Fund director stole $19m

| 11/08/2010

(CNS): Robert Christopher Girvan has pleaded guilty to 18 counts of theft and three counts of money laundering, which the crown said amounted to around $19 million. Girvan was a trader and fund director with four Cayman Islands Hedge Funds, known as the Grand Island Funds, which collapsed in 2008 as a result of major losses related to Girvan’s unauthorized trading. Girvan, who now faces a custodial sentence, was remanded in custody by Justice Charles Quin in court on Wednesday morning until his confiscation and sentencing hearing on 24 August. The court heard that Girvan stole millions of dollars from the funds, related financial companies and other bank accounts, a significant amount of which was used and lost in unauthorized trading.

However, Girvan also used some of the money for his own personal benefit, redirecting money to bank accounts outside the Cayman Islands as well as to purchase land in Crystal Harbour.

Revoking Girvan’s bail, Quin remanded the former fund director in custody as he said there was a serious flight risk now he had pleaded guilty and been convicted of significant charges which would certainly result in a lengthy sentence. The judge noted the seriousness of the offence and that huge amounts of money were involved that had caused significant losses to the third parties involved. Hefurther noted that the crime struck at the very heart of the country’s financial services industry.

The crown said that Girvan had been involved in a complex fraud and had stolen money from a number of different accounts and funds, which were redirected to his own bank accounts andthose of his wife’s in the United States.

From the four Grand Island funds alone (Grand Island Commodity Trading fund, Grand Island Fund II, Grand Island Income fund and Grand island Master fund) Girvan admitted to stealing over $9million and well over $5million from Caribbean Commodities.

The crown is hoping to recoup some of the lost funds in its confiscation hearing on 24 August before Girvan is sentenced on the same day. Girvan, who is a Jamaican national, could be facing a lengthy sentence as the maximum for theft is ten years and money laundering 14 years.

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  1. Tim Ridley says:

    The issue of Directors et al being exculpated (not liable) for negligence etc under the articles of association raises a number of knock on questions. For instance, if the Companies Law were to be amended to prohibit Directors, Officers and Managers from being so exculpated, it would also seem appropriate then to prohibit similar provisions in contractual engagement letters from auditors, legal counsel, and other professionals that also currently (and validly it appears) exclude liability for negligence. Do I hear howls of anguish already?

    There may also already be some light at the end of this particular tunnel. The Chief Justice here in a recent decision stated that, in his opinion, the articles of association (and presumably any engagement letter) cannot exclude liability on the part of auditors where they have been guilty of wilful neglect. Presumably, he would apply the same test to Directors. Sooner or later, an insolvency practitioner here should be brave enough to mount this argument against delinquent Directors.

  2. Tim Ridley says:

    I did not mean to suggest that CIMAshould do anything other than "play it by the book" in assessing fitness and propriety, and without favour to anyone. And from my knowledge of CIMA, I have confidence that CIMA will so proceed. 

    In terms of compensation to investors who have lost money, the persons best placed to bring an action against delinquent directors and others are the liquidators of the relevant entities. No doubt, that is something they have considered or are considering, having taken proper legal advice and assessed the chances of recovery and the costs involved.

    I would caution that, simply because investors lost money and there was theft, fraud etc, does not mean that the directors are necessarily delinquent and liable. It all depends on the facts. As many experts continually tell us, theft and fraud are often difficult to stop, even with the best practices of checks and balance in place. 

    • Chris Johnson says:

      Tim as you well know even when directors XXXXX are guilty of negligence even bordering on recklessness they cannot be sued because they are indemnified by the company. This nonsense has to stop and our laws must be up to scratch to protect investors. Cayman’s laws are way behind our competitors.Can the law firms please refrain from protecting Cowboy directors and protect their very clients; it is embarrassing.

  3. Tim Ridley says:

    The question of whether someone is "fit and proper" under the various regulatory laws is complex and nuanced. For those who are interested, I refer them to the relevant sections of the various regulatory laws and the extensive guidance issued by CIMA as to the factors it will take into account in making the assessment. 

