$4M seized from fund conman

| 26/10/2010

(CNS): A confiscation order has been issued by the Grand Court of the Cayman Islands to seize more than $4.4 million from the man who stole almost $19 million from four Cayman based hedgefunds. Robert Christopher Girvan, who pleaded guilty in August to some 27 counts of theft, fraud and money laundering in connection with the collapse of the Grand Island Funds in 2009, has been ordered to pay the sum under the Proceeds of Crime Law. The order was made by Justice Alex Henderson during the first day of Girvan’s confiscation and sentencing hearing. The court heard details of the complex web of financial transactions that Girvan wove in order to disguise the heavy losses he sustained as the trader, manager and director of the funds.

Setting out the particulars of Girvan’s offences, the crown revealed how from the inception of the various Grand Islands Funds in March of 2003 they began to make heavy losses. As a result, he entered into an elaborate fraud, which included intercepting and falsifying the statements from the Canadian bank accounts related to the entities to disguise not just losses but the huge transfers Girvan was making from the fund accounts to his trading account in an effort to “trade his way out of the losses”, the court heard.

Girvan, who is a Jamaican national, invented a bank contact by the name of Richard Duncan, which wrote letters affirming the defendant’s frauds and making the funds appear extremely profitable when the reality was the funds were suffering huge losses. This false information was passed on to Close Bros, the administrators of the funds, who created the fact sheets which were in turn used to attract new investors.

Prosecuting council described the various deceptions in the 27 counts against Garvin and how the defendant had also resorted to a Ponzi scheme drawing on new investors’ payments into the funds to use when redemptions were due to other investors. But because Garvin was falsifying the accounts, not only did the investors get a return based on false profits that they should not have received, Girvan was also taking his fees or commissions on those payments. With the losses continuing, however, Garvin reached a point where he was running what appeared to be a $30 million portfolio with only $3 million.

The court heard the defendant had stolen over $18.9 million but had lost most of the money. While he had taken money for himself to pay his mortgage and buy a vehicle for himself and his wife and other relatively smaller sums, the large cash transfers he made into his accounts continued to be lost in trading.

Eventually, the suspicions of Naul Bodden, Girvan’s business partner and local businessman, were raised and he moved to suspend the funds. Bodden then began an investigation into the losses. Realising the extent of the fraud, he then called in the Financial Crimes Unit, which began a fully fledged investigation before Garvin was eventually arrested by the authorities.

Once arrested in May of 2009, Girvan began to admit the complex deceptions and theft, but the crown noted that he had made various efforts to launder and conceal the money which he had stolen forhimself during the course of his fraud when he realized that his fraud may be about to be revealed.

The confiscation order of $4,432,440 is the total accumulation of his assets spread across various jurisdictions, as well as the Cayman Islands, from Denmark to Jamaica, including land, homes and other investments. During the second day’s hearing (Tuesday) the court is expected to set a time limit for Girvan to realise his assets and hand the money over to the authorities. Following the settlement of the confiscation process, the court will then hear from both prosecuting and defence council with regard to the sentencing. Girvan is expected to face a custodial sentence.

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  1. Anonymous says:

    Unfortunately, this is another "white collar" crime that gets some publicityand the criminal gets a minimum sentence in some minimum security prison.  Financial crimes like this will continue until people/countries get fed up and treat this criminal like a murderer.  We might all think this is criminal who is just ripping off some rich people.  If we did some research, we would probably find out that some of these investors are just regular "joes" who have worked hard for their money and put their faith and life savings in, with con-artists like Mr. Girvan, only to come out on the losing end.  Then we have the "after-effects" to these investors; some have commited suicide, lost their families, turned to drugs or a life of mental depression.  Unfortunately the courts do not consider these "after-effects" during the trial.  It is a travesty that these con-artists will get out of jail during our lifetime.  They should be treated to the same sentences as murderers and have a noose or the electric chair waiting for them.  Yes, this might seem way too harsh, but the reality is that these "white collar" criminals will continue to do what they are doing until there are real repercussions.

  2. Anonymous says:

    would be interesting to see the conflicts of interest in this fund that were not disclosed to investors/stakeholders

  3. Anonymous says:

     Given was not alone in this fraud.  To justify to the outside world whatour AG recently stated, we need to pursue and bring these other people to justice. 

  4. Anonymous says:

    Stealing from investors and your business partner, then using some of the money to purchase property in Crystal Harbour from your own business partner’s family, really takes someone with a lot of balls and backbone.

    I would describe Robert C. Girvan as a "financial terrorist" of some sort !!!

  5. noname says:

    I’m not overly bothered about the rich stealing from the rich to be quite honest.

  6. Anonymous says:

    This is just as bad if not worse as the recent arm robberies we’ve been having lateley.  Only thing that really different is the vast sums involved and the number of people who may be directly or indirectly offended. 

  7. Anonymous says:

    Can I advertise myself as looking for a part time job as a Fund Administrator?


    Girvan, who is a Jamaican national, invented a bank contact by the name of Richard Duncan, which wrote letters affirming the defendant’s frauds and making the funds appear extremely profitable when the reality was the funds were suffering huge losses. This false information was passed on to Close Bros, the administrators of the funds, who created the fact sheets which were in turn used to attract new investors.

    I promise that anytime I receive correspondence from a bank manager in Canada using a Hotmail address that I will immediately sound the alarm.

  8. Anonymous says:

    Anyone have an update on what is happening to the other “directors” and the auditors of these funds?

    • Anonymous says:

       As Chris Johnson will undoubtably tell you the directors are no doubt indemnified under the Company’s Articles of Association, a practice almost confined to the Cayman Islands. The auditors are probably not indemnified. But what about the lawyers whose prospectus was misleading with several important ommissions, the fund administrator and the three ‘wise men’ that acted as investment advisors.

      What will happen? Nothing as it did at First Cayman Bank.

      • Anonymous says:

        Get your facts right, you’re wrong and spouting garbage that is erroneous. Director indemnification under the articles is very common in the US and many other major countries in the world. You won’t get directors to act without indemnification with a carve out for fraud. Also, most auditors seek to limit their indemnification these days to 3 times their fees.

        • Cicero says:

          May I suggest you study the laws of other jurisdictions when you will find you are totally wrong. Obviously you are American.In the UK alone there are hundreds of thousands of directors, none of whom have an indemnity. Most auditors may try and seek to reduce their cover and most fail. Try reading up on the subject in the various cases that have and are taking place. It rather sounds if you know nothing of the business.If directors insist on indenities for their own negligence it is time to get another job.

  9. Karyll Iton says:

     This is yet another sad example of greed on the loose, and in the end the only casualty is the credibility of the financial services industry. For one, I think fund managers who steal are a million times worse than stick up kids and muggers. If someone steals your wallet, they may get the few dollars you have in there, but these guys lose people’s life savings. They take tremendous risk without any fear because the money isn’t theirs and they win regardless. I hope they throw the book at him.

    The sad part about it is for every fund manager like him there are a very larger number of others who are ethical and make their clients bundles of money. However, these people are usually humble and you aren’t going to hear too much about them or their performance. 

    I guess until fund managers start treating the money in their funds like it’s theirs (and have a healthy fear of losing it), a few (maybe not so few anymore) unscrupulous ones will "dip into the kitty". Maybe there should be a rule enforcing all fund manages to have a certain percentage of their own assets on the line…Unrealistic I know….but it certain would change the playing field.