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PaineWebber fires broker, closes offshore brokerage accounts

August 31, 1998
PaineWebber this month fired long-serving broker Terry Cross and terminated its relationship with Bahamas-based financial and corporate services company International Trade & Investments Limited over fears of becoming implicated in a possible tax evasion scandal. PaineWebber took this aggressive action after being tipped off that Cross, who worked at its San Francisco office, had allegedly promoted tax evasion during a speech he gave at an offshore seminar held two months ago in Nassau by ITI.

Bermuda’s Minister of Tourism loses $2 million legal decision in US

August 31, 1998
Bermuda hotelier David Dodwell, who is also the island's Minister of Tourism, has lost a legal decision in the US which may cost him $2 million personally and which also has jurisdictional implications for all offshore businessmen. On August 4, 1998, the United States Court of Appeals for the Fourth Circuit reinstated a $2 million default judgment against Dodwell that had previously been granted in favour of plaintiff Lee N. Koehler and then quashed by a lower court in Maryland.

Reports implicate Stirling Cooke in fraudulent insurance schemes

August 31, 1998
Two reports into Stirling Cooke Brown that were compiled two years ago by a London firm of insurance investigators on behalf of a client gives an interesting insight into the history of the Bermuda-based insurance broker, particularly allegations that the company was involved in a reinsurance spiral. The alleged spiral that we have been told has dragged Stirling Cooke and the Clarendon group into arbitrations in London at least partly involves North American Fidelity & Guarantee and Stockholm Re (Bermuda).

BVI government discusses its all-crimes legislation

August 31, 1998
The British Virgin Islands government has denied that its Proceeds of Criminal Conduct Law is 'defective' by UK standards, even though it agrees that its legislation provides no assistance for foreign investigations into tax offences. Since the UK has already described the all-crimes laws of Bermuda and Cayman as defective for similar reasons, there would seem to be little doubt that the BVI's law is considered in a similar light by the UK, which has also been confirmed to us by an independent source.

Lawsuits brought against Clarendon, Martin Hoffman and Eton Management

August 31, 1998
Further allegations of wrongdoing against entities involving Clarendon Insurance Group Managing General Agent Martin Hoffman and Clarendon itself are contained in two US lawsuits currently awaiting trial. Both actions were filed at the United States Bankruptcy Court for the Southern District of New York by the administrators of Qualis Care L. P., which is currently in bankruptcy.

Insider Talking: August 31, 1998

August 31, 1998
We devote a large portion of this month's Insider Talking to Lines Overseas Management, which is based in Bermuda and also has offices in the Cayman Islands and Guernsey, including a letter from one of the company's Cayman-based financial advisors that makes inaccurate claims and promotes illegal activity; We end this segment on LOM by revealing the contents of a letter written this month to a potential US client by Joe P. Montgomery, a financial advisor with LOM (Cayman), whose services as advertised by Montgomery would appear to be a money launderer's dream; The frequency with which Robert Pires, owner of stock broker/financial adviser Bermuda Investment Advisory Services, and members of his staff fall out, leading to staff departures, continues to occur at an alarming rate; We have reported in the past about John Deuss' courting of the Progressive Labour Party in the run up to this year's General Election; a relationship that has involved wining and dining PLP leader Jennifer Smith on his luxury schooner and paying off the mortgage of the PLP's party headquarters; The first of two lawsuits that are being brought against Cayman Minister of Land John McLean is due to be filed at the Grand Court of the Cayman Islands during September, not August, as we had previously expected; and The government of Nevis narrowly failed to take the island independent in a referendum held on August 10.

Cops 0, Robbers (Alleged) 1

August 31, 1998
The first real test of Cayman's anti-money laundering Proceeds of Criminal Conduct Law 1996 has ended in victory for the alleged money launderers and defeat for the US government - all because the US authorities were a day late in meeting a key filing deadline. Although not agreeing with his interpretation of at least two key points of the PCCL, Cayman's Court of Appeal nevertheless upheld a decision by former Chief Justice George Harre to discharge a restraint order freezing $7 million in three accounts at the Royal Bank of Canada that were controlled by Americans William J. McCorkle and his wife, Chantal.

