CAYMAN REGULATOR REPEATEDLY FAILS TO ASSIST VICTIMS OF FRAUD

The Cayman Islands Monetary Authority, known as CIMA, has repeatedly failed to stop financial fraud occurring within its jurisdiction, and has not assisted victims to recover assets that have been stolen from them by Cayman-based financial fraudsters. Complaints of losses, due to fraud in the Caymans, have flooded into the Securities & Exchange Commission (SEC) in the US, and the Ontario Securities Commission (OSC) in Canada.

Cayman financial professionals advise that there are at least a dozen open and pending investigations, into major frauds, at CIMA, and not one has reportedly resulted in a criminal referral to the Royal Cayman Islands Police Service. Some of these investigations have been open for a number of years A search of recent Cayman news articles has failed to turn up a single case of money laundering, prosecuted in Grand Cayman; the only convictions I found, of several Cayman fraudsters, were obtained in United States courts, by American Federal prosecutors. All the others have never been charged, and many still pose a clear and present danger to the investing public, due to what can only be described as regulatory malpractice.

More recently, CIMA was informed six months ago, of the massive $450m trading scheme at B & C Capital, Ltd., a Cayman shell company that illegally held itself out, in writing, to be a financial institution, yet the agency has never shut down the company, or even called in its officers and agents for interviews. It has totally ignored the most prominent Cayman financial fraud to hit the island in many years, eliminating all hope that the sixty Canadian & American retirees, whose money is missing, will ever be able to achieve a recovery of even a small portion of their life savings. The fraudsters, known as the Cayman Gang of Four, appear to have evaded justice, and many victims are demanding answers from CIMA.

When a regulatory agency, located in the British Overseas Territories, fails to properly discharge its obligations and duties, with the result being widespread damage and loss, the UK Foreign & Commonwealth Office, which has jurisdiction and oversight, can enter, and take over administration of the agency, to properly carry out the mission of the agency. We saw the UK take over in the Turks & Caicos, when corruption required strong action, and in the case of CIMA, many who have observed its chronic, dysfunctional operation, are calling for it to hereafter managed by the United Kingdom.

Ms. Cindy Scotland, Managing Director, CIMA

DID CAYMAN GANG OF FOUR MOVE $450m OF VICTIMS' MONEY TO CUBA ?

Lamb and Santana

The first civil suit has been filed by one of the victims, against one of the Cayman Gang of Four, Sharon Lexa Lamb, and Dundee Merchant Bank, where Lamb was the Senior Vice President & Director, but where is the estimated $450m-500m in stolen client money ? One source, who is familiar with Caribbean fraud, has stated that most of the money was probably moved to Cuba, and that it was deposited in several of the government-controlled banks there.

What is the reasoning behind such a statement, in the absence of evidence to support such an allegation ? It is based up these known facts:

(1) The Gang of Four's maritime courier, the Cuban national, José Fernandez Santana, has the ability to travel freely in and out of Cuban ports, to Grand Cayman, the Turks & Caicos, and a number of other Caribbean financial centers. Unimpeded international travel by Cubans, especially in a multi-million dollar yacht, can only occur if the individual has governmental approval. Is Señor Fernandez Santana an agent of the Cuban intelligence community ? Otherwise, his yacht would certainly be seized, and he arrested and imprisoned.

(2) Sharon Lexa Lamb, the obvious ringleader of the Gang of Four, and who married Santana, through a purely business arrangement that gives her Cuban residency as well as the right to purchase real property there, is frequent visitor to Cuba. As we have previously reported, Lamb fled to Cuba twice; first, when the trading scandal first broke, and later, when a civil suit was filed, and she was being sought for service of process.

Lamb in Cuba

(3) Other members of the Gang of Four are known to have visited Cuba, for the purpose of conducting business transactions. Were they setting up accounts, so that wire transfers from the Cayman Islands could be set up, or bulk cash shipments, orchestrated by Santana, or payments from other offshore tax havens, could be accomplished ?

