USA : Big money fraudster pleads guilty to laundering.

The Securities and Exchange Commission says that Terry L. Dowdell has entered a guilty plea to 20 felony charges, including Securities Fraud, Money Laundering and Wire Fraud, in connection with a multi-million fraudulent trading programme Dowdell operated since 1998. The plea was entered before the Honorable Judge James H. Michael, Senior U.S. District Court Judge for the Western District of Virginia, Charlottesville Division. The prosecution of this case is being conducted jointly by the United States Attorney for the Western District of Virginia and the Criminal Fraud Section of the United States Department of Justice.

The charges arise out of a fictitious investment programme that Dowdell operated through Vavasseur Corporation, a Bahamas company controlled by Dowdell. According to the 20 count Information filed in the District Court, investors in this programme (the Vavasseur programme) were required to sign an investment contract with Vavasseur Corp., termed a "Discretionary Investment Management Agreement" (Agreement). The agreement falsely represented that investor funds would be maintained in a bank account registered as "Vavasseur Corp. for the benefit of (Client name)," and committed Vavasseur:

"to use its best efforts to achieve anticipated profits. . . in an amount equal to or exceeding Four Percent (4%) of the Client's funds under management for each week in which trading occurs. [Vavasseur] shall use its best efforts basis to cause trading of Client's funds in a minimum of forty weeks during each fifty-two week Agreement term."

This would result in annualised gross return of 160%.

As Dowdell now admits, there were no "trades" or "investments" made by Vavasseur, but rather investors were paid "profits" in a typical pyramid scheme fashion from new investor funds diverted to Dowdell's AmSouth accounts.

The criminal charges come approximately one year after the SEC filed a civil lawsuit in the U.S. District Court for the Western District of Virginia against Dowdell, Vavasseur and others in connection with the same fraudulent investment scheme. On the day that the SEC filed its lawsuit, November 19, 2001, the Court entered a Temporary Restraining Order prohibiting Dowdell and his associates from raising any additional funds for the Vavasseur Programme, ordering frozen all of Dowdell's assets, and requiring the repatriation of all Vavasseur assets located outside of the United States. In connection with this order, more than $23 million of funds directly traced to Vavasseur investors has been frozen in various U.S. banks, including the AmSouth Bank, the Bank of America and The Chase Manhattan Bank.

On June 4, 2002, Dowdell admitted to the fraud in the SEC's action in a Consent and Stipulation, and the Court entered an order the same day permanently enjoining Dowdell from future violations of the antifraud provisions of Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. The judgment provides that the amount of disgorgement and civil penalties that Dowdell will have to pay will be determined later. On July 12, 2002, the Court appointed Roy M. Terry, Esq. and the law firm of DurretteBradshaw, PLC as Receiver over Dowdell's assets and to develop a plan of distribution for the return of funds to injured investors.

In his Consent and Stipulation, Dowdell admitted that other foreign nationals, including Shinder Gangar and Alan White, citizens and residents of the United Kingdom, have continued to raise investor funds in connection with the Vavasseur programme even after November 19, 2001, and further admitted that various foreign banks have been used in furtherance of the fraud, including Overseas Development Bank & Trust and Investors Bank & Trust in Dominica, the Bank of Ireland in Ireland, Banamex Bank in Mexico, Butterfield Bank in the Commonwealth of Guernsey, Investec Bank in Israel, Fortis Bank in Belgium and Cathay Bank in Belize.

The SEC and Department of Justice have been coordinating their enforcement efforts with law enforcement authorities in the United Kingdom and other countries, including the U.K. Serious Fraud Office (SFO), the Leicestershire Constabulary, the U.K. Financial Services Authority (FSA), the Antwerp Police, and Ireland's Criminal Asset Bureau. In related enforcement actions in October 2002, the SFO and the Leicestershire Constabulary arrested Gangar, White and two others suspected of involvement of the Vavasseur programme and other fraudulent investment programmes, and the FSA filed civil charges and obtained a worldwide asset freeze against White, Gangar and their accounting firms "Dobb White & Co" a and "Morris White & Co.," accusing them of running an unlawful investment scheme.

The UK's FSA says that it is is alerting the public to actions it took against the two firms of accountants in the High Court, London. The firms are not authorised by the FSA to undertake financial services, but FSA evidence to the court suggested that in the region of $18 million had been taken from investors in the UK for an apparent investment scheme.

The FSA was granted interim injunctions in the High Court on 29 October against two firms of accountants, Dobb White & Co and Morris White & Co, which have offices in Leicester and Nottingham, and against two partners of both firms, Mr Shinder Singh Gangar and Mr Alan White. The injunctions, which will continue with their consent until trial or further order of the court, restrain all of them from undertaking financial services business (regulated activities) as set out in the Financial Services and Markets Act 2000. They are also restrained from disposing of, otherwise dealing with or diminishing the value of their assets.