Grenada Today - The National Newspaper of Grenada, Carriacou & Petite Martinique

Grenada under Keith Mitchell’s New National Party (NNP) government was once again in the spotlight for an offshore scam that was committed by persons doing business on the island.

The latest scandal to surface that affected Grenada’s image was heard in a court in California in the United States. The story of the convictions was reported in the latest issue of Offshore Alert, the Miami-based publication of British-born journalist, David Marchant.

Offshore Alert was the publication that broke the story of the alleged acceptance of a bribery payment of US$500, 000.00 in June 2000 by Grenada Prime Minister Mitchell by German fraudster, Eric Resteiner in exchange for a diplomatic posting.

Following is the full text of the latest Marchant expose on Grenada’s offshore industry scams:

The operators of yet another Grenada-licensed offshore bank have been convicted of fraud-related charges in the United States.

Taansen Fairmont Sumeru, a.k.a. David Freeston, of Santa Barbara, California, and Jerome Harold Hall, a.k.a. JeRu Hall, of Fairfield, Iowa, were convicted by a jury of eight counts of securities fraud and nine counts of wire fraud at the U. S. District Court for the Central District of California on January 24, 2006.

Sumeru was also convicted of conspiring to launder money and failing to file federal income tax returns for 1999 and 2000. They are scheduled to be sentenced on March 27, 2006 by United States District Judge Manuel L. Real.
Sumeru faces a maximum sentence of nine years in prison and Hall faces a maximum sentence of 10 years in prison.

Sumeru and Hall were co-founders and directors of Sattva Investment Bank, which was incorporated and licensed in Grenada and had “consulting offices” at 2022 Cliff Drive, Santa Barbara, California, which was “a Mail Boxes Etc. store”, according to the indictment.

From February 1999 until November, 2000, Sattva - operating as a “sub” bank of the notorious First International Bank of Grenada - attracted clients by offering high returns and claiming that deposits were “guaranteed” by a sham offshore “insurer” known as IDIC, it was alleged.

As previously reported by OffshoreAlert, IDIC was originally formed in Nevis but re-domiciled to Grenada after it was closed down by the local regulator following an exposé by OffshoreAlert. “Evidence showed that during 1999 and 2000, Sattva promoted and sold investment and banking products, including Certificates of Deposit with guaranteed interest rates as high as 200% per year”, stated prosecutors in a press release to announce the guilty verdicts.

The jury found that Sumeru, Hall and others diverted and converted to their own personal use and benefit a portion of the funds obtained from Sattva investors. Evidence presented at trial showed that in order to give the scheme the appearance of legitimacy and to avoid detection, Sattva used funds received from new investors to make promised payments to earlier investors. Over $5,000,000 was invested in Sattva.

Sumeru laundered some of the criminal proceeds through accounts in the name of a Bahamas-registered shell firm called Golden Age Intelligence Associates Ltd. at Barclays Bank, in the Bahamas; in the name of Sat Yuga at American Savings Bank, in Hawaii, and in Sumeru’s own name at Belize Bank, in Belize, stated the indictment.

Hall, meanwhile, formed a corporation in Antigua called Jai Ram Corporation that used a P. O. Box in Iowa, according to the indictment. In order to develop “credibility and trust”, Sumeru allegedly claimed to have a Ph.D. in religion and “to hold the title of Governor of the Age of Enlightenment” in the Transcendental Meditation movement.

He targeted members of Investors International, described as “an unincorporated organisation that operated as a multi-level marketing program that claimed to have thousands of members worldwide; “practitioners” of Transcendental Meditation and those he had sold investments to before, including in schemes such as Quantum Gold, an unlicensed investment program operating from the Bahamas during 1998 and 1999 that supposedly engaged in futures trading with alleged yields of at least 10% per month net to investors, it was alleged.

Customers were told that Sattva’s “clientele consists mainly of tax haven charitable organisations involved in humanitarian projects whose mission is to bring World Peace” and were advised to open accounts with Bahamas-based Prosper International League Ltd. “in order to facilitate monetary transactions with Sattva”, it was alleged.

Sumeru and Hall are among approximately two dozen former operators of Grenada offshore banks who have been convicted, charged or arrested pending charges in connection with fraud investigations in the United States and the United Kingdom over the last few years.

In its heyday from 1998 to 2001, Grenada licensed more than 40 offshore banks, all of which have gone out of business and virtually all of the banks were involved in crudely fraudulent activity in what was, essentially, a criminal partnership between the public and private sectors in Grenada to defraud foreign investors.