A US court has ordered restitution payments to be made to victims of the massive First International Bank of Grenada (FIBG) fraud in which depositors lost millions of dollars.
The trial judge made the ruling while sentencing to jail four of the perpetrators of the fraud - Rita ReGale, Robert Skirving, Laurent Barnabe, and Douglas Ferguson.
During the trial, evidence emerged that some of the funds were used as bribery payments to Grenadian government officials to allow the controversial bank to continue its operations on the small East Caribbean island.
Former Offshore Regulator, Michael Creft testified that he also collected $100, 000 from First Bank officials to help the ruling New National Party
(NNP) in its 1999 re-election campaign which it won all 15 contested parliamentary seats According to Creft, he gave $50, 000.00 in cash to Prime Minister, Dr.
Keith Mitchell and a further $25, 000.00 to the party's Treasurer at the time, Anthony Joseph.
Calls have been made locally especially from Attorney-at-law, Anslem Clouden for Prime Minister Mitchell and the NNP to return the First Bank money to the fraud victims.
Following is the final part of the Sentencing Memorandum pertaining to the imprisoned Regale, Ferguson, Skirving and Barnabe:
RESTITUTION
The primary goal of the Mandatory Victim Restitution Act (MVRA) is to make crime victims whole.
"Congress intended district courts to engage in an expedient and reasonable restitution process, with uncertainties resolved with a view toward achieving fairness to the victim.".
The purpose of restitution is to restore the defrauded party to the position he would have been in had the fraud not occurred. The MVRA requires that when the return of stolen or embezzled property is impossible, impracticable, or inadequate, the defendant must pay victims the greater of the value of the property on the date of the damage, loss or destruction; or the value of the property on the date of sentencing.
In the instant case, the U.S. Probation Office sent out questionnaires to the thousands of victims who lost their investments with FIBG.
Of those victims, 343 responded to the questionnaires and gave information about their losses and their contact information.
The list supplied by the Probation Office and attached to each of the Presentence Reports includes the amount each victim invested, reduced by interest payments they received from FIBG during the course of the fraud scheme.
Those losses total $22,906,405. We agree that those amounts are the proper starting point for a restitution calculation.
In addition, the third-party IRA custodian PENSCO kept detailed records of the amounts of money its clients invested in FIBG, and the contact information for these victims. The victims who invested through PENSCO lost $4,156,466.
The government believes that these amounts should be increased for pre judgment interest.
In Gordon the Ninth Circuit upheld the district court's imposition of prejudgment interest, reasoning that foregone interest is one aspect of the victim's actual losses.
The Gordon court indicated that the applicable prejudgment interest rate is the one in effect immediately prior to the date of the wrongful conduct which caused the loss.
The rate of interest shall be equal to the weekly average 1-year constant maturity Treasury yield as published by the Board of Governors for the preceding calendar week.
The government has chosen as the date of the loss, August 11, 2000, the date that the government of Grenada appointed a receiver to step in and take control of FIBG.
In the instant case, the weekly average 1-year constant maturity Treasury yield on August 4, 2000, the week preceding August 11, 2000, was 6.09%.
Applying this rate for the six years between the date the receiver was appointed and the date of the first guilty plea on July 14, 2006, results in an interest rate of 36.54%.
The resulting prejudgment interest amount is .3654 x $27,062,871 = $9,888,773. We expect to submit additional loss information to the court prior to or at sentencing.
In addition, defendant Skirving should be ordered to pay restitution in the amount of $6,246,226 to the victims in the Bank of the Nations scheme, as set forth in paragraph 148 of his Presentence Report.
RECOMMENDATIONS
When the government entered into plea negotiations in this case, it predicted that a guideline computation on the Money Laundering Conspiracy charge would result in an offense level 32, before acceptance.
This figure was arrived at by taking the base offense level of 17, U.S.S.G.
§ 2S1.2(a), adding 13 levels for the value of the funds, U.S.S.G. § 251.1(b)(2)(N), and two additional levels for aggravating role, U.S.S.G. § 3E1. 1.
We agreed in each of the plea agreements not to seek additional enhancements. Probation agrees with the base offense level, the value of the funds and the role enhancement.
