Michael Karus, who was jailed for three-and-a-half years for embezzling £400,000 from a pensioner’s estate, is bidding to recover assets he transferred into their names to protect his property empire.
He moved the assets to his relatives after being banned from acting as a company director but Karus has sparked a family war by suing his sister, Anielka McElvogue, 52, and her husband, Anthony McElvogue, 51, claiming they are now refusing to return his money.
The 50-year-old has also admitted carrying out the transfer to hide his real worth from his estranged wife, to stop her launching a divorce claim for part of his fortune.
Karus was known to boast of being a “shark” who preyed on vulnerable victims. Two of the firms he transferred to his sister were GWS Property Ltd (Great White Shark) and Mako Property Ltd – named after the shark.
A former business associate said: “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.”
Lawyers for Karus, who lives in Gloucester Place in the New Town, allege in court documents that the McElvogues were “refusing to acknowledge that they hold, or ever held, any assets in trust for Michael Karus”.
Karus alleges that the McElvogues, who live in Cheshire, have sold a number of properties from the portfolio transferred to them while also pocketing rental profits. His lawyers added: “The only conceivable basis upon which they could be entitled is if the said assets were gifted. They were not.”
Karus launched the legal action at the Court of Session in Edinburgh through his new company – Playfair Investments Ltd – which he formed after being released from prison earlier this year.
In the court documents, Karus claimed that he had investments worth “several million pounds” in 2004 when he was hit with a “number of personal and business difficulties”.
In November 2004, he was banned from operating as a company director after one of his firms, Arrowbay, went bust with debts of £274,000.
Karus was also banned from working as a solicitor and his marriage broke down as he suffered a “number of cash and liquidity difficulties”, according to his lawyers.
His firm Micmal went into receivership, when assets worth £11m were sold to pay off debtors, while another firm in which he owned 50 per cent, Millbraid, went into receivership in 2005.
Karus admitted in the court papers that he did not want the remaining assets of Micmal handed back to him by the receivers in an effort to thwart a potential divorce pay-out to his wife, and agreed to make transfers to his sister instead.
He claims 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 claim that Mrs McElvogue never paid any money for these assets, and was supposed to hold them “in trust” until Karus wanted them returned. 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 lawyers for the McElvogues say Anthony McElvogue mortgaged properties, including the Gloucester Place address, to lodge £500,000 at Edinburgh Sheriff Court and help Karus following his embezzlement conviction. The cash was allegedly used to pay back funds stolen by Karus in a bid to cut his jail term.
Karus was jailed in October 2009 after admitting embezzling £413,052 while acting as executor of the estate of Edith Hampton, 89, who died in 2003.
Mr McElvogue has launched his own legal action to recover his £500,000 from Karus. Lawyers for Karus and the McElvogues did not respond to requests for comment.