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Grenada's Prime Minister, Keith Mitchell, speaks by mobile phone during a break in the
second session of the Caribbean Community conference in a 2005 file photo (AP).
second session of the Caribbean Community conference in a 2005 file photo (AP).
Grenada Reopens for Offshore Banking Following Massive Fraud
by
Josh Katz
The Caribbean island has altered its regulatory laws following a Ponzi scheme considered one of history’s largest cases of banking fraud.
30-Second Summary
Grenada’s financial services sector fell apart six years ago.
Former Oregonian Gilbert Ziegler masterminded a Ponzi scheme, creating the First International Bank of Grenada (FIBG) in 1997, the same year that the country authorized its first offshore bank. Ziegler held a passport from the fabricated Dominion of Melchizedek and backed-up his bank with a 10,000-carat ruby he falsely claimed ownership of and about $14 billion in securities.
Ziegler’s Ponzi scheme lured investors with the promise of 300 percent annual interest. The bank took in $170 million and Ziegler fled to Uganda. Although many individuals have been imprisoned, and Ziegler died in 2005 awaiting trial, there is no money left to pay back defrauded investors.
Ziegler’s scheme was just the worst of many banking scandals that occurred in Grenada, and charges have been leveled against the government of Prime Minster Keith Mitchell for its involvement in the frauds.
Grenada’s government says it is making the necessary reforms, and it has created a single agency to oversee the offshore banking system.
However, David Marchant, editor of Offshore Alert, which follows international banking and corruption, expresses skepticism about the Grenadian government’s financial ethics. “The most corrupt, anything-goes destination is Grenada,” he says in a 2007 Forbes article. “You can do anything you want, and if the regulators come to call, it’s to seek a bribe.”
Former Oregonian Gilbert Ziegler masterminded a Ponzi scheme, creating the First International Bank of Grenada (FIBG) in 1997, the same year that the country authorized its first offshore bank. Ziegler held a passport from the fabricated Dominion of Melchizedek and backed-up his bank with a 10,000-carat ruby he falsely claimed ownership of and about $14 billion in securities.
Ziegler’s Ponzi scheme lured investors with the promise of 300 percent annual interest. The bank took in $170 million and Ziegler fled to Uganda. Although many individuals have been imprisoned, and Ziegler died in 2005 awaiting trial, there is no money left to pay back defrauded investors.
Ziegler’s scheme was just the worst of many banking scandals that occurred in Grenada, and charges have been leveled against the government of Prime Minster Keith Mitchell for its involvement in the frauds.
Grenada’s government says it is making the necessary reforms, and it has created a single agency to oversee the offshore banking system.
However, David Marchant, editor of Offshore Alert, which follows international banking and corruption, expresses skepticism about the Grenadian government’s financial ethics. “The most corrupt, anything-goes destination is Grenada,” he says in a 2007 Forbes article. “You can do anything you want, and if the regulators come to call, it’s to seek a bribe.”
Headline Link: ‘Post-Ponzi scheme, Grenada to reopen for offshore banking’
“Nothing’s changed,” says David Marchant, publisher of OffshoreAlert, the American newsletter that first revealed the infamous fraud involving the First International Bank of Grenada (FIBG). “The same people are in power now that were in power then, and they knowingly, willingly, and gleefully entered into a criminal partnership with dubious individuals to defraud foreigners.” However, Grenada officials contend that they have instituted reforms.
Source: The Christian Science Monitor
Background: The Ponzi scheme and Grenada’s offshore banking controversies
On June 19, 2002, Oregon’s Willamette Week featured a story on Don and Shellie Freund and the massive sum of money they lost at the hands of a Ponzi scheme entangled with Oregonian Gil Ziegler’s Grenada bank and what “has been called the biggest banking fraud in history.”
Source: Willamette Week
In an April 2007 article entitled “Pirate Destinations,” Forbes details some locations renowned for their lax financial oversight. At the top of the list is Grenada. “Since President Ronald Reagan ‘liberated’ this island from socialism with Operation Fury in 1983, this 133-square-mile island has embraced capitalism with a vengeance, handing out licenses to more than 400 international banks. More than a few have wound up in the cross hairs of law-enforcement officials elsewhere.”
Source: Forbes
Related Topic: ‘The hazards of hiding money overseas’
“Immerse yourself in the world of offshore tax shelters, and pretty soon you’ll feel like you need to take a shower. I’ve yet to find an area of finance with more scams, schemes and dubious claims per square inch,” writes Liz Pulliam Weston in an article from MSN Money.
Source: MSN Money
Reference: Ponzi schemes; Grenada profile
Ponzi Schemes are named for Charles Ponzi, who defrauded investors in a postage stamp scheme in the 1920s. This type of pyramid scheme promises people a high return for their investments, even though the system will eventually fall apart. The SEC describes pyramid schemes as well.
Source: U.S. Securities and Exchange Commission
The U.S. invaded Grenada, or the “Spice Islands,” in 1983 after leftists killed the pro-American leader and took over. “Set against the background of Grenada’s hitherto peaceful post-independence history, the event highlighted the country’s contradictory character,” writes the BBC.
Source: The BBC
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