The massive First Bank fraud that took place under the watch of Grenada's ruling New National Party (NNP) government of Prime Minister Dr. Keith Mitchell occupied centre stage at the recent sentencing of four offshore bankers in the United States.

Defendants Rita Regale, Douglas Ferguson, Robert Skirving and Larent Barnabe were key figures of First International Bank of Grenada (FIBG) which bankrolled the NNP to its historic 15-0 clan sweeps of the polls in the 1999 general election.

During the criminal trial of the four Americans, former Chief Regulator of Offshore Banking in Grenada, Michael Creft testified on oath that he collected $100, 000.00 from the bank to give to officials of the ruling party.

According to Creft, he handed out $50, 000.00 in cash to Prime Minister Mitchell and $25, 000.00 to Tony Joseph, the then Treasurer of the NNP and used the other $25, 000.00 to pay off expenses for the election.

Below are extracts from the Sentencing Memorandum from the U.S Court in Oregon on defendant Douglas Ferguson, one of the masterminds of the First Bank scheme that took place under the NNP watch:

DOUGLAS C. FERGUSON

Defendant Douglas C. Ferguson was a long-time associate of Van Brink, collaborated with him on a variety of questionable projects, and was instrumental in the opening stages of the fraud scheme.
Prior to his involvement with Brink, Ferguson sold insurance and managed some dry-cleaning shops in Oregon.

€ In approximately 1994, while in Hawaii, Brink and Ferguson established Wheatland Interests, an entity that created pure trust organisations (PTOs) to assist individuals in hiding their income and assets from the IRS.

Brink and Ferguson enlisted Ferguson's son-in-law to register these PTOs with the State of Oregon, and to open up bank accounts for the trusts at Safeway Northwest Credit Union.

Brink and Ferguson gave presentations to prospective clients about financial matters and the establishment of PTOs at Brink's Maui home and at area businesses. It was at this type of meeting that defendants Rita L. Regale and Robert J. Skirving met Brink and Ferguson.

€ In July 1996, Brink convinced Diana Radford, his colonic therapist, to take out a home equity loan and invest in his offshore Bank, promising that her investment would be 100% guaranteed by the IDIC and that she would earn 50% interest on her investment.

At the time, Brink had not yet purchased the license for FIB, and IDIC did not exist. Radford's loan application was denied. In October 1996, Brink created a fraudulent loan application and fabricated a letter from an attorney to obtain a $750,000 home equity loan for Radford. Douglas Ferguson was the registered agent listed on the fraudulent corporate records submitted with the loan package.

Brink promised that $300,000 of the proceeds from Radford's home equity loan would be used to invest in FIB certificates of deposit. It was right around this time that Brink actually purchased the FIB license from a long-time tax protester named Jerome Schneider.

While Brink made good on his promise to Diana Radford to pay 50% interest on her investment, he neglected to tell her that he made the first few interest payments with her own money.

€ Once FIB was established, investors were instructed to send their funds to an address in Antigua. However, this was just a mail drop, and as soon as investment cheques arrived there, they were placed in an envelope and shipped back to a bill-paying business in Forest Grove, Oregon, called Automated Payment Processing (APP). Douglas Ferguson, acting as President of FIB, signed the contract between FIB and APP.

€ Initial deposits to FIB were passed through APP to two bank accounts at Safeway Northwest Credit Union controlled by Brink, Ferguson, and Brink's girlfriend.

From those accounts, the three paid all their personal living expenses and lulling payments to the first FIB investors. Ferguson used $100,000 of investor funds to open a brokerage account at Paine Webber that he and Brink controlled.

Brink and Ferguson deposited profits from this brokerage account into their accounts at Safeway Northwest Credit Union. Ferguson became its Executive Director. Ferguson drafted the language to be placed on FIB certificates of deposit assuring depositors of the IDIC's 100% guarantee against loss.

€ In his role as IDIC's Executive Director, Ferguson gave videotaped presentations to potential investors and promoters, wherein he falsely claimed the following:

€ that the IDIC was an independent, third-party insurer of deposits to FIB, FIBG and the subsidiary banks;

€ that the deposits of the banks were 100% guaranteed against loss of principal and interest;

€ that FIBG "blocked" assets in a ratio of $3 to every $1 dollar invested (that ratio later became 10:1); and

€ that in the unlikely event of a bank failure, IDIC would take the blocked assets and sell them, paying the depositors all their principle and interest.

€ These false claims were repeated in IDIC literature, which Ferguson drafted, signed, and distributed, and on an IDIC website that was located in Oregon and controlled by Ferguson.

€ Ferguson personally participated in attempts to acquire several "assets" which fell through. He therefore knew that the claims by the Bank and IDIC of huge assets acquisitions were false.

€ Ferguson represented to victims that in the event of a Bank failure, IDIC would "sell" Bank assets. He knew this was not true. At best, IDIC only had a claim against the Bank's paper assets, which over the course of the conspiracy the Bank could never turn into anything profitable. Thus, all IDIC could do was stand in the position of the Bank and hold worthless paper.

€ Ferguson knew that the Bank had never "blocked" or set aside any assets to be liquidated in the event of a Bank failure. Neither he nor IDIC ever had possession of a single FIB/FIBG asset.