(4) Rumors have abounded about certain Cuban government agencies, in need of hard currency for activities that they wish to conduct, who actively participate in financial crimes in the tax havens , the object of which is to fund subsequent covert operations. Was this one of those ?

(5) Admissions, made by Sharon Lexa Lamb, to witnesses who spoke to this blogger, to the effect that the victims would never recover their money, unless they granted her total immunity from prosecution, leaves one with the conclusion that the money is being held in a jurisdiction where it cannot be accessed or frozen. Cuba is one of the very few places that fits the description.

on his yacht

Are the retirement accounts of the sixty Canadian & American investors gone forever, and sitting in accounts in the Republic of Cuba, controlled by the Gang of Four ? Perhaps the multiple pending investigations will provide the answer; stay tuned.

RAISE COUNTRY RISK ON TURKEY TO UNACCEPTABLE LEVELS

Turkey may be about to experience a perfect storm in its economy, mainly through the missteps committed by its government of late. While any one of these issues might not, in and of itself, be sufficient grounds to raise Country Risk, rest assured that the combination will most certainly result in a large amount of economic damage, and the country's national policies could spell financial disaster.

Here is what we are concerned about:

Russia's minimal incursion into Turkish  airspace

(1) Turkey's shoot-down of a Russian warplane, that appears to have intruded into its airspace for no more than 10-15 seconds, in the extreme southernmost frontier area, has resulted in what could be crippling economic sanction imposed upon it by an angry Russia. It will especially affect Turkey's tourism industry, its need for natural gas, and its exports to Russia.

(2) The disclosure that Turkey continues to allow ISIS/ISIL to sell its bootleg oil through Turkey ( mentioned on this blog more than one year ago), and that senior government officials ( e.g. President & Prime Minister) are known to be personally profiting from it, means that Western sanctions may not be far behind.

(3) The sale of arms and supplies to ISIS, reportedly by the Turkish intelligence services, could mean that foreign trading companies might be implicated, in terrorist financing sanctions violations. Trade with Turkey just became a clear and present danger.

(4) The fact that Turkey allowed thousands of wannabe jihadists to enter Syria's civil war through its territory has not been lost upon Western leaders. Can a NATO member be sanctioned by its fellow members ?

(5) Turkish official statements, directed at Israel, a former de facto ally, including threats to conquer the holy sites in Jerusalem, coupled with Turkey's grant of safe haven to Hamas, thereby allowing it to operate in the West Bank, could result in an Israeli response, plunging the country into a wartime situation, just when things with Russia were grave.

Will the Turkish economy falter ? Even if it does not, it could be fatally weakened by any one of the above, and drop into a recession, or worse. You are advised to recalibrate Country Risk for Turkey to the highest level, meaning no extension of credit, no bank client shipments on credit, and no investment in-country, until & unless all of the issues presented here are resolved. 

PANAMANIAN LAWYER SOUGHT TO EXTORT $300,000 FROM CLIENT

When Vladimir Kokorev notified Panama City attorney Ismael Gerli that he no longer required his services, Gerli demanded $300,000, claiming that it was some sort of termination fee. When Kokorev refused to comply, Gerli flew to Spain, and gave perjured testimony to a Spanish prosecutor, alleging that Kokorev had been a money launderer from the family of the President of Equatorial Guinea.

Gerli then told the Kokorev family that, unless they paid the $300,000, he would not recant his perjured testimony. That constitutes extortion, by any definition of the term. The law also threatened Kokorev's life, and made anti-Semitic remarks, both violations of the laws of the Republic of Panama.

Attorney Gerli, who reliable Panamanian sources say literally bought his law degree from a corrupt school administrator, and never attended law school, nor took any bar exam, belongs is prison, not in a law office. Unfortunately, Panama does not discipline its attorneys, leaving them free to steal client assets, and to bribe their way out of any civil or criminal case filed against them as a result. Investors should take this into account when considering to undergo any financial exposure in Panama, where aggrieved foreign parties rarely, if ever, obtain justice through the country's court system. 

