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FCPA Blog Daily News

Entries in Turks and Caicos (10)


Here's some open source due diligence on Och Ziff's Africa agent

After reviewing several articles including the recent FCPA Blog post, "Alleged Och Ziff Africa 'fixer' arrested for FCPA offenses," my focus immediately shifted to due diligence procedures. Specifically, I thought about the risk profile of Samuel Mebiame. 

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American investment advisor jailed after IRS sting in the Cayman Islands

An American investment advisor based in the Cayman Islands was sentenced by a federal court in Virginia Friday to 30 months in prison for a money-laundering conspiracy, the DOJ and Internal Revenue Service (IRS) said.

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Two offshore bankers and a lawyer charged with helping Americans hide assets

A DOJ and IRS sting resulted in the arrests of two Caribbean-based bankers -- an American and a Canadian -- and their Canadian lawyer for conspiracy to launder money and hide the identities and assets of U.S. taxpayers.

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Sandals Resort pays $12 million to settle bribery probe

Luxury resort operator Sandals will pay $12 million to the government of the Turks and Caicos to resolve an investigation into bribery and money laundering.

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Resource Alert: Temples Of Integrity

Among Transparency International's good works are its country reports, called national integrity system (NIS) assessments. TI has published more than 70 since 1991.

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Tinseltown, Bourke Again, And Margaritaville

More on the Greens. In February 2008 we said: "We're not privy to the Greens' defense, of course, but they appear to have a tough legal battle ahead of them." As their trial was about to begin this week, it was postponed. According to the AP, the Justice Department blamed the one-week delay on "the availability of a prosecution witness." Trial delays aren't unusual. But could the Greens be trying to work out a plea?

As we've said, Perry Mason's clients never ended up behind bars. But real-life FCPA defendants aren't so lucky. Most accused individuals have plea-bargained to reduce or avoid jail time -- FCPA convictions carry a prison term of up to five years. And consider this: Since 1991, not a single FCPA trial has ended with an acquittal.

The Greens -- husband-and-wife Hollywood movie-producers Gerald and Patricia -- are also charged with conspiracy, money laundering, obstruction, and filing false tax returns. He's 76, she's 54, and if convicted on some or all counts they could spend the rest of their lives in prison.

Jury selection in U.S. v. Green is scheduled to start on August 25.

* * *
About those FCPA jury instructions. Responding to this week's post, The Feds Should Take A Meeting, a reader said:

I'm not sure the Professor's criticism of the Bourke instructions on jurisdiction are well-founded. Although the statutory charging language in the conspiracy count does allege that the conspiracy continued to in or about 1999, only two of the overt acts took place after the 1998 amendments were signed into law. One was a trip to Azerbaijan in January 1999 by Farrell and the other a trip in February 1999 by Bourke. Both of these trips are described as being for the purpose of meeting with Azeri officials concerning the privatization investment, but the government did not set out any particular acts in furtherance of the bribery scheme. Moreover, in the original indictment, none of the substantive FCPA counts involved transactions after November 10, 1998. Thus, it is likely that the government chose to play it safe and had the court instruct on the pre-amendment jurisdictional element.
But the pre-1998 jurisdictional instruction wouldn't be needed in U.S. v. Green, where the alleged offending behavior took place from 2002 to 2007.

The government's proposed jury instructions in United States v. Green (United States District Court for the Central District of California, Case #: 08-59(B) - GW) can be downloaded here. The proposed "interstate commerce" instruction is number 28.

The jury instructions from
United States v. Bourke, S1 05 Cr. 418 (SAS) (S. D. N. Y.) can be downloaded here.

* * *
Turks and Caicos-shire. Last Friday, Britain suspended the territory's political institutions and imposed direct rule. A U.K. report (available here) alleged systematic corruption among Turks and Caicos' leading politicians and their friends. A U.K.-appointed governor is now in charge.

In an AP report, former premier Galmo Williams said, "Our country is being invaded and re-colonized by the United Kingdom, dismantling a duly elected government and legislature and replacing it with a one-man dictatorship."

Turks and Caicos is a British Overseas Territory about 500 miles southeast of Florida. Its 25,000 residents have U.K. passports. Its beaches attract around 300,000 tourists a year.

British Foreign Office Minister Chris Bryant said the suspension could last up to two years while governor Gordon Wetherell "puts the Islands' affairs back in good order," according to the AP. Elections for a new government will be held by July 2011, Bryant said.

Meanwhile, will the U.K.'s audit into the government's accounts reveal any FCPA compliance problems for investors in T & C during its former home-rule regime?


Caribbean Corruption Report Leaked

WikiLeaks -- the site that publishes documents that are "classified, censored or otherwise opaque to the public record" -- has posted the suppressed final report of the Turks and Caicos Islands Commission of Inquiry. Based on the commission's findings, the British government said in June it would suspend the territory's political institutions and impose direct rule. Because of lawsuits filed in London, however, the takeover has been delayed and the commission's report was put under wraps. A redacted version appeared on the commission's website but removed a few hours later. WikiLeaks then posted an unredacted copy.