Ultimatum for bankrupt who hid assets offshore

August 31, 1998
A former high-flying Wall Street options trader who fell on hard times has been given a difficult choice by a Miami bankruptcy judge: either hand over the estimated $7 million that he placed in an offshore trust to avoid paying his debts or never have his $20 million bankruptcy discharged. This novel approach to combating debtors who hide their money offshore rather to avoid paying their debts was adopted by Judge Thomas A. Utschig.

Marc Harris latest: Liquidity crisis deepens, another client goes to prison

August 31, 1998
More information has come our way this month that sheds further light on the current and past turmoil of The Harris Organization of Panama, including details of liquidity problems, the conviction of another one of its clients on a drug trafficking charge and allegations of 'bounty hunting' against two of the group's officers. The financial services group, which we have previously reported as being insolvent, running a Ponzi scheme, ripping off clients and laundering the proceeds of crime, seems to be in financial trouble.

Bermuda Fire & Marine liquidators rejected $10-$15 m offer to settle lawsuit

July 31, 1998
Defendants in a fraud lawsuit involving Bermuda Fire & Marine Insurance Company made an offer last year of between $10 million and $15 million to settle the case, OffshoreAlert can reveal. However, Bermuda Fire's liquidators, Ernst & Young, rejected the offer on the grounds that it fell substantially short of what was acceptable, said a source whose company is owed money by Bermuda Fire.

Bermuda should not become haven for tax crimes, says Financial Secretary

July 31, 1998
Bermuda should not develop the reputation of a haven for those wishing to "hide the proceeds of tax crimes", the Ministry of Finance's Financial Secretary told the Money Laundering and Cybercrime Control conference that was held on the island this month. Addressing a proposed amendment to Bermuda's Proceeds of Crime Law to incorporate tax offences committed in foreign countries, Peter Hardy said Bermuda faced a "dilemma".

Court rejects Price Waterhouse bill of $76 m for 63 days of liquidation work

July 31, 1998
A Hong Kong judge has hit out at the provisional liquidators of the Bermuda-registered Peregrine Group after they and their legal advisers charged fees of $76 million for just 63 days of work. Doreen Le Pichon, Judge of the Court of First Instance High Court, said she was "greatly troubled by the amount involved" and refused to accept the charges of accounting firm Price Waterhouse and its legal advisers unless they could prove the work was reasonable and necessary.

US freezes $3.2 m at Stanford International Bank

July 31, 1998
U. S. authorities have frozen nearly $3.2 million in accounts at Antigua-based Stanford International Bank, as part of an investigation into the illicit fortune of the late Mexican drug lord Amado Carrillo Fuentes, reported The Wall Street Journal.

Mark Hardy’s bankruptcy annulled in the UK

July 31, 1998
The bankruptcy of former Bermuda-based businessman Mark Hardy has been annulled in London, OffshoreAlert can reveal. Creditors of seven failed Hardy companies, including Forum, Focus and Aneco, which were all based in Bermuda, agreed to the annulment three months ago in return for Hardy signing over various assets and debt recovery rights relating to his failed business empire.

Cayman government continues its immoral ways

July 31, 1998
In what might rank as one of the most immoral decisions ever made by a democratic government anywhere in the world, Cayman Minister of Land John McLean has been allowed to keep his ministerial position even though a vote to oust him was carried by eight to six in the Legislative Assembly. Members of the Legislative Assembly who were trying to remove McLean from office for allegedly illegally obtaining over 200 acres of Crown Land worth tens of millions of dollars fell one vote short of the required nine votes needed to pass their motion.

