Investment

A Cayman Islands-registered hedge fund is being sued in the United States by a publicly-listed firm for alleged violations of the Securities Exchange Act. Tilson Offshore Fund Ltd., which is 'based' at Walkers SPV Ltd., Grand Cayman, and several affiliates have been accused of making false filings with the SEC as part of a scheme to profit from the proposed buy-out of TROY Group Inc., whose shares are quoted on the pink sheets, by one of TROY's minority shareholders, Dirk Inc.

RenaissanceRe Holdings Ltd. announced on February 28 that it had received a subpoena from the Securities and Exchange Commission in connection with an industry-wide investigation into non-traditional insurance products.

A New York-based risk management consultant is seeking more than $1 million in a lawsuit against a Bermuda-based hedge fund manager and its affiliates. Emcor Securities Inc., which is registered with the SEC as a Broker/Dealer and is a member of the National Association of Securities Dealers, filed its lawsuit at New York State Supreme Court, for the County of New York on December 22, 2004.

The SEC has accused a Bahamas-based hedge fund and related parties of defrauding investors of approximately $37 million. Details are contained in a civil lawsuit filed by the Commission at the U. S. District Court for the Southern District of New York on February 16, 2005.

A notorious penny stock swindler currently in prison for fraud is secretly behind a Costa Rica-based Internet 'stock exchange', OffshoreAlert can disclose. Harold Bailey Gallison Jr., a 47-year-old U. S. national, controls the Global Internet Stock Brokerage Exchange, trading as GISBeX, through nominees, including his 74-year-old mother.

GISBeX: Listed Issuers, their management and service providers (past and present) - February 28, 2005

Civil complaints have been brought against parties from nine countries, including former Sotheby's Chairman Alfred Taubman, in an attempt by the Receiver for the failed Lancer Offshore group of hedge funds to recover allegedly fraudulent transfers. Among the defendants in two actions filed at the U. S. District Court for the District of Florida this month are companies from Bermuda, Canada, Isle of Man, Netherlands Antilles, Jersey, Kuwait, Switzerland, the United States and the United Kingdom.

Arbitration Award in Ronnie Moas v. Ehrenkrantz King Nussbaum Inc., Anthony Ottimo, Thomas Giugliano, Robert Bursky, Michael Berlin, and Robert Bursky before the NASD Dispute Resolution.

A fugitive international fraudster now living in Panama tried to impress potential victims by carrying around a "brown bag of cash" to buy a yacht and other expensive items, according to a court judgment. David Struckman, co-founder of the now-defunct Global Prosperity Group, obtained the money by emptying multiple ATMs of all their cash, it was claimed. Details of Struckman's purported spending habits were disclosed during proceedings at the U. S. District Court for the District of Oklahoma. Struckman was held in default for failing to comply with court rules and, on November 10, 2004, the court issued a judgment for $4.65 million against him and two of his firms, Pinnacle Quest International Inc., of Panama, and Synergy Productions International Inc., of Missouri, which he formed after abandoning GPG.

Bermuda-based investment firm Lines Overseas Management and its Managing Director, Scott Lines, have applied for a stay - pending an appeal - of a court order requiring them to turn over information to the SEC for use in two investigations into alleged securities fraud. In a joint motion to the U. S. District Court for the District of Maryland, LOM and Lines, claim that, until a final order is rendered, they "cannot lawfully be required to comply" with four SEC subpoenas and, therefore, the effect of a January 7, 2005 ruling by Magistrate Judge Alan Kay ordering them to comply should be stayed until it becomes final.

Former Bahamas resident and Grenada diplomat Eric Resteiner is considering entering into a plea agreement with federal prosecutors in Boston, where he has been indicted for alleged investment fraud. Details of a possible deal were contained in a joint filing by the U. S. Attorney's Office and Resteiner's counsel at the U. S. District Court for the District of Massachusetts on December 2, 2004.

The last phase of the 1999 settlement between the liquidators of Bermuda Fire & Marine Insurance Limited and BF&M Ltd., which was fraudulently spun off from it, has begun. Part of the $60 million agreement to settle litigation at Bermuda Supreme Court included Bermuda Fire & Marine receiving options to buy shares in BF&M.

