Madoff Money Trail Leads to Barbados?

Barbadians authorities may soon get a call from United States investigators trying to locate some of the missing billionsof dollars in the Bernard Madoff scandal.

Any inquiry would be part of an international search being mounted by teams of forensic accountants and law enforcement officials who are trying to unravel the systematic and complex way Madoff, the disgraced Wall Street investment broker, allegedly used to operate what is now being called the world’s biggest ponzi scheme that may have cost investors as much as US$50 billion.

The teams are poring over Madoff’s books in an effort to track the money and early indications are that he may have sent hundreds of millions, even billions, of dollarsto “tax havens” in the Caribbean, Europe and elsewhere to avoid paying taxes on the money.

“We have not received a call or inquiry from the Americans asking about Madoff,” a Barbados government official told the WEEKEND NATION.

“Quite, frankly we would be surprised if Madoff had used Barbados to stash away some of his firm’s funds. Other Caribbean jurisdictions heavily involved in offshore banking and mutual funds would have been more attractive to Madoff. We are small and our reach much more diversified than someof our neighbours. We don’t specialisein that kind of business.”

Switzerland, the Cayman Islands, Ireland, Luxembourg, the British Virgin Islands, the Channel Islands, The Bahamas, France, Britain, Bermuda, St Kitts-Nevis and the Turks & Caicos may be high on the investigators’ list. Barbados, whichhas a double taxation treaty and an exchange of information agreement with the United States, may also be investigated but for a different reason.

Stash away

The flow of financial information between Bridgetown and Washington would make it relatively easy for United States officials to track down any funds or companies located there which Madoff might have used to stash away funds.  Stephen Harbeck, the top receiver of Madoff’s bankrupt firm, made it clear he would be going after the money, wherever it was hidden, be it in the United States, Europe or the Caribbean.

“We will trace funds wherever the trail goes,” he said on the steps of the US Bankruptcy Court for the Southern District of New York.

Harbeck and his investigators believe Madoff routinely sent large sums of cash to the Caribbean and Europe where the money was lodged in highly secret accounts. The Observer newspaper in London quoted the receiver as saying the hunt for funds would “spread all over the world”, not simply the Caribbean or Europe.

Although investigators have so far declined to single out any Caribbean financial services centre by name, what is known is that M-Invest Limited, an offshore company in the Cayman Islands, lost hundreds of millions in the Madoff scheme.

M-Invest was set up several years ago in the Cayman Islands by Union Bancaire Privee (UBP), a 39-year-old elite private Swiss bank which has US$125 billion in assets. Many of the world’s richest families, individuals and institutions are UBP clients.

The key reason for establishing M-Invest in the Caribbean was to make it easier to channel money into the United States, according to sources familiar with the bank’s operations while at the same time keeping the transactions secret and out of the reachesof United States federal tax officials.

Banking centre

The Cayman Islands, a British dependent Caribbean territory, is one of the world’s leading banking centres and is known for its secrecy, much unlike Barbados, for example.  M-Invest and UBPare believed to havelost US$700 million invested with Madoff.  Another loser in the Caribbean, albeit ona tiny scale, is the Roman Catholic Diocese in theUS Virgin Islands.

It put $2 million in Madoff’s hands to invest but some of the money was set aside to pay the tuition fees for poor students at two of the diocese’s elementary schools on St Croix.  The diocese, M-Invest, UBP and a host of other investors have been told that they stand little chance of getting back all or most of their money.

US bankruptcy judge Burton Lifland has issued a court order limiting the amount any single investor can recover to US$100 000.  To get that small amount, investors would have to prove they put their money into Madoff’s company’s hands in the 12 months prior to his arrest on December 11.

Officials have described the Madoff scheme as a “highly complex hybrid fraud”, explaining that each individual investment account could be its own self-contained fraud. In other words, it was a fraud within a fraud. It was akin to a thief stealing from a thief.

Source: Nationnews


3 Responses to Madoff Money Trail Leads to Barbados?

  1. Pingback: » Madoff Money Trail Leads to Barbados?

  2. Pingback: Madoff Money Trail Leads to Barbados? « Bajan Global Report | Ace Card's Caribbean Vacation

  3. Pingback: Madoff Little Helpers Charged « Bajan Global Report

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