Mick hinted at the details in his earlier post, but the story deserves a bit of unravelling.
In the first part of 2011, David Kirk raised criticisms about Invest NI’s “strategy and intervention in Northern Ireland’s investment ecosystem” and followed them up with a written report. In response, Invest NI arranged an ‘Access To Capital Stakeholders Forum’ with investors and industry reps to be held in mid-October 2011, though they were reluctant to invite any NI angel investors with technology startup experience.
Blogging recently about the forum, David Kirk explains:
Because of the issues I’d raised, [Alastair Hamilton, Invest NI’s chief executive] informed me that he wanted to sponsor a meeting/forum to address them [and identify any other issues that may not have been raised]. He asked for my participation, which was willingly given …
Then in early October, less than a week before the forum, I received a link to a news article, on one of the local VC attendees that was invited to the forum. The nature of the article had serious implications, if only on InvestNI’s understanding of the actual street level investment situations and their judgment on where to go for information.
Three days later the stakeholder forum was cancelled. It still hasn’t been rescheduled and David Kirk finishes his post:
This is IMPORTANT to Northern Ireland’s economy. This is vital for struggling entrepreneurs and startups.
This morning, tech entrepreneur and online journalist Lyra McKee picked up the story. She linked to the May 2007 news article from the Preston Citizen that David Kirk had read which told the story of “bogus accountant David Walsh” had “fleeced business partners … out of nearly £700,000 to fund a lavish existence” and was jailed.
The court heard that Walsh, who faced a mountain of debts from banks and credit card companies, had no formal accountancy qualifications. He had previously admitted theft of £680,000. Nick Dean, defending, said his client was genuinely remorseful about his actions and now wanted to rebuild his life with his new wife Caroline in Northern Ireland, following the case.
A quick Google shows up another article from the Preston Citizen, this time from March 2008 in which Caroline Walsh (now his ex-wife) was “said by a judge to have enjoyed the high life, thanks to the fruits of her husband’s fraud, has been jailed for 15 months”.
Carolyn Walsh laundered money through her bank account before it was spent on jewellery and other expensive goods, as well as stays in hotels like Claridges. In addition, she and her husband David Walsh sold around £80,000 worth of vehicles, including a Mercedes, Ferrari and BMWs despite a court order. [She] pleaded guilty to one money laundering charge and one of perverting the course of justice.
Her 39-year-old ex-husband was last year sentenced to six years for a £680,000 fraud carried out on a Lancashire based firm called Concept Business Solutions … Today he had another twelve months added to his sentence after he admitted perverting the course of justice and also perjury.
Now out of prison with his ‘6+1’ sentence behind him, David Walsh reappeared on the Irish investment scene. Lyra McKee says:
If you’re an entrepreneur from Ireland, you’re probably scratching your head right now. You’re wondering why you’ve heard that name before. And why the photo looks so familiar. That’s because the David Walsh jailed for £680K theft is the same David Walsh who runs Walsh Doherty Capital, a private equity firm based in Northern Ireland.
While commenting that “People make mistakes. Everyone deserves a second chance”, Lyra McKee goes on to detail the experience of a local NI entrepreneur who was raising funding for his new startup. In her post, she explains how the entrepreneur met David Walsh in mid-July and exclusive negotiations covered by a legal agreement followed through-out August.
On the last day of exclusivity, the potential investor issued a demand for the ‘break-up fee’ of £10,000+VAT to be paid. (This kind of fee would be triggered if information was not disclosed that would later hinder an investment.) Later this was reduced to a demand for £2,500, and finally dropped altogether.
Walsh Doherty Capital’s website was taken down earlier today and now simply explains that it “closed on 31 October 2011” and insists that “statements made on the internet with regards to the conduct of the firm are strongly denied”. It goes onto say that “a private agreement existed between connected parties on a personal basis” and “due to potential litigation we are not able to comment further”.
WDC’s website is adamant that “we have no legal connection to Sebdo Global Investment Group or any other firm linked to that company”.
Former Guardian Technology journalist Bobbie Johnson wasn’t so sure when he picked up the baton this afternoon in his follow-up post on GigaOM.
… a quick Whois search reveals that Sebastian Doherty was the name used to register a number of domains related to WDC and Sebdo — as well as the website of Shout For It, the American company that Walsh claimed his fund had taken equity in.
However, Bobbie Johnson goes on to explain:
… I could not find any record that Walsh Doherty Capital itself exists as a legal entity.
As far as I can see, there is no company in U.K. or Ireland registered or trading under the name of Walsh Doherty, nor does there appear to be any independent record of either man running or raising money for a private equity fund in recent years.
On top of this, neither this David Walsh nor Sebastian Doherty appear to be accredited investors in Britain, nor do they or any of the companies they claim to represent exist on the register of the Financial Services Authority, Britain’s financial watchdog. This is highly unusual.
It’s a bit of a mess. While Invest NI can’t be expected to vet everyone they invite to meetings, surely David Walsh didn’t end up on the guest list without having some kind of prior relationship with Invest NI?
The publicly-funded investment body should outline the nature and extend of their relationship and whether they recommended that any local companies talk to David Walsh and/or Walsh Doherty Capital about raising funds.
Invest NI also need to explain why they didn’t reschedule the forum that Alastair Hamilton felt was the best way to address David Kirk’s well-publicised concerns and criticisms? And they need to explain what other actions they’ve taken in the meantime.
I’ll leave the last word to Bobbie Johnson:
Now the startup investment community in Belfast is left to clean up the mess and confusion caused by this controversy. InvestNI, the agency that had previously invited Walsh to a number of events, told me that it had no knowledge of his criminal background and said specifically that it has “no relationship with David Walsh.” Let’s see if the region’s startups can say the same.
Update – new post detailing Invest NI’s response to these questions.
[While – at time of posting – no legal action has been taken against any of the bloggers involved, I have been careful in the quotes I’ve taken from the other blog posts, and you may want to be careful with your comments!]