The Laundry Man by Kenneth Rijock ( Penguin/Random House UK)

Sunday, October 9, 2011


An insurance executive, who sold fraudulent liability insurance policies written by shell companies located in Caribbean tax havens, has entered a plea of guilty to conspiracy to commit money laundering in US District Court in Texas*. Edmund Benton faces a maximum sentence of ten years in Federal Prison, plus a substantial fine. Two other defendants have elected to go to trial, still others remain overseas, and their extradition is being sought.

The scheme involved the use of insurance companies with no assets located in St. Vincent & the Grenadines. The fraudsters wired the proceeds of their criminal enterprise to Canada, and to Caribbean and Central American banks.When an insured filed a major claim, due to loss of life in a maritime accident, it was discovered that the entities providing coverage were shell companies with no assets. The policies were worthless.

If you have been in the compliance business a while, you may remember the case of the offshore insurance company that insured high-risk businesses in Los Angeles two decades ago. After an earthquake, the insureds were unable to obtain any payment upon their policies, because the tax haven jurisdiction did not adequately monitor corporations, and it was a corporation secrecy jurisdiction. The company had no assets to pay claims. In this case, accepting insurance coverage from any entity located in offshore jurisdictions is playing with fire; you will probably get burned.

*United States vs. Benton et al, Case No.: 10-cr-814-S (SD TEX).

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