  4. Tim Ridley says:

    It is important that regulators and law enforcement not duplicate their efforts and thus waste scarce resources. White collar crime of all kinds, whether or not committed by persons and institutions regulated by CIMA, should be handled by the relevant (commercial crimes) division of the RCIPS. That requires the RCIPS to significantly improve the level of its game, and to do that, it requires better human and other resources. I can confidently say that, during my more than 35 years in the Cayman Islands, the RCIPS has rarely, if ever, been adequately resourced to go after white collar crime, particularly where there is a cross border element (which is usually the case). That needs to change. I make exactly the same comments about the Attorney General’s Department, which has the responsibility for bringing and pursuing the prosecution of white collar crime before the Courts.

    CIMA of course has a vital role to play asthe regulator. I have no doubt that CIMA has been closely involved in reviewing the details of the Girvan debacle, and will have seen the various reports submitted to the Grand Court. And I am sure that CIMA is giving careful consideration as to whether it is appropriate to exercise its powers with respect to those, if any, who failed to meet their obligations under the various regulatory and other laws. It does have quite wide enforcement powers, such as the power to declare someone not fit and proper to serve as a director of a regulated entity. But equally it recognises that the exercise of these powers must be on a considered, balanced and prudent basis. Declaring a local professional as not fit and proper is a potentially career destroying for that professional. So it is action that should not be taken lightly.

    I would close by saying that we pretty much get what we pay. If, as we should, we want better and more effective enforcement and regulation, we have to find a way to raise the resources for it. The shrinking violets in the financial services industry might like to mull on who should pay for these improved resources. 

    • Justitia says:

      Surely the consequences to an individual of being declared unfit are not the issue.  The consequences of unfit individuals, whether local or foreign, both to the jurisdiction and to individuals who entrusted them with their savings are far greater.  That is why we have the regulations in the first place.  Discretion in the application of regulations, especially the local residence of the individual, is a dangerous path which in the best case is open to misinterpretation by the overseas financial markets and in the  worst case abuse.  You either have rules or you do not – rules that you are known to bend in favour of locals is if anything worse than no rules at all.

      • Chris Johnson says:

        Justitia you are quite correct in your judgment. The SEC takes no prisoners and frequently take action against the perpetrators of fraud or their blind accessories. This is exactly what we have here: professionals turning a blind eye and forgetting that most important factor, a proper system of internal control. Remember UCCI? Well that was no different. The board of UCCI failed miserably as directors. The directors of the Grandiose Fund were seasoned professionals most of whom are millionaires. They need to pay the price by repaying investors and taking a rest. As I have said for years these director cowboys need to go back to the corral whilst a competent legal draftsman pens a suitable law on directors disqualification.Roderick Donaldson would have been the first to agree; god bless his soul.

  5. Tim Ridley says:

    It is important to understand that this episode demonstrates that the Cayman Islands is willing and able to take enforcement action against white collar crime. This sends the right and much needed message locally and internationally. But the time it took to bring this matter to a conclusion is very concerning. Theft is not such a complicated matter. Enforcement must be quicker. That requires more resources devoted to the task. And the financial industry should be asked to pay for those resources.

    Many of the other players in this sad saga should indeed have known better. Hopefully, they have learned some lessons, not least that it is naive for marginal operators to think they can go up against the sharks in the global commodity markets and win. And how foolish to employ a light-weight crook to do it for them. No wonder they are embarrassed and very quiet about their losses. Indeed they should be. 

    • Caymanian to the Bone says:

      Tim, I am so glad we have someone such as you amongst us here in the Cayman Islands.  We are very very lucky to have someone of your insight and knowledge. 

      I must ask a question, do you feel that the CIMA should set up a special task force that can investigate these matters in order to speed up the process in which to take them to trial.  I am of the thinking just the Attorney General Office may be doing these investigations along with the RCIPS and due to the fact that these 2 departments are so busy with other pressing matters it takes away from the time needed to investigate and bring before the courts.  Your thoughts on this?

  6. Anonymous says:

    I agree entirely with Chris Johnson and some of the others on this subject. Girvan is being made the scapegoat. There are a lot of local players in this saga that should not be allowed to work in the financial community again, and who should hang their heads in shame XXXXX

    I have not seen the offering memorandum but am pretty sure that this should have been only offered to High Net Worth individuals that understood the risks involved. This usually requires a minimum of investment of $100,000. I have been informed that certain well known individuals associated with the fund collected contributions on behalf of individuals that were not HNW’s then pooled their money to get up to the $100k minimum subscription. This is known as being a distribution agent and usually get paid acommission on the amount of funds solicited.