€ Ferguson also attended several meetings from January 2000 through March 2000, where the worthlessness of the Bank's assets was openly discussed with Mark Kennedy, Rita Regale, Robert Skirving and others.
  
€ In September 2000, Ferguson admitted misleading investors. He acknowledged to case agents that the term "liquidate" used in the IDIC literature and in the presentations to depositors was misleading.

Ferguson said that the Bank never intended to sell assets, but was really going to use the assets to obtain loans or lines of credit in order to continue operating, and in order to pay interest to the depositors. That never happened. For his participation in the scheme, Ferguson initially received $6,000 per month deposited to an account he controlled at Safeway Northwest Credit Union. The monthly deposits to Ferguson's account rose to $8,000, and continued until the Bank failed in June 2000.

In addition, beginning in 1998, Ferguson and his girlfriend, Eve McLellan, received $10,000 back per month for operating IDIC. In all, more than $850,000 from the scheme went to Ferguson's benefit. Ferguson failed to report any of the funds he received on his tax returns.
Ferguson engaged in obstructive conduct during the Government's investigation and prosecution.

€ On August 18, 1997, defendant Ferguson appeared at an IRS office in Hawaii in response to a lawful IRS summons directing that he provided documents and testimony in connection with an investigation of Gilbert Ziegler.

Ferguson refused to answer any questions about Wheatland, claiming that he was under contract not to disclose any information.
In addition, defendant Ferguson provided an affidavit which falsely stated that he had "no knowledge of where any such documents or records might be now, or have been kept in the past."

This conduct concealed his then ongoing involvement with Ziegler/Van Brink in the beginning stages of this conspiracy.

€ Defendant Ferguson appeared in Portland, Oregon, on September 6, 2000, and was served with a subpoena in his capacity as "Custodian of Records" for IDIC to produce corporate records. He provided an "affidavit" in which he essentially stated that he did not have and did not know anything about where IDIC records might be kept.

Ferguson never provided anything else in response to either subpoena, and his proclaimed lack of knowledge and control was false. Two months earlier, on July 11, 2000, Gerald Burton, the former attorney for IDIC, had told Ferguson: "This, along with IDIC's files I would be happy to mail to any convenient address which you may indicate, as soon as the retainer due for June, 2000, as well as the necessary postage fees have been paid."

Ferguson responded on July 14, 2000, asking Burton to hold the records a little longer. Ferguson did not even communicate the existence of the subpoena to Burton, who testified that he would have produced the records had he been informed of the subpoena.

€ As the court is aware, Ferguson, with the assistance of his girlfriend, Eve McLellan, eluded arrest for many months after he knew he had been indicted.

€ When agents contacted Eve McLellan in January 2004, she repeatedly lied to FBI and IRS agents, claiming that she had last seen Ferguson briefly in the Bahamas a few months earlier, that she had not been in contact with Ferguson for a long time, and that she did not know where he was.

Shortly thereafter, agents traveled to the Bahamas, only to learn that Ferguson and McLellan had rented an apartment there for the previous three months, and that Ferguson left in December 2003 to live with Brink in Uganda while McLellan returned to the U.S.

A search warrant executed on McLellan's computer revealed that she was in contact with Ferguson on a daily basis between January and March 2004.

€ Ferguson's emails to McLellan from Uganda clearly establish he was aware of the indictment and that he was evading U.S. authorities by hiding in Africa:

€ "I'm glad I'm here instead of going through what Bob (Skirving), Larry (Barnabe), and Rita (Regale) are going through."

€ "Good grief, you just got me to read the indictment. .

€ "DO NOT TELL THEM WHERE I AM. SAY THE LAST PLACE YOU SAW ME WAS IN FREEPORT. THIS IS VERY  IMPORTANT. PLEASE BE CAREFUL

€ "The problem with Rwanda is that they do have an extradition treaty with the U.S. Whereas Uganda and Burundi (about six hundred miles) south of here does not ‹ so asylum there just isn't going to work.

Again, with funds like about 10 g apiece V (an) and I can get the passport thing I told you about here and get the visa from the US embassy in Brussels."

In May 2004, Ferguson and Brink were finally arrested by Ugandan police during a raid at the walled estate where the two were living. They were immediately handed over to a team of FBI agents who brought both defendants back to the United States.

Finally, throughout the time he was a fugitive, Ferguson, along with Brink and Skirving, were engaged in an ongoing effort to victimise FIBG depositors. The three were operating "The Restoration Project," a scheme wherein they promised FIBG depositors they could recover their lost investments through a new project that was secret, but was certain to be successful.

In order to recover their funds, FIBG investors had to contribute more money towards the "Restoration Project." Investors were also told that their FIBG loss claims would rise to the top of the repayment list if they provided additional finds or "Staying Alive Money" for Brink's and Ferguson's living expenses.

This entire scheme was premised on the same sort of failed asset acquisitions and high-yield investment fraud which had led to the Bank's collapse.

Any claim Ferguson might make that he thought his actions were legitimate is belied by his continuing promises of guaranteed profits to investors, when he already knew those promises had failed.

(To be continued)