NEW YORK FINANCIAL REGULATOR PROPOSES MASSIVE UPGRADE IN REQUIRED CERTIFIED COMPLIANCE PROGRAM, AND PERSONAL LIABILITY FOR CHIEF COMPLIANCE OFFICER

The State of New York Department of Financial Services, an agency that is not shy about going after financial institutions that are deficient in their AMLCFT programs, has proposed a massive set of new requirements for banks and MSBs, including what amounts to personal liability of their chief compliance officers, who will be certifying that their programs meet the new guidelines.

It is strongly suggested that you review the details of this proposed Part 504, Banking Division Transaction Monitoring and Filtering Program Requirements and Certifications, because, when enacted, it will radically change what constitutes best practices in the field of the AML/CFT, since all financial institutions conducting business in New York would be forced to upgrade accordingly.

You can review the complete text here. 

WHO IS THE COOPERATING INDIVIDUAL IN THE CRIMINAL INVESTIGATION OF THE GANG OF FOUR ?

There have been persistent rumors, to the effect that one of the individuals involved in the Cayman Gang of Four $450m trading scandal is cooperating with a North American law enforcement agency.  This would explain the fact that questions have been posed, to some of the more than sixty reported Canadian & American victims, which indicate that investigators, located outside Grand Cayman, have intimate knowledge of the evidence against the Gang of Four. Who is assisting them, perhaps in exchange for immunity from prosecution ?

The only member of the Gang of Four, who has not fled the Cayman islands, is B& C Capital's present Managing Director, Fernando Mota Mendes.  You may recall that Mendes is extremely sensitive to having his name appear in print; he brought bogus criminal charges against a local news blogger, who reported on his role in the Gang of Four case. Is he the Cooperating Individual ?

The other possible participant is an American who formerly worked in Ryan Bateman's office, and later was convicted of money laundering in the United States. Though sentenced to a term in Federal Prison, he has curiously been sent to a halfway house  instead, which allows him to work at an outside civilian job during the day, and only to be confined at night. This is an extraordinary benefit to him, and may indicate that he is rendering Substantial Assistance to law enforcement in the Gang of Four case. Is he the one who is filling in the blanks in the criminal investigation ?

We shall continue to inform our readers of all developments in this case, as they occur.

PANAMA'S MOST PROLIFIC FRAUDSTER SEEKS A DELAY IN SENTENCING ON HIS DUTCH CHILD PORNOGRAPHY CONVICTION

Okke Ornstein, the Dutch fraudster who was, for years, the Scourge of Panama, is seeking to delay his sentencing, in the Netherlands, on a child pornography conviction. Ornstein, who owes Panama more than three years of prison time, in two cases, plus has a five million dollar judgment lodged against him, is once again employing dilatory tactics, in a futile effort to delay justice.

The defendant was convicted in Absentia, in a Dutch court, for selling child pornography, and is awaiting sentencing. Now, he is alleging that he was never served in the case, in an attempt to delay the proceedings further. Of course, he will have to make a personal appearance, which will not happen, for Panamanian authorities want him, for the prison time he owes their court system. He also has several pending fraud cases in the Republic of Panama, and he is a Person of Interest in an unsolved murder there.

He has still one more major problem: if he shows up in court, his life will probably be in danger. He stole $36,000 from the designated terrorist organization, Hamas, taking charitable contributions that were intended for refugee Palestinians living in warn-torn Syria. He has taken to wearing a dress, and posing as a woman, to elude Hamas, according to eyewitnesses.

What will this career criminal do now ? He has been in hiding, in Europe, for some time, but you can trust the Dutch government to eventually catch him. When that happens, his liberty will be lost for an extended period of time. 

EXTORTION CHARGES FILED IN SPAIN AGAINST PANAMANIAN LAWYER WHO FRAMED KOKOREV FOR MONEY LAUNDERING

A Spanish prosecutor has filed criminal charges against the Panamanian attorney, Ismael Gerli, for Perjury, Making Threats, Disloyal Professional Conduct, Extortion, and Giving False Testimony Contrary to the Administration of Justice. Gerli, whose full name is Ismael Enrique Gerli Champsaur,  formerly represented the Russian businessman, Vladimir Kokorev, who has been charged with money laundering offenses in Spain, based solely upon Gerli's sworn statements, which are now considered to be false statements, made for material gain. The apparent intent of Gerli was to frame Kokorev, and his immediate family, for money laundering.

