Fake Grenada Bank Operators Convicted in $170M Ponzi Scheme
Four officers of the fraudulent First International Bank of Grenada were found guilty of running a massive Ponzi scheme that duped investors worldwide out of $170 million.
Four Convicted Over Collapsed Fake Grenada Bank That Stole $170 Million
Four officers of the First International Bank of Grenada have been found guilty of operating a large-scale Ponzi scheme that defrauded investors around the world, iccwbo.org reports.
The phoney bank, which collapsed in 2000, lured investors with promises of returns as high as 300%. Its founding claim — that its assets were backed by a 10,000-carat ruby appraised at $20 million — was entirely fabricated. The ruby was owned by a California man who had no knowledge of the bank or its officers.
One of the four convicted officers received an eight-year prison sentence and was ordered to pay more than $32 million in restitution. The remaining three received prison terms and were ordered to pay in excess of $26 million in restitution combined. The bank's founder, former mortgage banker Gilbert Ziegler, died in 2005 while awaiting trial.
A spokesperson for the FBI described the case as a textbook fraud operation. "The First International Bank of Grenada is a classic example of a large-scale Ponzi scheme," the spokesperson said. "Fake high returns were simulated by using money scammed from unsuspecting original investors." The spokesperson added that the FBI advises its members to exercise caution and conduct due diligence when presented with offers of short-term, very high-return investments.
Of the approximately $170 million invested, the court found that most of it has disappeared. Roughly one third was paid back to investors as fictitious interest, a substantial portion was spent on lavish expenses, and much of the remainder was lost when the defendants were themselves defrauded by other con men.
Prospects for victims recouping their losses remain extremely slim. At the time of sentencing, one of the convicted operators was living on social security and another was working in a grocery store.
Investigators required eight years to unravel the scheme, and court proceedings took a further three years. The fraud extended beyond the First International Bank of Grenada to encompass Fidelity International Bank and 13 subsidiary institutions. Prosecutors told the court that the banks' assets included fraudulent financial instruments falsely attributed to legitimate institutions, among them the Bank of China, Union Bank of Switzerland, and Dai-Ichi Kangyo Bank, with a combined face value exceeding $10 billion.
The FBI spokesperson said the scale of the operation required vast quantities of forged documents and a web of fictitious banks deliberately constructed to confuse investors and obstruct investigators. "A fraud of this scale inevitably involves large volumes of fraudulent documents and a spider web of fake banks used to confuse investors and prevent discovery of criminal activity," he said.
Source: Google News GD — Crime