Probation seeks an additional level for role enhancement for Skirving. We do not agree that he had more of a managerial role than his co-defendants, and accordingly do not agree with this recommendation.
Probation has taken the position that an additional two points should be added because defendants knew the funds involved were from the proceeds of a specified unlawful activity.
Application of this provision, however, is limited to cases in which the defendant knew the proceeds were from one of the specified unlawful activities set forth in 18 U.S.C. § 1956(c)(7).
Defendants in this case have admitted that they knew the laundered funds were the proceeds of the sale of unregistered securities, which does not fall within the list of offenses in section 1956(c)(7).
It is for that reason that the government did not seek this enhancement in plea negotiations.
We acknowledge that Probation may consider conduct beyond what defendants have admitted in applying this enhancement, but would ask the court to honour the agreement of the parties and not apply this enhancement.
Presuming that this enhancement is not applied, and that Skirving receives the same role enhancement as his co-defendants, all defendants are at a level 32, and each has earned a three level reduction for acceptance of responsibility, producing a level 29 and an advisory guideline range of 87-108 months.
Robert J. Skirving
The government agreed to a mid-range sentence of 97 months for Robert Skirving. This sentence would be the largest of any of the defendants.
Our basis for treating Skirving in this manner recognizes a number of aggravating factors.
Those include: (1) he took, by far, the most money from the scheme; (2) as a result of prior administrative actions, he had been put on notice of the wrongfulness of his actions; (3) after First Bank failed, he participated in a new fraud scheme involving Bank of the Nations, with new victims and additional losses; (4) the Bank of the Nations case also included bankruptcy fraud, in which his wife was involved.
For these reasons, we ask the court to impose a 97-month sentence. The sentences of the remaining defendants were adjusted downward to account for various factors.
Laurent E. Barnabe
The government agreed to a 72-month sentence for defendant Barnabe. We concluded that his culpability was second to Skirving for the following reasons.
First, he too had previously been sanctioned for similar conduct, and therefore, was on notice of the wrongfulness of his actions. Second, he had the most direct involvement in producing and distributing the false statements which made the scheme work.
Third, he profited handsomely from his involvement. Nonetheless, he was judged to be less culpable than Skirving primarily because he did not participate in Bank of the Nations.
Barnabe has also agreed to forfeiture of the funds being held by PriceWaterhouseCoopers in Canada.
Douglas Ferguson
The government agreed to a 52-month sentence for defendant Ferguson. We discounted his sentence because of his relatively lesser direct involvement in Bank affairs and because he received compensation which was comparatively less than the other defendants.
Rita Regale
The government initially agreed to a 6-level departure for substantial assistance for defendant Regale.
Following her guilty plea, Ms. Regale met on many occasions with prosecutors and discussed many aspects of the case. The value of this cooperation was greatly enhanced by the unique circumstances of this case.
As a bank insider, Ms. Regale was in a position to introduce foreign bank records and provide factual descriptions of events which occurred overseas.
For this reason alone, her cooperation was an enormous benefit to the government.
We also believe that knowledge of her cooperation contributed to the remaining defendants decision to plead guilty. For these reasons, we continue to believe that a 6-level departure is appropriate.
In addition, the government now seeks an additional 2-level adjustment which would bring Ms. Regale into a 46-57 month range, and we recommend a low end sentence.
Our basis for this adjustment is as follows: (1) Ms. Regale had little or no direct contact with victims; (2) while she was instrumental to the scheme, she was also in many respects following the direction of others, principally Van Brink; (3) as the first and only cooperator in this case, it would not be appropriate for her to do more jail time than Ferguson, who waited almost another year and put the government to great expense before pleading.
At the same time, we strongly oppose defendant's request for probation and will be happy to further address our objections at sentencing.
Suffice it here to say that a sentence of substantial jail time is necessary for any defendant guilty of involvement in a scheme of this proportion.
CONCLUSION
For the foregoing reasons, the government requests that the court adopt the sentence recommendations set forth above.
DATED this 22nd day of August 2007.
Respectfully Submitted,
KARIN J. IMMERGUT
United States Attorney