Spanish authorities, in the November 20, 2015 filing, state that Gerli threatened to  testify against Kokorev, before a Spanish court in the Canary Islands, unless he received money, and assignment of  title to real estate assets located in the Republic of Panama. Gerli also threatened the life of Kokorev, unless he received payment. Gerli sent multiple emails to the Kokorev family, and others, which the prosecutor attached to his filings, and which included Anti-Semitic slurs directed at Kokorev.

Gerli, who obviously violated the attorney-client privilege, by traveling to Spain, and giving testimony designed to implicate Kokorev, has a law license in Panama, but allegedly bought his law degree, without ever attending law school. Panama has the diploma privilege, meaning that no bar exam is required to become admitted to the bar, only a degree. Since opening his law office, Gerli has himself employed lawyers, to perform the office's legal work, because he has neither the education, nor experience, to do so.

Gerli's troubled history:

(1) A decade ago, he was implicated in a major money laundering case in Nicaragua, involving the most senior government officials; he is believed to have an outstanding warrant for his arrest in Nicaragua.

(2) Gerli has been closely connected to clients, or partners, who were involved with him in financial crime, in the Ukraine, and in Spain.

(3) Gerli is allegedly on the US Department of Justice No-Fly List, meaning that he cannot travel into, out of, through, or over, the United States.

(4) He is a defendant, in a civil case, in Panama, where it is alleged that he stole real estate from Kokorev, through fraud.

For the foregoing reasons, and others, Ismael Gerli's testimony at a trial in Spain, against Vladimir Kokorev, and members of his family, should be disallowed, and his former statements stricken from the record.

WHY NOT NAME AND SHAME THE GUILTY BARCLAYS OFFICERS ?

By now,  you have read and absorbed the news about the £72m fine levied against Barclays PLC, for compliance violations that occurred when the bank allowed wealthy Politically Exposed Persons (PEPs) to participate in a secretive billion Pound investment. The case is especially egregious, due to the fact that Barclays reportedly went to extraordinary lengths to conceal the names of the investors, keeping that information in a secret safe that staff members did not know existed, and that it applied a lower level of Due Diligence upon those individuals, than it required for PEPs.

The real tragedy here is that the United Kingdom Financial Conduct Authority (FCA) has failed to name & shame the senior officers at the bank who ran this obscene operation, and has declined to take any action against them. How are we to know whether a new hire at the bank, next year, was one of the guilty ones, who kept the PEP client names totally out of the computer databases of customers, to hide them from even other Barclays bankers ? These individuals need to be permanently banned from the global financial services industry, and to do any less shows the financial sector that they can, indeed, get away with such conduct. 

ADDITIONAL VICTIMS COME OUT TO CITE THE CAYMAN GANG OF FOUR FOR FRAUD

Margarita Island, Venezuela

A number of additional Canadian & American investors, who have reported that their financial advisers, known as the Cayman Gang of Four,  absconded with their money, have contacted this blogger, either in person or through counsel, and related their stories of loss, due to fraud, and breach of a fiduciary relationship. They have uniformly stated that the most egregious frauds executed by the Gang of Four were committed by Sharon Lexa Lamb, and Ryan Bateman, and that they consider the misconduct of these two fraudsters, who diverted client assets into a covert trading scheme, to be criminal acts, for which they plan to seek justice through indictment. Most observers believe that the money will never be recovered, as it has reportedly been effectively laundered in several countries.

Other victims have asserted that they were defrauded by one or more of the members of the Gang of Four, in a case unrelated to the $450m trading scam.

Some of the victims, who are planning to bring civil suits in the Cayman Islands, have requested details on the present whereabouts of Gang members Lamb, Bateman, and former Dundee Bank President Derek Buntain, all of whom are reported to be in hiding. Only Gang member Fernando Mota Mendes can be found in Grand Cayman, for service of process.

