Creditor fainted and collapsed in shock after Ryan Schembri fled Malta

A man who had been encouraged to invest his savings in Ryan Schembri's business told the court how he fainted and collapsed when learning that Ryan Schembri had fled the island.

"I cried when he fled. I fainted and collapsed in shock,” Joe Difesa told the court. He explained how he had initially handed Schembri over €500,000 in cash after being assured that the Schembris were people of integrity.

Schembri, cousin to former OPM chief of staff Keith Schembri, had fled the country in 2014 with a reported €40 million in debts left behind from the More Supermarkets crash. He is believed to have borrowed large sums of money from entrepreneurs, before finding he was unable to pay back the loans, originally intended for an ambitious import-export operation

Difesa recounted how in September 2013 he met a person familiar with Schembri, in the office of his financial investment advisors, Calamatta Cuschieri.

"He told me that at the time there were no investment opportunities, but he mentioned Ryan Schembri and led me to his business premises in Ħandaq," Difesa said, testifying against Schembri on Tuesday.

Difesa explained that he had followed the suggestion and went to Ħandaq to oversee Schembri's business structure and was quite assured by what he had found. Schembri's secretary arranged a meeting for her boss with Difesa at a rented villa in Birkirkara.

The witness said that he observed a lot of activity, with people coming and going, managing files and other things. Difesa was under the impression that business was thriving and was further assured when Schembri explained how private investors in his meat industry, trusted him with their funds and made a good return on their investment thanks to him.

When Difesa expressed his concern about what would happen if something went wrong, Schembri had issued insurance documents to reassure his potential investor. "But he could have shown them to me upside down as I don't know how to read," the witness said.

After asking around and being assured that Schembri came from a "good family," he pulled €500,000 in cash from his financial advisor and handed the money over to Schembri for a one-year term, with returns being offered monthly or quarterly, or as agreed.

In April 2014 he presented one of the cheques at Banif Bank, but this was rejected and he was told not to return, because Schembri "had no money". Difesa called Schembri himself and after explaining what had happened, he was invited to go to him directly for the cash.

Cheques not cashed

Difesa said that Schembri never complained, and that he used to tell him to cash all or part of the cheques according to his needs. But when Schembri's business went bust, Difesa was left with several unsanctioned cheques. The witness presented these cheques in court as evidence.

Among these were cheques of €16,000 and four more of €27,000 each. When asked why he continued to accept the cheques after the bank had rejected them, Difesa said that he could always take the cash from Schembri, pointing out that he did not need all those funds in hand at the time, as he was making a living.

In addition, he kept those unpaid cheques to invest in Schembri's promised new venture, supplying cruise liners with meat and other food products. He had invested US$1,015,000 in Schembri's business, Difesa said.

Before handing over the money, he went to Ħamrun looking for Ryan's father to verify that the business was reliable. "Can you confirm it’s ok? If I lose this money, I will end up talking to myself," the witness told Ryan's father. "We've been in this business for three years," said the father reassuringly.

Under cross-examination, the witness rebutted the defence's argument that he had actually cashed "a lot of cheques and a lot of money". "How isn’t there a single cheque that has been referred back to drawer," asked Schembri's lawyer, Roberto Montalto. Difesa stressed that he had only tried to cash those cheques once at the bank and after being sent back, he had started getting the cash from Schembri.

The last payment was affected about four or six months before Schembri fled Malta, leaving behind a trail of creditors. Schembri would say that if things went wrong he would refund his creditors within two years.

Schembri asked for a small loan just before fleeing the island

Difesa recalled how shortly before Schembri fled, he had asked for a small loan.

He handed over the money and told him to collect them the following Monday, on his birthday. “You seem to remember how much you invested but you can't remember how much you got back," Montalto asked.

It was no more than €150,000 over two years, the witness replied. Asked why he kept the cheques unsealed for so long, Difesa replied, "I believed in his project [...] I'm still waiting."

The case, presided by Magistrate Donatella Frendo Dimech, continues in July.

Lawyers from the Attorney General's office, Karl Muscat and Francesco Refalo assisted prosecuting inspector Anthony Scerri.

Lawyer José Herrera represented Difesa's interests and lawyer Ian Vella Galea appeared parte civile.