More trouble for Clarendon Insurance and Martin Hoffman new lawsuit filed in New York

July 31, 1998
Clarendon National Insurance Company, Eton Management and Martin Hoffman have all been named as defendants in a lawsuit filed on June 15, 1998 in New York Southern Bankruptcy Court by Qualis Care LP, an entity owned by Hoffman that is currently in administration. Last year, the same plaintiff brought an action in the same court against Hoffman's Barbados-based Knightsbridge International Reinsurance company: a case that is currently awaiting trial.

US Internet gaming ban moves a step closer

July 31, 1998
A law banning Internet gaming moved a step closer to reality this month when the US Senate voted overwhelmingly in favour of it. The Senate voted by 90 votes to ten to approve a Bill presented by Senator Jon Kyl (Republican-Arizona) that would make it a crime to place a bet over the Internet and to offer Internet gaming services.

Cayman’s fiscal exemption clause in PCCL may be legally invalid

July 31, 1998
The fiscal exemption clause in the Cayman Island's Proceeds of Criminal Conduct Law may be legally invalid, according to a leading local lawyer and trust services provider. Attorney WS Walker said that legal advice obtained by his firm in London was that the exemption would not stand up if legally tested.

GTE Re applies to wind-up Belvedere Insurance in dispute over $9M fee

July 31, 1998
A dispute between Belvedere Insurance and GTE Reinsurance Company, which are both based on the island, turned ugly this month when the latter applied to Bermuda Supreme Court to have the former wound up. The irony of GTE Re's application is that the company is believed to be a net debtor of Belvedere's, rather than a net creditor.

Raydon/Stockholm Re in arbitration

July 31, 1998
Two applications have been filed at Bermuda Supreme Court recently in relation to an arbitration between Stirling Cooke Brown subsidiary Raydon Underwriting Management and Stockholm Re (Bermuda), which folded a few years ago.

Florida businessman indicted, Stirling Cooke ordered to place $500,000 into escrow

July 31, 1998
Businessman David Sanz was criminally indicted in the US last month to face charges of racketeering, grand theft and fraud in relation to Florida-based Gulf Atlantic Management Group Inc., which he owned. The offences include an allegation that Sanz illegally stripped off millions of dollars from GAMG over several years and, in a final flourish as the regulatory net closed in, sold its entire book of business of GAMG and that of a related company to Stirling Cooke Insurance Services for $1 million.

US government battles for jurisdiction over Swiss American Bank

June 30, 1998
A battle for legal jurisdiction between the US government and four offshore financial institutions in a $7 million forfeiture case contains a number of important issues that will affect all companies and individuals who operate offshore but have US clients.Among arguments being put forward by the US government for jurisdiction over banking entities located in Antigua, Switzerland and Panama is the fact that the offshore companies sell their services over the Internet, which can be accessed in the US; that Swiss American Bank has advertised in the in-flight magazine of American Airlines; and that SAB has correspondent banking relationships with banks in the States.

John Deuss lays off staff at Transglobal Insurance after disappointing results

June 30, 1998
Transglobal Insurance (Holdings), which is owned by Bermuda-based oil magnate John Deuss, is changing its senior management, cutting back expenses and altering its marketing focus in the wake of disappointing results in its first 18 months in business.Transglobal president Lionel ‘Kip' Herring is being laid off shortly and the company's controller, Beau Franklin, left recently to join another firm in Bermuda.

US seeks to extend legal powers over foreign countries

June 30, 1998
Major legislation has been introduced to US Congress that would extend the power of the US authorities to apply its money laundering laws and penalties in other countries.The proposed laws, which were tabled in April, has the support of both Democrats and Republicans, according to a report in Miami-based newsletter Money Laundering Alert.

Kemper Re settles with EMLICO liquidators

June 30, 1998
Kemper Reinsurance and the Bermuda-based joint liquidators of Electric Mutual Liability Insurance Company have announced a settlement of their long and acrimonious dispute over EMLICO's insolvency.