    Can anyone also shed any light as to what happened to the other funds in the group and who was charged with investigating and winding them up. I would not be surprised if the job was given to the same big four firm as the partner who was involved.

    • anonymous says:

      He did not do this alone. come on now, why is he taking the fall all by himself.

      Everyone thought Murdoff did it all by himself too until the Feds started sniffing around his family

      Not enough sniffing I’m afraid some people still hiding under the bed. No one can steal l9 million dollars all by himself. what about the bank receiving the money why wern’t they asking questions?!

      Look under the table!.

    • Chris Johnson says:

      PricewaterhouseCoopers are the liquidators having originally been recommended by the directors and appointed by the shareholders. Their appointment was later confirmed by the court. I understand that Deloittes and Mr Andrew Jones were appointed to do an investigation with regard to Caribbean Commodities Ltd.

      The prospectus was misleading and certainly lacked full disclosure with regard to related parties and their incestuous dealings. How the directors and auditors were bamboozed is beyond me. In addition the companies involved were exempted  companies and yet were doing business on the island but I doubt if the Registrar of Companies picked up on that facet, let alone the lawyers and other professionals that should have known better

      I agree with the previous writer insomuch that people who could ill afford to lose money were conned into investing. All this on our own doorstep makes the matter very embarrassing for the jurisdiction and this time we cannot put the blame on foreigners.

      Whilst I agree with Tim Ridley,s comments on justice being done there is a strong argument for enacting a directors’ disqualifation law to ensure cowboy directors are banned from further roadshows. Perhaps the committee formed to review our laws can make a note assuming of course that they have commenced their assignment. [ It would be nice to hear of their progress to date.]

  7. Rafael says:

    He must be one serious individual to have done all this by himself It is really sad to see that he appears to now be the "fall guy" To Chris Johnson’s point some same to have immunity from investigation and prosecution. I guess they were victims of being exposed  . They don’t appear to be too financial distressed about this situation though living large in their sedans and Suv’s. That’s how it goes the Police get their man they got Dolla$$$$ all is well yes sa.

  8. Don't worry I wont stay says:

    IN MY OPINION…  He was probably about 6-8 weeks away from being a hero. The timing of the collapse of an oil commodities fund corresponding to a huge run up is a bit odd.

    Unless… Your were on the wrong side.  Placing some bets in early 2008 that the price of a barrel of oil could not go above 100. Doubling down a month later, no way it could ever reach 110. Bring in a loan shark to double the bet again… It can not possibly get to 120. Make a few unauthorised moves, trades, no no no way it could ever get to 130 (rubbing hands already spending the profits). Then in desperation absolutely betting the farm, the friends, the family, the funds, your freedom because there is absolutely no way in the world it could ever ever reach 140….

    End of June, oil hits 140, margin call, collapse, police… History.

    A few more days, a couple of closes over 140, then, he was right all along. if everyone had held their collective breath for a few more painful weeks. By the end of the 2008 with oil below 50, his would not be the only new mansion in Crystal Harbour.

    I have no idea what options the funds were purchasing, selling, or trading, other than it was oil.

  9. Macman says:

    He transferred funds to his wife’s account.

    I do not see any mention of her being charged with money laundering!

  10. Anonymous says:

    CNS you need to follow up on this issue.  Maybe you don’t understand the difference but I assure you it is a crucial one!  This man was NOT a director of any of the funds he stole money from.  Either you misunderstood what was presented in court, or the court relayed erroneous information.  If its your bad, fair enough we all make mistakes.  If its the court’s bad then I say follow up on that story because why would they make that mistake?

    Not saying he ain’t guilty, just saying: why are they making this man out to be something he’s not?  Who are they trying to protect?

  11. Wolffmeister says:

    This only increases the mysticand image in the publics eye of the Cayman Islands!

  12. big money maker says:

    Wha happen to the other Big playa’s i remember certain top businessmen were moving with this guy and he was the flavor of the month. Big wheels and big deals.

  13. Anonymous says:

    The title of this story is misleading. This convict was not the Director. He was the trader/investment manager.