A 68-year-old United States resident is suing a British Virgin Islands-registered hedge fund that he claims swindled him out of $432,245.The action against Runnymede Master Fund was filed at the U. S. District Court for the Central District of California on December 14, 2004 by Paul G. McManigal and two of his retirement accounts.

Three civil lawsuits filed at Bahamas Supreme Court against Ansbacher (Bahamas) Limited by investors in the fraudulently-operated Imperial Consolidated Group - which perpetrated a $400 million investment fraud in the United Kingdom and various offshore financial centers - have been thrown out in farcical circumstances. In a written judgment dated November 15, 2004, Justice Hugh Small was scathing about the competency of the law firm of Collie & Collie, representing all of the plaintiff investors who, OffshoreAlert understands, collectively paid it at least $80,000 in legal fees.

Another lawsuit has been filed against the Citco Group concerning its administration of the Lancer group of hedge funds, which collapsed in 2003 with a net insolvency estimated at hundreds of millions of dollars. The latest complaint was filed at the U. S. District Court for the Southern District of Florida on January 11, 2005 by Marty Steinberg, as court-appointed receiver of Lancer Offshore Inc., and The OmniFund Ltd., both of the British Virgin Islands.

Affidavit of Christopher E. Allen of Tony S. Dutson, as Trustee of Diamond Productions International and NW Atlantis, Inc. v. Charles Nolon Bush, d.b.a. Cornerstone Institute, at the U. S. District Court for the Western District of Washington.

The British Columbia Securities Commission yesterday dismissed an application for cease trade orders and other sanctions against offshore investment firm Lines Overseas Management Ltd. and its senior officers. However, it was a hollow victory for the respondents since the Commission panel immediately ordered a new hearing to determine whether to ban LOM from the local market for different reasons.

Criminal Indictment in USA v. Nicholas Mitsakos at the U. S. District Court for the Eastern District of Texas.

A British national who was arrested on Christmas Eve as part of an investment fraud investigation has now had a civil lawsuit filed against him in which $120 million is being sought on behalf of alleged victims. The action was filed at the U. K. High Court on January 5, 2005 by the liquidators/administrators of five corporate members of the Imperial Consolidated Group, which operated in England and offshore centers before collapsing in 2002 owing approximately US$400 million.

Letter to the Editor of OffshoreAlert from Andrea Pinder, of Banakor Swisse Financial Group of Companies.

Bermuda-based investment firm Lines Overseas Management Ltd. and its Managing Director, Scott Lines, have been ordered by a U. S. court to comply with four subpoenas served on them last April by the SEC. The order was issued by Magistrate Judge Alan Kay at the U. S. District Court for the District of Columbia on January 7, 2005. It is likely that LOM, at least, will appeal the decision, as the firm has previously indicated it would do if the ruling went against it.

A sixth person has been arrested in the United Kingdom as part of an investigation by the Serious Fraud Office into the Imperial Consolidated Group, which collapsed in 2002 owing approximately $400 million. Robert Statham Raven, a 44-year-old British national believed to reside in continental Europe, was arrested on Christmas Eve in Monmouthshire, Wales, where he was apparently spending the holidays.

Nassau-based Cardinal International Fund Services Ltd. was due to exit the fund administration business effective December 31, 2004, in the midst of an investigation by the Securities Commission of the Bahamas. Cardinal unexpectedly announced its plans to close within weeks in late 2004. In announcing the decision, the firm's Chairman, Stephen Hancock, claimed the Board of Directors "had concluded that the economic outlook for fund administration both internally and as a jurisdiction created insufficient comfort to warrant the continuation of the business". However, the abrupt nature and timing of the closure announcement indicated there were other reasons.

Bermuda-based investment firm Lines Overseas Management and its two most senior officers "have been at the epicenter of at least two suspected fraudulent schemes", according to the U. S. Securities & Exchange Commission. Furthermore, LOM and brothers Scott and Brian Lines have done "everything possible to keep the SEC from getting to the bottom of it", claimed SEC attorney Michael Lowman at a U. S. court hearing.