Cayman governor promises to recognize fiscal offences

June 30, 1998
Cayman governor John Owen appears to have secretly promised the UK government that Cayman will change its law to allow foreign investigations of tax evasion.That is the startling revelation disclosed in the minutes of a meeting of the Public Accounts Committee of the UK government held in London on December 15, 1997.

UK offshore tax initiative: The truth finally comes out after months of misinformation

June 30, 1998
The unfolding saga of moves by the UK to force its Overseas Territories to recognize fiscal offences in its mutual legal assistance laws is extraordinary in that it reveals the lengths that politicians, civil servants and businessmen will apparently go to lie or mislead the public when they think it is in their best interests to do so.It also underscores the importance of newsletters like Offshore Alert, which was launched in February, 1997 to provide clients with an independent and accurate source of information in a sometimes overly secretive offshore world where the truth is often difficult to find.

Shorex 98 focuses on Europe, the Internet and offshore financial services

June 30, 1998
Shorex 98, which is probably the biggest offshore exhibition and conference around, takes place at the Business Design Centre in London on October 20-22.Labeled ‘The International Money Show', the event's organizers expect to attract over 100 exhibitors and 6,000 visitors from around the globe.

Insider Talking: June 30, 1998

June 30, 1998
Offshore regulators apparently uninterested in scams exposed by OffshoreAlert; NimsTec's 3-D cameras offered for sale as "collector's items" over the Internet; Marc Harris has t-shirt with the slogan: "David Marchant is alive because killing him would be a crime"; As General Election looms, Progressive Labour Party tipped to win power in Bermuda for the first time; Dominion of Melchizedek offers a variety of fraudulent products and services; and Little Switzerland contemplates legal action after proposed purchase of Colombian Emeralds International falls through.

Offshore Territories must enforce ‘all-crimes’ laws, not just pass them into law

June 28, 1998
Offshore financial centres that are also UK Overseas Territories have been told that it is not enough for them simply to introduce legislation outlawing ‘all-crimes' but that they must also enforce the new laws.That was one of the messages delivered to the House of Commons Select Committee on Public Accounts by Sir John Kerr, Permanent Under-Secretary of State for the UK government.

Bahamas News Briefs

May 31, 1998
Mutual Fund stats; Central Bank suspends Socimer International Bank; and National Debt grows.

First Nevisian defends itself in erroneous press release

May 31, 1998
A press release claiming it is the victims of a 'smear campaign' briefly appeared on the web-site (www.firstnev.com) of the First Nevisian stockbroking and corporate services group recently before quickly being taken off. The release was in response to our article of March 31 that revealed the existence of an arrest warrant for First Nevisian's boss, Keith King, in South Africa, where he is wanted for questioning in relation to fraud and forgery offences, that his Isle of Man company had lost a recent lawsuit brought by a former client and that King had been declared to be ‘not a fit and proper' person to run a company in the Isle of Man.

Insider Talking: May 31, 1998

May 31, 1998
Former Cayman banker John Mathewson's sentencing hearing for helping to launder the proceeds of crime has been delayed yet again. Mathewson was due to be sentenced on April 30 by a court in New Jersey in the US but the matter was adjourned until later in the year; If figures compiled by The Wall Street Journal are to be relied upon for accuracy, the Cayman Islands is not the world's fifth largest financial center, as it claims, but is actually the eighth largest; Six months after US$9 million of its assets were frozen in British Columbia as part of an investigation into fraudulent trading, the Cayman-based broker/dealer Harris McLean Financial Group has filed a lawsuit in the Grand Court of the Cayman Islands against one of its principals, Richard Harris, and his mother, Ana Harris; and Those of you who have been following our articles on The Harris Organization of Panama might like to read a three-page article on the subject that appeared in the June 1 edition of Business Week.

Scandal-plagued Cayman government faces new crisis over John McLean

May 31, 1998
The Cayman Islands government is facing its second scandal within seven months following an announcement that Minister of Land John McLean has been cleared of illegally obtaining Crown Land worth tens of millions of dollars - despite evidence to the contrary. The circumstances of the official whitewash of McLean are such that it calls into question the ability of the current government to administer its affairs in a competent or moral manner, including regulating its offshore financial services sector.