A reputable media source in the region has stated that the ultimate destination of the Gang's ringleader, Sharon Lexa Lamb, is Margarita Island (Isla Margarita), a Caribbean territory of Venezuela. Considering that international relations between the United States, and the Bolivarian Republic are extremely strained, the chances of her possible extradition in the future, to face charges in the United States, are slim to none.

Miss Lamb

Exactly why Miss Lamb would choose to relocate to Margarita is not known. Margarita is the center of radical Arab terrorist activity in Venezuela, and elements of Hezbollah, Al-Qaeda, Hamas, the FARC, and the ELN, all reside, and operate from, that location. Whether any of the other Gang of Four missing crew members are presently hiding out there, to avoid service, is not known.

US FILES ITS BRIEF IN RICHARD CHICHAKLI APPEAL

Miami Federal Detention Center

We have been getting inquires from readers, requesting an update into the status of the appeal of Richard Chichakli, the Syrian-American CPA who worked with the Russian arms trafficker, Viktor Bout. The case has generated great public interest, not only because of the defendant's ties to Bout, but due to his allegations of governmental misconduct, against both himself & Bout.

 Chichakli is still being housed at the Federal Detention Center (FDC) in downtown Miami, which is primarily a pre-trial holding facility, and not designed for permanent placement of inmates serving their sentences, unless there are special circumstances. He will not be released until June, 2017, and I can find no reason to relocate him to Miami.

 Given that Chichakli had numerous objections, regarding his inability to adequately prepare for trial, while being confined in an FDC in New York, there is clearly a question as to the propriety of his swift post-conviction transfer to Florida, which is far from the venue of his appeal, the Second Circuit, and whether it was done for punitive reasons by the BOP.

The United States has filed its brief in the appeal, and here are the pertinent point covered in the 75-page, well-documented and with profuse citations, filing. Readers who wish more detail should access the document on PACER, or at terminals available to the public at the Court.

(1)  The District Court properly admitted the Bout laptop and exhibits.
(2)  The Court properly admitted the summary exhibits, and the testimony describing them.
(3)  The Government did not suborn perjury.
(4)  The Indictment was valid.
(5)  There was no violation of the Rule of Specialty.
(6)  The appellant has no cognizable claim for ineffective assistance of counsel.
(7)  There was no instructional error.
(8)  There was nothing improper regarding the Government's references to Bout.
(9)  There was no "secret" evidence admitted against Chichakli.
(10) There were no Discovery violations.
(11) Chichakli's placement in the Special Housing Unit (SHU) was not part of the Government's trial strategy.
(12)  The District Court's Guidelines calculations were correct.
(13)  The Forfeiture order should not be disturbed.
(14)  There was no evidence of juror misconduct.

The US Attorney's Office has requested Oral Argument, which is unusual, as it generally desires to have the cases decided solely upon the briefs filed, but then again, it is a case of great public interest, with multiple issues raised by the appellant.

There is a possibility that, should the Court delay somewhat in its decision, or there be significant extensions of time granted, that the defendant could complete his sentence, and actually be released before a ruling is handed down. Can this be considered a case with political implications ? We cannot say at this time, but we will continue to follow the progress of the appeal on this blog.

  

OFAC LEVIES CIVIL PENALTIES ON COMPANY THAT SOLD INTERNET BLOCKING SOFTWARE TO IRAN, SYRIA & SUDAN

Barracuda Networks, inc.,  a US seller of "web filtering products, including products that could be used to block or censor Internet activity, " and whose UK subsidiary sold Internet security products, and related software subscriptions, to individuals and entities in Iran, Sudan & Syria, some of whom were SDNs, was fined $38,930 by OFAC.

Although designated a non-egregious case, I disagree. These products have no benign applications, other than to keep minor children from accessing mature Internet sites.  The software damaged any democracy advocates in those countries, and prevented individuals from seeing the truth, unclouded by evil national interests that are in conflict with Western values. The officers richly deserve some Federal Prison time, and allowing this to remain a strictly civil case is a miscarriage of justice, in my humble opinion.

