There’s possible good news for TAG Virgin Islands: a civil suit alleging the V.I.-based investment management company misused and improperly invested $60 million under its management has been selected for federal mediation.
In late December 2010, Matthew Szulik, the retired head of software giant Red Hat, along with several of his family members, filed suit against the financial management firm alleging the company defrauded Szulik and his family by misusing more than half of their investment portfolio.
Those originally targeted by the Dec. 23 lawsuit include TAG owner James Tagliaferri and the company’s top officers. A beneficiary of the territory’s Economic Development Commission (EDC) program, TAG relocated to the territory from Connecticut in 2007.
According to the suit, Szulik claims he gave Tagliaferri strict instructions to pursue a very conservative investment strategy and that the company complied for many years. But the suit alleges that around the time Tagliaferri moved to the territory, he began liquidating those financial instruments and investing heavily in a number of risky ventures—including thoroughbred horse racing—more than one of which also paid large fees to TAG Virgin Islands.
The fact that Szulik and TAG have agreed to mediation suggests the parties believe some sort of final agreement is possible in principle. However, mediation is both nonbinding and voluntary, meaning that either party can end the process and return to court if they feel it is not moving forward productively.
Notice that the case was selected for mediation was filed Dec. 29. It was placed on the federal courts’ online case management system website Monday, along with a link to a list of certified mediators for the Eastern District of North Carolina, where the case was filed.
The latest development is also potentially good news for the V.I. government, given TAG’s status as a beneficiary of the EDC program. A protracted public lawsuit could have meant another black eye for the oft-maligned program, which has come under considerable scrutiny in recent years from both Congress and the Internal Revenue Service.
