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).

Grenada Reopens for Offshore Banking Following Massive Fraud

June 02, 2008 02:56 PM
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.”

Headline Link: ‘Post-Ponzi scheme, Grenada to reopen for offshore banking’

Background: The Ponzi scheme and Grenada’s offshore banking controversies

Related Topic: ‘The hazards of hiding money overseas’

Reference: Ponzi schemes; Grenada profile


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