US probes $50m fraud, money laundering scheme
Two Vincentians have been indicted by the United States Attorneyâs Office in relation to a $50 million international securities fraud and money laundering scheme.
Linda Bullock and Adrian Baron, both having dual citizenship in St Vincent and the Grenadines (SVG) and the United Kingdom (UK), were named in the indictment, which was unsealed on Thursday, March 1, in Brooklyn New York.
Bullock, 57 is the chief executive officer (CEO) of Loyal Bank and a director of Loyal Agency and Trust Corp. She primarily works at Loyal Bankâs office at Villa, SVG, while Baron, 63, is employed as the chief business officer (CBO) of Loyal Bank and a director of Loyal Agency. He primarily works at Loyal Bankâs office in Budapest, Hungary. Prior to being CBO, Baron had been employed as the CEO of Loyal Bank between 2006 and 2014. Bullock had been employed as Loyal Bankâs head of compliance between 2004 and 2014, before being promoted to CEO. Loyal Bank Ltd is an offshore bank with offices in Budapest, Hungary and SVG; and Loyal Agency and Trust Corp, an offshore management company, located in SVG.
According to the indictment, Baron and Bullock are alleged to have participated in a scheme to manipulate the United States stock market and assisted with the laundering of the proceeds of various market manipulation schemes through bank accounts at Loyal Bank. The indictment alleges that on or about June 14, 2017, an undercover agent of the United States Government, who was investigating these schemes, met with Baron at Loyal Bankâs office in Budapest. During that meeting, which according to the indictment was consensually recorded, the undercover agent explained that he was a US citizen and that he was a stock promoter involved in stock manipulation schemes.
âThe Undercover Agent further explained to Baron that he was interested in opening multiple corporate bank accounts at Loyal Bank. The Undercover Agent informed Baron that these accounts would be opened in the names of Belizean International Business Companyâs (IBC) controlled by the Undercover Agent and that no US citizens would appear on any of the account opening documents, despite the Undercover Agent
being the true beneficial owner of the accounts. According
to the indictment, Baron responded that Loyal Bank could open these accounts and provide debit cards linked to them. After this meeting, the Undercover Agent applied for a corporate bank account at Loyal Bank in the name of one of his Belizean IBCs and with a confidential source (CS-1) acting as the nominee for the account,â the indictment stated.
On or about July 7, 2017, Bullock and Baron met in Miami with the Undercover Agent, and again, according to the indictment, the meeting was consensually recorded. During the meeting, the Undercover Agent described how his stock manipulation deals operated, including the need to conceal from the Securities and Exchange Commission (SEC) his true beneficial ownership of more than five per cent of a companyâs stock through nominee brokerage accounts, and the need to circumvent the Internal Revenue Serviceâs (IRS) reporting requirements under the Foreign Account Tax Compliance Act (FATCA).
FATCA requires that foreign financial institutions and certain other non-financial foreign entities report on the foreign assets held by their US account holders.
âFollowing Bullockâs departure from the meeting, Baron joked that the corporate bank account at Loyal Bank, for which the Undercover Agent had applied, had âno US involvement that [he] could see,â despite the Undercover Agentâs representations to the contrary, the indictment stated.
The Undercover Agent also emphasized that he required Loyal Bankâs debit card service to provide kickbacks to US-based brokers as part of his stock manipulation deals. Baron described the stock manipulation deals as âpump and dumpâ or âshare rampingâ schemes, in which âstocks are pumped up by a lot of fake news and everyone sells out and the owners of those stocks are left with nothing.â
It is alleged that following this meeting, the Undercover Agent requested that Loyal Bank open five additional bank accounts in the name of five more Belizean International Business Companies (IBCs) controlled by the Undercover Agent, Again, the Undercover Agentâs IBCs utilized Belizean nominees instead of his own name. All six account applications contained identical business plans for each of the six IBCs.
âOn or about and between July 14, 2017 and August 8, 2017, Loyal Bank opened five of the six bank accounts requested by the Undercover Agent. Notwithstanding the Undercover Agentâs statement that he would be the true beneficial owner of the accounts, at no time did Loyal Bank request FATCA Information from the Undercover Agent,â stated the indictment.