A deep rift has developed between the SEC's Receiver of the failed Lancer hedge fund group and the majority of its investors. The group of investors, who claim to have invested more than $570 million in Lancer Offshore Inc. and The OmniFund Ltd., have accused Marty Steinberg of "antagonism" and a lack of co-operation.

A regulator in the Cayman Islands has asked a court to order SEGOES Securities Ltd. to provide information about its business activities after the firm would not do so voluntarily. The Cayman Islands Monetary Authority applied for the order at the Grand Court of the Cayman Islands on December 16, 2004, with a hearing held in chambers before Justice Alex Henderson on December 22 and continued to a future date. CIMA was represented by law firm Maples and Calder and SEGOES by attorney Clyde Allen.

Four civil lawsuits have been filed in Bermuda against Horizon Bank International, which is licensed in St. Vincent & The Grenadines. The separate actions were filed at Bermuda Supreme Court  on December 7, 2004 by FX Bridge Limited, Transworld Management Consultants Corporation, International Monetary Services Inc., and Four Square Partners Inc.

A United States court has reserved judgment on whether an offshore investment firm and its boss must comply with four subpoenas served on them by the U. S. Securities and Exchange Commission. Magistrate Judge Alan Kay did not issue a ruling from the bench at the end of a two-hour hearing on December 10, 2004 at the U. S. District Court for the District of Columbia, as the SEC had hoped.

The SEC's Receiver of the Lancer Offshore Group has filed a civil complaint against the hedge funds' former auditors. Marty Steinberg, in his capacity as court-appointed receiver of Lancer Offshore Inc. and The OmniFund Ltd., alleges professional malpractice and gross negligence in an action that was filed at the U. S. District Court for the Southern District of Florida on December 2, 2004.

Judgment in U. S. Securities and Exchange Commission v. Philip Sexauer at the U. S. District Court for the Northern District of Illinois.

Affidavit of Det. Insp. Michael Moxey in The Attorney General v. Giuseppe Joseph Castiglione, Michael Castiglione, Banakor Swisse SA, BSB Corporate Services Limited, Banakor Swisse Holdings (Nassau) Limited, and Royal Bank of Canada (Bahamas) Limited at Bahamas Supreme Court.

Two prominent Bermudian businessmen accused of fraud appeared at Magistrates Court in November for a preliminary hearing on whether there is sufficient evidence for the case against them to proceed. Bermudians Arthur Jones, 52, and Fraser Butterworth, 62, have exercised

OffshoreAlert has uncovered new evidence casting doubt about the legitimacy of the recent 'sale' of crisis-hit SEGOES Securities Ltd. to Uruguayan company Laxberg SA following regulatory action in the Cayman Islands.

A purported investment "expert" accused of defrauding an elderly couple out of $2.1 million is seeking to hold three offshore firms and others accountable for the claim.Aslam M. Shaw and his business, Investment Club of America, were named as defendants

Another application for evidence has been filed in the United States as part of a criminal investigation by the Serious Fraud Office in the United Kingdom into an alleged $240 million investment fraud and money laundering. The latest application to

Two government agencies in Kuwait are suing a Cayman Islands-registered fund for the return of their $50 million investment.They claim that the operators of the CyberVest Fund - the California-based CIC Group - have strayed from its investment objective and altered its structure to more than double management fees.

Delaware-domiciled River Capital Group Inc., which is controlled by brothers Scott and Brian Lines, of investment firm Lines Overseas Management, is still maintaining that an affiliate's application for a Bermuda insurance license is alive - even though it appears to have died many months ago.