    This story’s title inaccurately casts Cayman Islands Directors in a bad light.

    CNS: Girvan was referred to in court as a director of the fund and other entities.

    • Chris Johnson says:

      I believe he was only a director of the trading company, Caribbean Commodiries Ltd but more than likely he was a shadow director of the funds and thus shares any liability with other directors. Interestingly Caribbean Commodities Ltd is still on the CIMA website sharing the same status as Cedrus Investments Ltd.

      • Alan Nivia says:

        Didn’t this all pre-date the concept of shadow directors being incorporated into Cayman law?

    • Anonymous says:

      For readers involved in the Funds industry the story’s title is misleading. At the other end of the spectrum, those readers not involved with the Funds industry, this information could be incorrectly interpreted.

      While it may be accurate that Garvin is listed as a director on the company’s documents the title is still misleading/an oversimplification.

      Owners of any company can be listed as directors as directors are required by the Companies Law. This is similar to the Companies Law requiring an address to be registered as place of business. However, that does not necessarily mean that the companies operations take place at that address. *Remember that Ugland House was previously and irresponsibly portrayed as the "biggest building in the world". A good political soundbite but an oversimplication of reality.

      In the Funds industry, Directors are often independent entities that provide Corporate Governance services.As some others have replied, a fund’s Directors, do not have control over the daily operations or transaction proceeds.

       

      • Not a fund director says:

        Isn’t one of the duties of a fund director to monitor the activities of the fund on behalf of investors and to make sure stuff like this doesn’t happen? You seem to be trying very hard to convince us that fund directors are just periphery players and not at fault when things go south.

  14. Anonymous says:

     Stinking stick of weed is right. Your cousin as well as Girvan both deserve their jail

  15. Anonymous says:

    COVER UP

    XXXXXXX

    Obviously he is the scapegoat and coverup for others who are also responsible. You cannot tell us that he was or should have been allowed to have total and single control over the funds capital on his own.

    There is something not right about this case that is not coming out.

    • Anonymous says:

      While the Directors of the Fund may possibly be liable to shareholders for breach of their duties of oversight, the individual in question committed criminal offences. He misappropriated the funds. It is therefore misleading to say that because he has been convicted it means that he is a scapegoat. 

      If there is civil liability on the Fund Directors an action should be brought by the shareholders. If they are found liable then appropriate regulatory action could be taken so that they are blacklisted as Directors of regulated entities.      

      • Legal Beagle says:

        You obviously have no clue about any of this.

        • Anonymous says:

          Perhaps you should explain what I am missing rather than simply being nasty.  

          • Alan Nivia says:

            Explaining what you were missing would take a while and would not necessarily be straightforward.  So here is a very potted precis for what it is worth.

            Basically shareholders don’t have a claim against directors for their wrongdoings in a company like this.  The claim would be the company’s claim – either brought by a new board or by a liquidator if it is insolvent.  There might be occasions where you have heard about derivative actions, but they are still claims brought by the company albeit through the positive action of an aggrieved minority shareholder.  So the statement that the shareholders would have a claim showed a lack of understanding about basic company law.

            Second, the blacklisting.  We don’t have that.  We should and Mr. Johnson has pointed this out.  We should have directors’ disqualification proceedings here in Cayman like in the BVI.  But we don’t yet.

            So the criticism was probably that you suggested two things in the paragraph "if there is civil liability" that indicated good intentions but a lack of understanding of the laws of the Cayman Islands.

            • Anonymous says:

              Actually, I have a fairly firm grasp of company law and the laws of the Cayman Islands generally.  

              The company may in general meeting (i.e. a meeting of shareholders) both resolve to remove the directors and to sue them for breach of their duties to the company. Such a meeting could be requisitioned by a minority of shareholders. If the Directors will have control of the general meeting as  majority shareholders then a derivative action may be brought on behalf of the company by the minority shareholders.

              Re the blacklist, you may not be aware but CIMA does maintain a list of persons that it has found not to be fit and proper.  

              Of course there may be some point of fact which I am missing why none of this is possible (e.g. that they are protected by an indemnity and exculpation clause in the Articles) and that is what I was looking for, rather than a condescending and simplistic account of the law.     

