted on May 8th in the Irish courts and the following day similar orders were granted to the plaintiffs in a Hong Kong court. Both orders were continuing.

The defendants resisted the present interlocutory application on a number of grounds including an alleged failure by the plaintiffs to disclose all facts including the fact that Mr Sprague is the subject of federal indictments in relation to alleged revenue offences committed in the early to mid-1980s in the US. That fact was known to the defendants from the beginning of their relationship with the plaintiffs and he was not satisfied it was relevant, the judge said. He could not agree that full and frank disclosure had not been made. He also did not consider the alleged failure by the plaintiffs to establish that there are assets in this jurisdiction means their application fails.

The judge said the documents generated by the funds "leaves one with the impression that the whole arrangement is disturbingly vague and free of identifiable structures".

In his view, the apprehensions of the plaintiffs that the assets will be either dissipated or removed from the court's jurisdiction with a view to depriving the plaintiffs of their money was reasonably founded.

He granted an interlocutory order restraining the defendants, Genesis and Exodus on a worldwide basis from reducing the value of the assets of each fund below 5 million dollars.

He directed the defendants to discover the whereabouts of all monies invested by the plaintiffs with funds known as the Human Element, Genesis and Exodus, within six weeks as well as all of their assets.