In its cover note, WikiLeaks said:

This suppressed report, dated July 18, 2009, lays at the center of UK plans to take control of the Turks & Caicos Islands—a Caribbean tourist and tax haven.

Following corruption allegations made against the Islands' political elite, the British Foreign and Commonwealth Office (FCO) commissioned Sir Robin Auld last year to run the Turks & Caicos Islands Commission of Inquiry.

After the release of an interim report in March, 2009, the Commission and the Island's Governor were sued to prevent the release of parts of its final report.

On July 18, 2009, the Commission briefly released on its website what it called its Redacted Final Report ( According to the Commission's July 18, 2009 press release, the —

Governor's redaction results from the direction of the Hon Chief Justice Gordon Ward in the current litigation between Mario Hoffmann and Cem Kinay against the Governor and me (and an assurance given by the Hon Attorney General in proceedings brought by Jak Civre).

Hours later, the entire 266 page redacted report was removed from the Commission's web site.

WikiLeaks has obtained the full report—and unredacted the missing text.

Download a copy of the July 18, 2009 Final Report of the Turks and Caicos Islands Commission of Inquiry 2008 - 2009 here.

Read our prior posts on the Turks and Caicos Islands here.


More Caribbean Controversy

Tiny Antigua -- the adopted home of Sir Allen Stanford -- isn't the only Caribbean hide-away that's in the news these days for the wrong reasons. There's also its even-tinier neighbor, the Turks and Caicos Islands.

In April, a U.K. report alleged systematic corruption among Turks and Caicos' leading politicians and their friends. Based on the report, the British government announced plans to suspend the territory's political institutions and impose direct rule. It was supposed to happen two weeks ago but a last-ditch lawsuit filed in London to block the move will be decided first, maybe as early as this week.

Turks and Caicos is a British Overseas Territory whose citizens have U.K. passports. Its total population is only around 30,000 but every year 300,000 tourists show up on its beaches. And it's a favorite among privacy-seeking celebrities, said to include Keith Richards, Bruce Willis, Christie Brinkley and Donna Karan, among others.

The London court case was filed by the territory's former prime minister, Michael Misick, who resigned when the U.K. corruption report came out. He says Britain's plan to suspend the constitution and the right to trial by jury would violate the residents' human rights. Misick himself, according to investigators, made millions of dollars since his election in 2003, partly by selling crown-owned real estate and pocketing the money. One of the key witnesses against him has been his estranged wife, the American actress LisaRaye McCoy.

Some locals, however, are accusing the U.K. of grand hypocrisy. The current premier of Turks and Caicos told the Financial Times that because of the expenses scandal in the U.K. parliament, British politicians “no longer have the moral authority to lecture other countries on corruption.” Former premier Misick said, “We have a saying on the island – it is like the pot calling the kettle black. How can you want to dissolve our parliament when you have these problems at home?”

Most politicians in London, according to the Financial Times, dismiss the idea that the MP-expenses scandal has lowered Britain's standing in the world and ability to govern the Turks and Caicos. The MPs themselves are mostly saying they've been victimized by a bad system. But a British diplomat said, “There’s no question that it feels a touch more uncomfortable, whether you are a minister or official, to talk about the importance of good governance or tackling corruption.”

* * *
From Frederic Bourke's Trial. Bourke rested his defense on Tuesday without taking the stand. Closing arguments will be on Monday, July 6, then the case goes to the jury.

This week Bourke’s lawyers kept hammering away at earlier testimony from Hans Bodmer, Viktory Kozeny's former Swiss lawyer. He said he told Bourke about Kozeny's plan to bribe Azeri officials. According to Bloomberg's courthouse-reporter David Glovin here, "Eric Vincent, a lawyer who in 1998 worked for investor Omega Advisors Inc., [on Monday] became at least the third defense witness to challenge Bodmer’s testimony. Vincent said Bodmer never told him Azeri officials were part of the Socar deal, as Bodmer claimed."

Glovin reports that "Bourke denies knowing of the bribes and says Kozeny stole more than $180 million from him and other investors. Azerbaijan, a nation in the Caspian Sea region, never sold [state-oil-company] Socar, wiping out the investment. Bourke, who was once married to a member of the family that owned Ford Motor Co., put up $8 million, including cash from . . . his friend ex-U.S. Senator George Mitchell." Two weeks ago Mitchell testified in the case for four hours. He backed Bourke, saying he trusts him and that they never discussed any bribery.

Bourke's final witness was his "life partner" Megan Harvey. She also said she never heard Bourke talk about any bribery connected with the deal. They knew about Azeri officials investing, she said, but she and Bourke had been told "the Azeris had paid for their stake and that their lawyers had said it was legal." Prosecutors didn’t cross-examine her.