               

  16. Paul Chen says:

    He was caught luckily.  Otherwise, we would have seen a beautiful palace popping up in Crystal Harbour in few years time .  

    Problem in Cayman is this type of people get released afetr serving couple of years behind bar for the good behaviour without ourknowledge. 

    I believe him pleading guilty  is suspecious as this may be an attempt to avoid disclosure of names of prominant personalities in Cayman in the trial.

  17. Anonymous says:

    Pending – Administrators don’t have control. As for not really being a good image is ridiculous. As if this doesn’t happen in the US and UK.

  18. Lenrick says:

    Tha wa he get, i hope de lock him up forever,,,, no longer dan dat!

  19. whodatis says:

    Da wha’ ya get – hope dey catch all a um!

    :o)

    If it is one thing I despise it is a thief – more so the suited and booted, hot air inflated and overpaid type. So many of them crawling all over this island it makes me sick to my stomach. (Don’t think for a moment he is a rarity or that he managed to make off with this heist all on his own.)

    Lock him under the jail and throw away the key Quinn! My cousin just got 12 months for a stinking stick of weed – this idiot STOLE $19m … and had the audacity to request bail?!

    Ha!

    • Anonymous says:

      Tell your cousin to get off the weed.  You too if you use.   

      • whodatis says:

        I’m not going to get into the weed vs. alcohol and which one causes the most harm onto society debate – though I am tempted to.

        I can further expand on the fact of how high level corporate crime carries global reaching ripple effects that touch upon every single person in this world yet the perpetrators are often treated like royalty when it comes time for the court appearance. Contrast that with the shackled and ruffled treatment of the simple blue collar man that chose to simply enjoy oneof nature’s plants in his own home – but I am sure you wouldn’t be interested.

        (Did you honestly not understand the point I was trying to make? Guess some people need it s-p-e-l-l-e-d out for them huh?)

        Clearly you are one of the run-of-the-mill folks of this world that are sitting comfortably in your oblivious ignorance.

        You are obviously trying to be a smarty-pants (epic fail by the way), so I will let it slide.

        Re" "Tell your cousin to get off the weed."

        I would be far more inclined to offer your misguided advice to the millions of individuals in this world that are hooked on the laboratory concocted "legal" DRUGS funneled to them by way of the all powerful and predatory western drug industry.

        As for me – I live my life the way I want to. If my actions are not affecting you then you really ought to enjoy a hot cup of STFU!

        :o)

         

        • Anonymous says:

          Totally agree with Whodatis…when you just casually check the sentencing in Cayman, especially when it comes to Caymanians for minor drug offences, it is questionable. Yes, judges can use their discretion and maybe if we had a permament court reporter in all courts and compilation of sentencing, the statistics might be more convincing.

          But my point is, it might be very interesting if we we were to look at the foreign nationals deported for drugs (recently some guys from Europe??) versus otherforeign nationals who get less severe sentencing so that they can still remain in Cayman WITHOUT a custodian sentence (no jail time at all)…so probation/community service.

          Oh where are the statisticians? courts office, social services, probation and rehabilitation, economics office????

          Plus, WHITE COLLAR CRIMINALS (foreigners and Caymanians), in my opinion seem to be treated with lesser sentences, than other criminals, when they are in positions of TRUST and not simply harming their own bodies….they need to be held accountable for their criminal act s and breach of confidence and trust that had been placed on them, and be given the maximum.

        • Anonymous says:

          also whodatiz, you forgot to ‘let it slide’  you told me to stfu. chill. 

        • Anonymous says:

          and please stop using that ridiculous phrase  ‘epic fail’ .

          Thank you

    • Anonymous says:

      The courts need to throw this scumbag into jail and throw away the key – he should never be let out into society again.  It’s scum like this that caused the global recession, caused innocent people to lose their jobs, homes and hard earned savings.  Another greedy "fat cat" and there are so many more out there who haven’t been caught. 

