Watchdog goes behind scenes of Grand Island funds

| 27/08/2010

(CNS): The Miami based unofficial watchdog of the region’s offshore financial service centres has reported that Cayman Islands-based businessman Naul Bodden (left) has agreed to pay US$3.3 million to settle his liabilities to a fund group he controlled whose investors were defrauded out of US$19 million. In the wake of Robert Girvan’s guilty pleas to 18 counts of theft and 3 of money laundering earlier this month in connection with the group of funds, Offshore Alert is reporting in this month’s newsletter that under the terms of a settlement agreement with the Joint Official Liquidators, Bodden will pay back fees the JOL say were not properly earned. In an in depth report in the fraud and the funds’ collapse, the newsletter goes behind the scenes of the complex case and raises an number of unanswered questions. 

The funds involved are Grand Island Commodity Trading Fund, Grand Island Commodity Trading Fund II, Grand Island Income Fund and Grand Island Master Fund. Bodden will repay all management and performance fees that were paid to the Funds’ investment manager, Caribbean Commodities Limited, which he majority-owned, in three instalments over the next year.
 
Offshore Alert reveals that Bodden has already written a check for US$332,000 on the day of the settlement and has agreed to pay a second instalment of US$1,328,000 on or before September 30 and a final instalment of US$1,660,000 on or before March 31, 2011.
 
The newsletter reports that in return for his commitments, the liquidators have released Bodden, who was a director of all of the Funds, CCL and RTCG "from any and all liability" and indemnified Bodden "in respect to reasonable legal fees of defending any proceedings brought against him by various parties up to a maximum of US$100,000". They also agreed to recommend to the Grand Court that Bodden be "one of the members of the combined liquidation committee of the Funds", notwithstanding their opinion that his Fund Group was operated illegally from inception.
 
Girvan’s case, which is directly related to the collapse of the funds, was adjourned this week because of the extensive exhibits recently handed to the defence. He is expected to appear in court next Friday to set a date for a confiscation hearing, when the prosecution will be attempting to recoup some of the missing cash.
 
In the full story, David Marchant, the editor of OffshoreAlert, reveals the details behind the collapse of the funds and the players involved and notes that Girvan, an “expatriate of no particular standing in the local community”, is the only person charged in connection with the losses.
 
He says the only complaint for damages which OffshoreAlert could find was filed at the Ontario Superior Court of Justice in Canada by the Funds, represented by the liquidators, RCTG Investments and Caribbean Commodities, which he details in the report.
 
Marchant writes that, twenty-two months in, the liquidators are still missing documentation regarding the Funds. He reveals that the liquidators believe the Funds were operated illegally from inception, which means targets for recovery may include investors who took out more than they invested, the identities of which, Marchant said, could be gleaned from the liquidators’ first report to the Grand Court of the Cayman Islands in July 2009. 
 
Attached to that report is also an affidavit by Naul Bodden in which he seeks to explain the circumstances that led to his discovery of the fraud, which was perpetrated by Girvan in the office he shared with Naul and David Bodden, who are NCB’s directors.
 
Marchant raises a number of questions about the revelations in the document, including the fact that Bodden does not disclose that, at the time of the engagement of Kroll to investigate the possible fraud by Girvan, he directly owned 15% of Kroll (Cayman) Ltd.
 
The OffshoreAlert report asks a number of questions and points to various conflicts of interest regarding events surrounding the collapse of the fund and the complexities of the case. Marchant also reports that once again his questions to Cayman Islands based financial firms have gone unanswered.
 
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Comments (31)

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  1. Anonymous says:

    Naul Bodden as done many good deeds, yes, however, that does not erase the fact that he was a director of all of the funds involved in this fraud. It appears that, unfortunately, his trust in Girvan was misplaced but, be that as it may, there are victims who have suffered great losses as a result of these failed schemes. Let us all remember though that we should wait until the trial is over to cast judgement here.

    • O'Really says:

      Mr. Bodden was paid $3.3m in fees in a five year period. With respect, he was not paid to "trust" anyone, he was paid to exercise appropriate oversight as a director ( he was of course not alone in this ). He was managing partner of a major accountancy firm and part of the stock in trade of such a firm is the concept of internal control so that events such as befell this group cannot happen. They did happen, so what does that say about both internal controls and appropriate oversight?

      I note as well that the $3.3m he has been required to repay represents fees derived from the funds. This alone simply returns him to the financial position he was in prior to the funds setting up in Cayman. I understand there are a number of investors out there who would love to be returned to the financial position they were in prior to getting involved with these funds. Maybe Mr. Bodden has suffered investment losses along with others, but even so, he is a lucky man in my admittedly not fully informed opinion.

      • Anonymous says:

        Again, it must be asked, why is this only an issue on CNS? Compass? Radio Cayman?

        God help us.

  2. What is particularly interesting in this case is the passivity of the victims of the fraud that was committed.

    Clueless and pliable are two words that immediately spring to mind.

    The representatives of the victims should be ashamed of themselves and, in my opinion, are leaving themselves open to claims of negligence.

    • Not really..... says:

      Most of the investors are well off professionals and business owners with big fish/small pond egos. Having spent the past several years waxing on about 20% PA returns from the local wonder fund they are (i) too embarrassed to admit they were unable (or unwilling) to spot the classic ponzi indicators and (ii) have, in most cases, been lucky enough to get most of their money back. So they are willing to cut their losses and play another 18 holes with the promoter, because he is a really nice guy after all. No you’re right, they are clueless and pliable.