Bourke faces up to 30 years in jail for conspiring to violate the Foreign Corrupt Practices Act, money laundering and lying to federal investigators.

Read David Glovin's reports on the trial here.

Read all our posts about U.S. v. Kozeny and the prosecution of Frederic Bourke here.

We wish our U.S.-based readers a great Independence Day weekend. We'll be back on Monday.


On The Side Of Justice . . .

Great words from Ellen Podgor at the White Collar Crime Prof Blog (here). They're about Attorney General Eric Holder's decision this week to drop the prosecution of former Senator Ted Stevens: This dismissal is monumental in terms of sending a message that this justice department will be very different. Many years ago a group of AGs signed an amicus brief in the case of Gideon v. Wainwright advocating for the defendant. They wanted a fair fight in court, and recognized the importance of the right to counsel to achieving justice. What happened today is on par with what happened back then. It is a recognition that prosecutors are not merely advocates, but rather "ministers of justice." Today an Attorney General took the side of justice.

* * *
When a Chinese provincial official was asked earlier this year if he would support an anti-graft law encouraging office-holders to disclose their wealth, he answered, "No. If that's the case, why don't citizens declare their assets." Well, that's what they're doing. The first was a high school teacher in Zhejiang Province. Chen Yong's disclosure appeared on two of China's most popular online forums.

Chen listed his assets as a small farmhouse built by his parents worth $25,00, his life savings of about $10,000, and stocks worth about $500 that he said had lost 60% of their value. Taking a shot at philandering corrupt officials, Chen said he only had "one girlfriend, no mistresses or lovers." Now others are following his lead all over Chinese cyberspace. A comment on one site said, "We've taken up the challenge and disclosed our assets, now it's your turn." (Source: The Straits Times, Singapore, March 28, 2009).

* * *
In a February post here, we wondered if evidence might emerge that Allen Stanford violated the Foreign Corrupt Practices Act. He hasn't been charged by U.S. authorities with any criminal offenses, but his cosy relationships with Antigua's rulers at least created some blatant conflicts of interest for the regulation of his offshore banks.

Now comes news that the number 2 executive in Stanford's commercial empire is cooperating in the federal criminal investigation. As the law blog's Ashby Jones perfectly put it, "Could this be an uh-oh moment for R. Allen Stanford?" The executive, James Davis, is "fully cooperating with the federal investigations," according to his lawyer. He was a director and chief financial officer of both Stanford Financial and Stanford International Bank, based in Antigua.

* * *
And staying in the Caribbean, this April 1, 2009 report from the U.K.'s Times :

"Michael Misick, the previous Premier of the Turks and Caicos, announced his intention to step down just hours after reports last month that London might seize control of the islands over concern at the allegations of corruption. He is alleged to have built up a multi-million dollar fortune since he was elected in 2003, with a series of loans from banks based in the tax haven and from deals with property developers for land owned by the Crown. Mr. Misick, 43, who condemned the plan to strip the territory of its independence, is at the center of allegations that he and his now estranged wife, the American actress LisaRaye McCoy Misick, lived a celebrity lifestyle far beyond his salary as premier."

As we said in a post here, whether past violations of the Foreign Corrupt Practices Act and other anti-corruption laws might be found by investigators after the British take direct control of the government is an open question.


Combating Caribbean Corruption

The U.K. government is in the process of assuming direct rule over its Caribbean dependency, the Turks and Caicos Islands. A U.K. Commission of Inquiry found "clear signs of political amorality and immaturity" in the government there. The BBC said chief minister Michael Misick is alleged to have "built up a multi-million dollar fortune since coming to power in 2003." He denies misusing public funds.

Turks and Caicos, a British Overseas Territory whose citizens have U.K. passports, consists of about 40 islands, eight of which are inhabited by a total population of around 30,000. The U.K.'s preliminary report said there was "information in abundance pointing to a high probability of systematic corruption or serious dishonesty" throughout the government. The CIA World Factbook says T&C is a transshipment point for South American narcotics destined for the U.S. and Europe.

The head of the U.K.'s Commission of Inquiry, Sir Robin Auld, hasn't said whether he'll recommend criminal investigations. His final report is due in April.

Reuters said today, "The U.K. will proceed with the seizure of power when a final report is published next month . . . . The decision is the latest effort by [British Prime Minister Gordon Brown], U.S. President Barack Obama and leaders in Germany and France to crack down on offshore financial centers. Turks & Caicos Premier Michael Misick called on the United Nations to intervene on the country’s behalf."

Antigua, another tiny Caribbean destination, was in the news last month. Texan Allen Stanford, accused by the Securities and Exchange Commission of an $8 billion investment fraud, headquartered his offshore bank there since 1996. As in Antigua, offshore financial services are an important part of the Turks and Caicos economy. That raises the same possibility of corrupt relationships between officials there and offshore operators. Whether past violations of the Foreign Corrupt Practices Act and other anti-corruption laws might be found by investigators after the British take direct control of the government is an open question.

Stay tuned.