Wednesday, July 2, 2014

Four Grand Juries investigated Vesco's Bahamian Bank

Beginning in late 1978, the Drug Enforcement Agency had begun an investigation under the new federal Continuing Criminal Enterprise statute--21 U.S.C. § 848(d) (1976). The target was a marijuana smuggling ring headed by Thomas E. Long of Westmoreland County, Pennsylvania. Eighteen other men from various locations in the United States and the Bahamas would eventually be named as part of the conspiracy to import multi-ton quantities from Colombia and Jamaica, announced by Assistant U.S. Attorney Charles D. Sheehy of the U.S. Attorney's Office in Pittsburgh. Some of those involved were arrested and prosecuted, but others were never captured. As reported in the appeal on the forfeiture proceeding case (654 F.2d 911):
Long and eight co-defendants have departed for parts unknown and are presently fugitives. Eight other co-defendants pled guilty to the indictment that named Long the manager of an illicit drug enterprise. They were sentenced in the Western District of Pennsylvania, on March 2, 1981. One defendant was acquitted of all charges in a non-jury trial and the final defendant was found guilty by a jury and sentenced on March 2, 1981. United States v. Long, et al., 88 F.R.D. 701 (W.D.Pa.1981) (Ziegler, J.)
Before Long fled the court's jurisdiction, his attorneys, Irwin G. Lichter and James Arnkoff, required him to pay off some previously incurred legal fees still outstanding, and agreed to settle for transfer of title to an airplane Long had used in his smuggling operations, a Beechcraft Baron aircraft, 58 T.C., Serial No. T.K.-44. Arnkoff received the bill of sale in the Bahamas from Anthony Bowe of Columbus Trust Ltd.and registered the sale from Circleville Holdings Inc., Long's Florida corporation, on October 22, 1979, about seven months before the grand jury returned the indictment against Long. Bowe also was a fugitive. Circleville had been incorporated by Lance Eisenberg, an attorney at 1401 Brickell Ave., Suite 1101 in Miami.

Eisenberg would subsequently become a target for three other grand juries investigating his money laundering activities in connection with other drug rings in Houston, Texas; Gainesville, Georgia; and in Charleston, West Virginia--all of which used the Columbus Trust bank in Nassau, formerly controlled by Robert Vesco.
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U.S. TAX AND DRUG INDICTMENTS TRAIL FIGURES IN BAHAMIAN TRUST

 
Robert Vesco
NASSAU, the Bahamas— Behind the scenes in at least four Federal grand jury investigations into suspected money laundering and narcotics trafficking by Americans has been a Bahamian bank in which Robert L. Vesco, the financier who is now a fugitive, had financial interests.
[Editor's note: Robert Vesco was born in 1935. His father Donald Vesco worked in Detroit as a metal finisher in the auto industry but eventually returned to Ohio to work at Trabon Engineering in Solon, Ohio as a supervisor, a coal mining part of Ohio near where Donald Vesco's Italian-immigrant parents (Martino and Parina) had settled in 1904--midway between Columbus, Ohio and Pittsburgh.
The bank is the Columbus Trust Company Ltd., organized in 1969 and closed this spring [1983] after Bahamian officials voided its license without explaining. So far the investigations have produced the following results:
  • In 1980 Anthony Bowe, a former bank official, reportedly now a fugitive, was indicted on drug charges in Pittsburgh.
  • In 1981 Lance Eisenberg, a lawyer who represented the bank, was indicted by a Houston grand jury in a tax evasion case.
Chester pleaded not guilty two years before death.
  • Early this year, Mr. Eisenberg was indicted on tax charges by a grand jury in Charleston, W.Va.
  • Early this month Mr. Eisenberg and 11 other people, including Tilton Lamar Chester Jr., a business associate of the bank's president, were among 11 people indicted on narcotics trafficking and tax evasion charges by a Federal grand jury in Gainesville, Ga.
Mr. Eisenberg and Mr. Chester have pleaded not guilty in the cases.

A Continuing Investigation
The grand juries have been part of a continuing Federal investigation into suspected violations of American tax and narcotics laws by United States citizens who take advantage both of the Bahamas' strict bank secrecy laws and a geographical location that makes it an ideal drug transfer point. Prime Minister Lynden O. Pindling and Kendal W. Nottage, the Minister for Youth, Sports and Cultural Affairs and one of the most influential members of the Pindling Government, have each owned 2.5 percent of stock in Columbus Trust since 1970. Both men said they had taken no role in the way the bank conducted its business. 