    • anonymous says:

      You mean to tell me that they are still locking up people for one measely stick of weed/

      That’s equivalent to one or two beers! I personally am against both but lets use some logic here. the Cayman Islands government has got to review the drug laws. Some very good kids had their names tarnished for smoking one stick of weed its not fair.  The big shots are big crooks living large and the kids in this country smoke one stick of weed and they are branded for life.

      that’s not fair. they need to pay a fine and get counselling. Why destroy them over a weed habit? then destroy the drunkards that  buyng beer and hard liquor, stggering all over the place drunken driving and are killing people in their cars as well!    Some one running for office need to change that law. If we put all the young people in jail who are the men and women of tomorrow/

      Caymanias just think about this. There were young men that were fired from their jobs just for smoking a stick of weed! that is so stupid that any fool can see through it. then why don’t they fire the rest of them for drinking  barrels of beer endangering people’s lives!.

      At some point, Cayman has got to get their legal and judiciary priiorities in place. right now, we are destroying our young people and making them a lost generation because of our sick and incomprehensive court systems.

      CHANGE THEM

  20. Pending says:

    Perhaps the title of this could have been "Trader stole 19m" as it was in that capacity that the fraud was committed. As a fund director you don’t get your hands on the investors money, you merely oversee the workings of the fund, and make sure evertything is done in line with the funds stautory documents. It is more so the Adminiistrators and Investmetns Managers that have that control.

    Not really a good image for Cayman especially with the way we are looked at by the US and EU……..

    • Chris Johnson says:

      Interesting article but it reflects a mere fraction as to what actually took place. These CIMA licenced entities were administered by a major bank, audited by a big 4 firm and their lawyers were one of the two largest law firms in Cayman.. The fund directors included a former director of a large insolvency firm and a director of the bank that administered the funds. One of the investment advisors is a personal friend of one of the directors and a partner in a big four accounting firm. It is two years since these funds went into liquidation and the whole debacle reflects very poorly on those in charge of these companies who no doubt were charging their usual fees whilst being totally incompetent.

      I hope one day that those involved see fit to personally repay  investors that lost their monies in these funds. I also hope one day that the full story is told rather than just reporting on one segment of the story. Like First Cayman Bank the public will most likely never know what happened behind the closed doors.

      As a major financial centre Cayman can ill afford scandals like this one. Had these been  SEC registered funds heads would have rolled big time.

      • Anonymous says:

        Chris Johnson knows whereof he speaks. When will someone take notice of the insightful, pointed comments he keeps making on CNS? Cindy Scotland? Ken Jefferson? Sam Bulgin? Where are you?

        • Rorschach says:

           Because nobody wants to admit that the emporer is naked….

        • Anonymous says:

          Laws don’t apply to locals do they? After all, it is their island, they can do as they please.

  21. Anonymous says:

    He was wanted in Jamaica for the same thing. How did he get a work permit? 

    • Lordy Lordy says:

      Anyone can get a job in Cayman once you are not from here.  He should have taken 10 billion instead.  There are many more from all walks of life ripping companies off.  You are all being silently ripped off and it is just a matter of time to find out.  Take it.

    • anonymous says:

      These are the kind that slip through the cracks – "poor Cayman" never knows their background or affiliation with who and who.  How long was he on the Island? It must have been several years for such acts to have been committed.  We are still dumb to the outer world, and why are we not thoroughtly checking their credentials before issuing a Work Permit?   Cayman will be looked upon differently by the outer world.  Who are to be blamed for these aliens that make it to the Cayman Islands?  

    • Anonymous says:

      He had lots of money.  We love people with lots of money! 

      • Anonymous says:

        Truth be told, locals thought this person could make them money and that is why he was brought here. So it was local, not foreign, greed that got this person a permit. Due to this local greed, his prior sins were ignored / forgiven. How did he get a work permit? Proof that Immigration looks after their own.

        P.S. He didn’t have lots of money. He had lots of other people’s money. Ask anyone in Jamaica.

      • Anonymous says:

        And connections. There were several a prominent Caymanians that were involved with this fund as directors/marketers.

        Little or no mention has been made of them. Perhaps because they were not found to have committed any crimes.

        • Chris Johnson says:

          Turning a blind eye and being reckless with other peoples money may not be a crime but certainly those involved have incurred liability and should make restitution to the unfortunate investors. Any director involved should be disquailified from acting in similar positions as would happen in other financial jurisdictions. Cayman seems to be content to let local cowboy directors loose on the world. It is time these guys were rounded up and sent to tombstone.

    • Pauly Cicero says:

      Where was he employed? Do you really think he had to sweat for a permit?