An investigation into suspected stock manipulation has been stymied by the non-co-operation of offshore broker Lines Overseas Management, it has been claimed.The allegation was made at a hearing in November before the British Columbia Securities Commission to consider banning the following parties from the local market: LOM (Holdings) Limited, LOM Securities (Bahamas) Limited, LOM Securities (Bermuda) Limited, LOM Securities (Cayman) Limited, Lines Overseas Management Limited, and LOM officers Donald P. Lines, Chairman and a former CEO of the Bank of Bermuda; Brian N. Lines, President and a Director; Scott G. S. Lines, LOM's Managing Director; Malcolm Moseley, LOM's CFO, Executive Vice President, and a Director; David McNay, Vice President of Investment Operations; and J. Scott Hill, Compliance Manager, all of whom reside in Bermuda.

Two securities fraudsters whose undercover work for the FBI led to multiple indictments in 'Operation Bermuda Short' two years ago are finally being dealt with for the crimes that prompted them to co-operate.Robert Schlien, 56, and William David Jones, 43, each pleaded guilty to conspiracy to commit securities fraud at the U. S. District Court for the Southern District of Florida on October 29, 2004. Their scam caused losses of between $20 million and $40 million to investors in Sky Scientific Inc. and The Jockey Club Inc., both of Florida.

Church-goers in Utah are among investors who claim they were defrauded out of $2.5 million after being promised "guaranteed minimum" returns of 100 per cent per month.The "promised" returns should have come to more than $300 million in a 12-month period, according to a civil lawsuit that was filed at the U. S. District Court for the District of Utah on November 15, 2004.

Complaint in John G. Pitman and Susan Pitman v. Seed International, Ltd., Ocean International Marketing, Ltd., Architects of Wine, Ltd., A.V.E. International, Disney Limited, Kensington Corporation, Ltd., Paradigm Holdings Limited, OptiDisc International Limited, Churchill Associates, Ltd., Heros Global Marketing Services, Ltd., Paradigm Wine Services, Ltd., New Fine Wines International, Ltd., Paul Freeman, Robert John Middlemiss, Denver Andersson, David Wilcock, Phillip Beasley, Fred Hagelberg, Trevor Burroughs, Giles Cadman, Craig Garrett, Desmond Jackson, Anil Kohli, and Robin Loxton at the U. S. District Court for the District of New Jersey.

Confidential Private Placement Memorandum for securities issued by Strategy International Insurance Group Inc. and Strategy Real Estate Investments Ltd.

A former insurance regulator in the British Virgin Islands has been accused of conspiring with others to defraud the United States Government of more than $500 million since at least 1998.Nigel J. Bailey, a British national living in the BVI,

A hedge fund manager and its four principals have settled securities fraud litigation with the SEC. Under the terms of the settlement that were announced on October 28, 2004, New Jersey based Beacon Hill Asset Management LLC, John D. Barry,

Public Announcement about Meridian Income Bond Limited by the British Virgin Islands Financial Services Commission.

Affidavit in support of request for extradition from Panama in USA v. Thomas E. McMurrain at the U. S. District Court for the Northern District of Georgia.

First Amendment Complaint in U.S. Bank N.A. v. Eel River Investment Company, Veril L. Olsen, Michael D. Ross, John E. Breazile, Michael Sullivan, Sterne Agee & Leech Inc., Eel River Acquisition Corporation, Ross Williamson & Loitz PLLC, Sendjer Shefket, of England, and Target International Funds Ltd., of England, at the U. S. District Court for the Western District of Washington.

Application for the appointment of a Commissioner to collect evidence for a criminal investigation in the United Kingdom into Shinder Gangar and others for alleged investment fraud.

Complaint alleging securities fraud involving, inter alia, Imagis Technologies, Inc., of Canada, and Indo Sakura Trust Ltd., of Nevis, in U. S. Securities and Exchange Commission v. Treyton L. Thomas and Pembridge Group Ltd., of the Cayman Islands, at the U. S. District Court for the District of Massachusetts.

Insiders and privileged clients of investment firm Lines Overseas Management stood to profit from the alleged manipulation of a penny stock by LOM principals Scott and Brian Lines, according to a court filing by the SEC.These included directors such as Graham Collis and Susan Wilson, senior employees like CFO Malcolm Moseley; relatives of the Lines brothers, including two minors, and the manager of a local restaurant, Constanzo Di Meglio.