Stirling Cooke – profit up but what lies around the corner?

May 31, 1998
Stirling Cooke Brown Holdings, a publicly-listed company over which there are several question marks, has reported a profit of $4 million for the three months ended March 31, 1998 - a 41 per cent increase on the same period a year earlier. The company reported that revenues went up by 39 per cent to $19.9 million, while reporting that expenses also increased by 39 per cent to $15 million.

The colourful world of the promoters of The Harris Organization

May 31, 1998
One wrote a book describing Albania as a "fairy tale land" and promised he could show investors "how to double your capital at no risk", another sells seemingly dodgy insurance brokerage licences to the gullible, promising they are available within 72 hours to people with no qualifications or even a formal education who will be able to access the Lloyd's of London market; and another has written a book on prostitution showing where "balding, fat guys like your author" can find "Thai virgins".

First Cayman Bank liquidators prepare to sue directors

May 31, 1998
The liquidators of First Cayman Bank have opened negotiations with the bank's directors and officers with a view to holding them financially accountable for their responsibilities. A lawsuit for negligence is also being considered against the bank's auditors. This and the fact that professional fees and disbursements totalling $1.16 million were incurred in the first 23 weeks of provisional or official liquidation were the highlights of the second report of FCB's liquidators, Ian Wight and Michael Pilling, of Deloitte & Touche, dated May 14.

Turks & Caicos firm used for alleged fraud

April 30, 1998
The U. S. Securities and Exchange Commission has obtained a preliminary injunction and other relief against an Austrian national and three of his companies, including one in the Turks & Caicos Islands, in connection with an alleged multi-million fraud targeted primarily at German-speaking Europeans.

Nevis government supports First Nevisian boss despite arrest warrant

April 30, 1998
The Nevis government has thrown its support behind the First Nevisian stockbroking and corporate services group after Offshore Alert revealed last month that there is a current arrest warrant in South Africa for its main principal, Keith Leslie King, in relation to fraud and forgery charges and that he was kicked out of the Isle of Man by regulators. We have not heard from King or the Nevis government since we ran our article last month.

Stirling Cooke accountant Brian Hynes has conviction for fraud

April 30, 1998
An accountant who participated in one of the world's best-known insurance frauds is currently working for Bermuda-based insurance group Stirling Cooke Brown Holdings as a financial accountant, we can disclose. Brian J. Hynes, former managing director of Carlos Miro-owned Anglo-American International Reinsurance Co., is employed by Stirling Cooke at its London office.

US government brings test case against offshore gaming operators

April 30, 1998
In what is being seen as a test case, the U. S. Government has charged 14 owners and managers of six sports betting companies headquartered in the Caribbean and Central America with conspiracy to transmit bets and wagers on sporting events via the Internet and telephones. The cases are the first federal prosecutions of sports betting over the Internet and they will be watched closely by offshore centers that have embraced gambling as a way of earning much-needed foreign currency.

Dumb and Dumber: How not to conduct a private investigation

April 30, 1998
Prior to, and following, the publication of last month's edition of Offshore Alert, private investigators have been making an unsuccessful attempt to dig up dirt on its publisher and founder, David Marchant. So hapless has the investigation been that Marchant was actually able to track down one of the investigators - Darren Brost, of Renton, Washington - and gave him a call to say ‘hello' and to inform him that he faced the possibility of prosecution for suspected fraud. A criminal complaint against the man has been made with police in his home-town of Renton, Washington State, alleging that he obtained telephone records by wire fraud.

FCO letter presents gloomy picture for offshore finance centres

April 30, 1998
Further details obtained by Offshore Alert about the UK government's new proposals for regulations in its Overseas Territories confirm that what is being planned represents an offshore financial centre's worst nightmare. And there is growing evidence that independent offshore centres like the Bahamas and Antigua are also facing international pressure to conform to new standards.