       

  3. Da Bracster says:

     You all hush up now ! we created these mafia type figures in this little society ya by keeping our mouth closed when we saw certain little things going down now this has mushroom to bigger things that effect us all. The "untouchables" have become a virtual secret Mafia like organisation in our society now, scaring the living daylights out of the honest and innocent and poor who dare not speak under threat of economic or financial strangulation and eventual death. The political judicial and financial and governmental apparatus have been infiltrated and inundated by its well placed agents enforcers and very loyal supporters (usually high officials). They in return not only influence but make decisions and policy to control government and the private sector a virtual secret and shadow government and this is usual done for them and their cronies sole benefit. Our current political mold and leadership has been infected and corrupted by these very same people who see themselves as "King Makers" with their own legacy and dynasty. So hush nah man before the Cayman Brac big boys get bad with unnah.

  4. Dred says:

    Honestly people we have so many of these in the upper echilons of our society it is not funny. This my friends is how many of them got there by doing things we would the average Joe would be scared to do.

    To make it in this life and become wealthy YOU MUST TAKE RISK. Some take more than others.

  5. Anonymous says:

     If it’s foreigners, they go to jail.  The Caymanian criminals get a free pass.  I say expose them all. 

    • Anonymous says:

      Operation Tempura proves that that is false. If there is any generalization to be made it is quite the opposite. The people who came off best were foreigners. Judge Henderson get’s $1.3m will while Burmon Scott is offered $7,000. Every charge in the book is thrown at Lyndon Martin while his colleague John Evans get’s to be a witness for the Crown.  A court did not convict Deputy Commissioner Dixon but he is still not allowed to return to work because of "disciplinary investigations" 11 months after acquittal.    

      • Anonymous says:

         Talking about the financial criminals not the waste of money Operation Tempura.  

        • Anonymous says:

          Criminals are criminals.

          The point is there is just no basis for the statement which seems to have been picked up from David Marchant’s commentary in is article about what is common in offshore financial centres.  

  6. Man says:

    Naul Bodden has done more to help elevate young Caymanians than the elected members of parliament over the last 50 years.

    • Pauly Cicero says:

      What does this have to do with the issue here?

    • Anonymous says:

      I agree with that, he is a very kind  man and has helped many, also adopted and raised a lovely daughter.

  7. Rockafellas says:

     I want to see the "big ballers" get their come upings what happen to the three amigos  We all know the political connections and ramifications of this one  poor old PPM Chuckie defects and Kurt’s Boss having financial  problems.lordy lordy what more is going to happen yah so.

  8. anonymous says:

    These rich people are giving Cayman a bad name and are ruining Cayman.  McKeeva Bush you are the instigator of allowing these rich people to roam free in the Cayman Islands and you better stop making them use you for a puppet.  Having a good name and reputation is better than having a lot of money.  The rich man will not even be allowed through the eye of a needle in God’s world.

    • Pauly Cicero says:

      The shareholders are Caymanian I believe.

    • Anonymous says:

      Actually a known fraudster received a work permit under the PPM.  

    • Anonymous says:

      your comments are purely ignorant and foolish..

    • Anonymous says:

      Go back and read your Bible and you might find that you have totally misrepresented what it says, which by the way is a sin. The Bible also says that you should not add nor take away from the it.

  9. Anonymous says:

    Name him yes.

    Paying a settlement is the least…

  10. Anonymous says:

    Where is the Monetary Authority and its $200,000K managing director in all this? Can’t they save us from this embarrassment? And Radio Cayman’s  er, ahem. investigating journalists? Why do we have to hear this from David Marchant via CNS??

    It’s disgraceful and disgusting and just gives Marchant every thing he needs to paint us as continuing to be seedy and furtive when it comes to protecting "our own".

    Signing checks doesn’t make everything right.

    • Friends says:

      Yea, I wonder who the liquidators are!

      XXXX

      CNS: The liquidatos are named in the OffshoreAlert article as Nicholas Freeland and David Walker of PwC Corporate Finance and Recovery (Cayman) Ltd.

    • Anonymous says:

      CIMA is quiet.   Linburgh Martin, Deputy Chairman of CIMA Board is also involved in this caper, as is his company Close Brothers.

      The conspiracy continues…

       

    • Anonymous says:

      An asolutely valid question! What has the Monetary Authority done about all of this?! Did they even know this was taking place?! Indeed the Caymanian public should have been advised by a statement from CIMA and not from David Marchant doing what he does best, dig up dirt and expose it! This kind of inaction by CIMA is what will continue to erode the reputation of the Cayman Islands and cause the jurisdiction to appear as anything but a clean financial centre. 

    • Anonymous says:

      Wow! Almost 100 thumbs up but not a squeak from anyone in authority to comment on this affair.We cannot continue like this in the 21st century.

  11. Anonymous says:

    Talk about being stripped down to your Rolex watch and Mercedes Benz !!

    This is a "classical case" that should carefully be noted by all of Cayman’s multi-millionaires who want to be richer and richer and end up having to start from scratch all over again.

     

    • Anonymous says:

      Honestly, I do not think the relatively minor amount Mr. Bodden will be paying will SEVERELY affect his wealth.  Mr. Bodden has a lot more where that is coming from!  I think the main point is, thankfully a major corrupt member of the financial community will be serving hard time for his misdeeds.  Thereby, sending a strong signal to the outside world that law and order still prevail in these Islands.

      • Anonymous says:

        Law and order will prevail, if the perpetrator is not from here. Directors, get this, are directly responsible for their companies. They get compensated for this responsibility. Yet when the stuff hits the fan here, who goes down?

  12. Anonymous says:

    How come this isn’t front page news?