âOn or about July 21, 2017, the Undercover Agent emailed representatives of Loyal Agency, including the defendant Linda Bullock. In that email, the Undercover Agent inquired about the possibility of purchasing six IBCs incorporated in St Vincent and the Grenadines.
âOn or about August 18, 2017, the Undercover Agent emailed representatives of Loyal Agency, including the defendants Adrian Baron and Linda Bullock, and advised them that he was purchasing the IBCs for the purpose of opening brokerage accounts in the name of the IBCs at Beaufort Securities or a brokerage firm affiliated with Loyal Bank. The Undercover Agent subsequently purchased six IBCs from Loyal Agency, and Loyal Bank then opened a corporate bank account for each IBC. At no time did Loyal Bank request FATCA Information from the Undercover Agent for these accounts,â the indictment further read.
âOn or about July 26, 2017, the Undercover Agent directed Beaufort Securities to transfer approximately $95,000 from a brokerage account at Beaufort Securities to a bank account he controlled at Loyal Bank. These funds represented the proceeds of the sale of The Financial Times Stock Exchange (FTSE) Stock A by Beaufort Securities on behalf of the Undercover Agent. Beaufort Securities subsequently transferred the funds after receiving a letter from the defendant Linda Bullock confirming the wire transfer details of the Undercover Agentâs account at Loyal Bank. The Undercover Agent separately transferred approximately $95,000 to bank accounts he controlled at Loyal Bank,â according to the indictment.
The charge goes on to read that about and between October 2017 and December 2017, Loyal Bank shipped 11 debit cards to a confidential source (CS-1) in Belize at the direction of the Undercover Agent. Each of these debit cards was linked to the 11 corporate bank accounts opened by the Undercover Agent at Loyal Bank.
âOn or about December 8, 2017, the Undercover Agent placed a consensually recorded call to the defendant Linda Bullock. During the call, the Undercover Agent described his stock manipulation deals and again informed Bullock that he was the true beneficial owner of the bank accounts at Loyal Bank. Bullock stated, in part, that she was aware that the accounts had a ânomineeâ and that the Undercover Agent was not listed as the true beneficial owner. The Undercover Agent also described to Bullock how Loyal Bankâs debit card service allowed him to provide kickbacks to corrupt stockbrokers in the United States.
âNotwithstanding this conversation, Loyal Bank continued to maintain the 11 bank accounts controlled by the Undercover Agent and, on or about January 30, 2018, Loyal Agency renewed the six IBCs purchased by the Undercover Agent.
âOn or about and between November 9, 2017 and February 22, 2018, the debit cards sent by Loyal Bank to CS-1 at the direction of the Undercover Agent were used to withdraw approximately $130,000 from automated teller machines located in the Eastern District of New York,â revealed the indictment.
Other individuals named in the matter are Panayiotis Kyriacou, Arvinsingh Canaye, Matthew Green and Aristos Aristodemou, while Beaufort Securities Ltd, a brokerage firm located in London; Beaufort Management Services Ltd, an offshore management company located in Mauritius; were also named as defendants.
According to the indictment, Beaufort Securities facilitated at least 10 âpump and dumpâ schemes involving US publicly traded stocks, generating over $50 million in proceeds for its clients. One person, Arvinsingh Canaye, 30, a resident of Mauritius, has so far been arrested in relation to the indictment. He was scheduled to be arraigned last Friday in Brooklyn.
A statement from the United States attorneyâs office, dated March 2, said the charges in the indictment are merely allegations and the defendants are presumed innocent unless and until proven guilty.
SEARCHLIGHT made a call to the Cedar Hill Crest Villa, St Vincent office of Loyal Bank on Monday to elicit a response from Bullock. A female voice who answered the phone said that Bullock was unavailable.
On Monday, the Financial Services Authority (FSA) of SVG said in a press release (see page 4) that they are investigating the alleged actions of the bank officials involved.
âThe FSA has thus launched its own investigation into the allegations and is, together with the relevant authority for money laundering and financial crimes â the Financial Intelligence Unit â investigating the alleged actions of the Bank officials involved and is monitoring any actions which the Bank itself is taking in view of these developments and allegations. The Financial Services Authority, and indeed St Vincent and the Grenadines, are taking these allegations very seriously,â said the release.