Add to this the fact that Barracuda Networks, Inc. had no OFAC compliance program in place, and we end up with a mere slap in the wrist, for reckless violations. You may read the complete text of the Enforcement Information for November 24, 2015, here*.
___________________________________________________________________
*http://www.treasury.gov/resource-center/sanctions/CivPen/Documents/20151124_barracuda.pdf

PAKISTAN'S TOP MODEL FINALLY CHARGED WITH MONEY LAUNDERING

Ayyan Ali, regarded by many to be Pakistan's top supermodel, and who was stopped, in March, 2015, when she attempted to board a flight to Dubai, carrying an undeclared $508,000, has been charged with money laundering. While the long delay in bringing her case has often been attributed to her threats to name names, regarding her clients, she has been indicted by the Customs Court, and a hearing has been set for December.

Ali's many previous trips to the UAE, as she is now thought to have been a regular bulk cash smuggler for prominent Pakistani businessmen, has highlighted the potential role of celebrities in financial crime. Most celebrities are rarely stopped, let alone searched, when they jet around the globe, and customs agents, who are often in awe of them, are usually prone to avoid properly discharging their law enforcement duties, when confronted by a famous film or television star.

A number of international celebrities have been found to be carrying large amounts of cash, under circumstances that suggest criminal activity, including tax evasion, either for themselves, or others. Compliance officers should take that into account when bank staff has been receiving unusual requests for large amounts of cash, or the purchase of significant amounts of foreign currency; Don't let their stardom dazzle you. 

GOVERNMENT BRIEF: TRIAL COURT DID NOT ERR IN CALCULATION OF PONZI LOSS IN ILLARRAMENDI CASE

The Brief of Appellee in the Second Circuit appeal, by the Venezuelan Ponzi schemer, Francisco Illarramendi, states that the trial judge did not commit error in its calculation of loss. The appellant, who has gone through no less than five lawyers in this case, delayed sentencing for three years with his arguments regarding the losses suffered by the victims.

The various estimates of the total loss were $382m, $300m, $380m, and $275m. The defendant's gain was estimated as $20m, but it may have been as high as $22m.

The US Attorney's office in Connecticut made these points:

(1) The District Court did not commit procedural error in calculating the loss amount under the Sentencing Guidelines.
(2) The District Court properly determined that Illarramendi's fraudulent conduct caused a very substantial loss.
(3) The District Court cautiously determined that the loss amount could not be determined with sufficient precision.
(4) The District Court acted well within its discretion, in declining to conduct an evidentiary hearing, regarding the loss amount, and the gain attribution.
(5) The District Court properly used Illarramendi's gain as an alternative measure of loss.
(6) If there was Procedural Error, it constituted Harmless Error.

The Appellant's Reply Brief is due in late December; He is currently serving a 13-year sentence.

CRIMINALS BESIDES MEDICARE FRAUDSTERS ARE ALSO HIDING OUT IN CUBA

Most compliance officers are familiar with the cases involving billions of dollars of Medicare payments fraudulently obtained by criminal organizations in Florida. Generally, the front man relocates to Cuba, where he has enjoyed immunity from extradition to US District Court in Miami. There are, however, other classes of criminals who take full advantage of the "Sugar Cane Curtain" that allows them to flee to Cuba, and enjoy the fruits of their American criminal pursuits.

The Wanted poster above illustrates a different type of criminal conspiracy; the offenders fake automobile accidents, and then, using corrupt physicians to assist them, file multiple claims against the insurance companies that cover the motor vehicles. One such criminal organization existed in South Florida; the law enforcement operation that targeted the fraudsters is called Operation Sledgehammer.

As you can see, all the principal bad actors have fled to Cuba, thereby avoiding criminal prosecution. One wonders what the position of the Government of Cuba will be, when diplomatic relations are finally normalized between the two countries ? There are a large number of fugitives from justice living in Cuba at this time. Will Cuba give them up, when sanctions are completely removed ?