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Wednesday
Jun272018

‘Wolf of Wimbledon’ fraud had deep ties to Mossack Fonseca

Wolf of Wimbledon Jeffrey Revell-ReadeOne of the biggest boiler-room fraudsters in UK history hid his operation behind multiple layers of offshore shell companies set up by the now-defunct Panama Papers law firm, Mossack Fonseca.

Jeffrey Revell-Reade was sentenced by a London court in 2014 to nine and a half years in prison.

Yesterday Revell-Reade, 53, an Australian national, had four years added to his sentence for failing to pay about half of a $9.9 million confiscation order.

He sold worthless shares in U.S.-listed companies to amateur investors in the UK, using high-pressure sales tactics from boiler room operations in Spain.

About 1,000 investors lost $90 million. Prosecutors said Revell-Reade took more than $50 million for himself.

He bought a $6.6 million house in Wimbledon, outside London. He also had luxury homes in Marbella and Melbourne.

He was extradited to the UK from Australia.

Revell-Reade is often compared to the Wolf of Wall Street, Jordan Belfort.

When the Panama Papers were leaked from Mossack Fonseca in April 2016, documents revealed the structure of Revell-Reade's fraud.

A report in May 2016 by Simon Bowers of the Guardian said,

Globe Trade Services had been set up by Mossack Fonseca’s BVI office in February 2005 on the instructions of an intermediary in Hong Kong. Within three months, shares were owned by the company’s sole director, who was not a person but another company, giving a post office box address in Belize. Yet another firm, with a PO box address in Samoa, was appointed company secretary.

Eventually about $38 million taken from swindled British investors was transferred to Globe's Hong Kong bank account, the Guardian said.

The Guardian's 2016 report said "the Panama Papers suggest just how few checks [Mossack Fonseca] made on those behind Globe before forming the company, and how, despite continuing to serve as its registered agent, it failed to alert the authorities when a complaint was received."

The complaint came from a UK investor who said shares he bought through Globe hadn't been delivered.

Mossack Fonseca could have detected links between Globe and Revell-Reade's boiler room fraud, the Guardian said. Allegations had appeared in internet chat rooms, among other places.

But Mossack Fonseca said,

Your suggestion that we should not have incorporated this company based on complaints that appeared on what you describe as internet "bulletin boards" betrays a fundamental misunderstanding of our business, and of how our institution and many others conduct required due diligence.

The firm said it had been "persistent in lodging the appropriate questions related to the nature of the business being conducted by [Globe]."

Panama-based Mossack Fonseca operated for nearly 40 years. At its peak it employed 600 staff in more than a dozen offices.

It shut down at the end of March this year.

New documents leaked from the firm this month revealed huge gaps in meeting know-your-client obligations. After the intial leak, the staff couldn’t identify who owned tens of thousands of companies the firm had registered in offshore jurisdictions.

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Richard L. Cassin is the publisher and editor of the FCPA Blog.