Mr. Nottage said in a recent telephone interview that if Columbus Trust was making money from the laundering of drug money, ''I didn't earn anything from it and certainly I didn't know.'' 

Money laundering is the transferring of funds through a number of bank accounts in an attempt to conceal the money's origin. It is often a means to evade the payment of taxes. 

Mr. Nottage, whose financial disclosure documents show him to be a multi- millionaire, said his association with Columbus Trust dated to the time when he was a lawyer in private practice and was asked to handle the legal work of organizing the bank and obtaining a license for it from the Bahamian Government. 

As partial payment for his services, Mr. Nottage said, he received 5,000 shares of Columbus Trust stock, which in 1970 were valued at $1 a share. Mr. Nottage said he had just purchased Mr. Pindling's law practice and, in a gesture of gratitude, advised Mr. Pindling to purchase 5,000 shares for himself. Mr. Pindling agreed and paid Mr. Nottage $1 a share. Mr. Nottage said he had since held these shares in trust for Mr. Pindling. 

Bank Is Being Liquidated
According to a spokesman for Touche Ross & Company, which is now handling the liquidation of Columbus Trust, the trust company managed $50 million to $100 million for more than 200 client companies. Mr. Nottage said he and Mr. Pindling decided to sell their Columbus Trust shares last year, after newspaper articles here and in the United States cast clouds over some of the bank's business dealings. 

Mr. Nottage said he arranged with Donald B. Aberle, one of the bank's founders and since 1973 its president and largest shareholder, to buy the 10,000 shares he held at $3 a share. The purchase was approved by the Central Bank early this year, he said, but the sale was never consummated. The Central Bank is the governing agency for bank and trust companies. 

The ties between Robert Vesco and Columbus Trust are obscured by strict bank secrecy laws in the Bahamas, but court documents, Congressional testimony, and interviews with bank shareholders and clients, as well as Bahamian and American authorities, provide this sequence of events: 
  • Columbus Trust was formed by Mr. Aberle, a Bahamian citizen born in Australia, and by Denys Dobbie, an accountant, who at the outset had the controlling interest with 120,000 shares. Mr. Nottage and Mr. Pindling acquired their shares in 1970. 
Sale to Butler's Bank
  • By the end of 1971, according to the Columbus Trust annual statement to the Bahamas Registrar General's Office, the Dobbie shares and control of Columbus Trust had been sold to Butler's Bank, Ltd., of Nassau.
  • It was Butler's Bank, according to published news accounts and investigations by the Securities and Exchange Commission, that in 1970 vouched for Mr. Vesco's bailout plan to gain control of Investors Overseas Services, the Swiss-based mutual fund group that he was later accused of bilking of $224 million.
  • In 1971 Mr. Vesco acquired control of Butler's Bank through International Bancorp, one of a number of companies American and Bahamian officials believe he used to shift funds from Investors Overseas Services to the Bahamas. International Bancorp had purchased Bahamas Commonwealth Bank, which listed as its sole assets the loan and investment portfolio of Butler's Bank. Eventually, Butler's Bank was absorbed by Bahamas Commonwealth. 
Note: International Bancorp Ltd (IBL) was sued by the SEC in 1972.
''At the time Commonwealth was formed and was under Mr. Vesco's control, there was a certain category of persons that had difficulty borrowing from the traditional banks,'' said Paul Adderley, the Bahamian Attorney General and Minister for External Affairs.

''He did lend more liberally to black Bahamians at the time, a high percentage of whom were members of the Progressive Liberal Party.'' Mr. Adderley also noted that in the early 1970s nearly all politically active blacks in the Bahamas were members of the party. 

Reasoning on His Actions
''He was still a man of good reputation at the time, but if you accept the premise that he was looking for a safe haven from the United States, he had this policy in an attempt to ingratiate himself with the Government,'' Mr. Adderley reasoned. 

''I don't know if the exercise was complete, however,'' he continued, noting that Mr. Vesco fled the Bahamas in December 1973, about four months after the United States initiated extradition proceedings against him. The whereabouts of Mr. Vesco, who returned here but fled again in 1981 after the Bahamas began deportation proceedings against him, have not been determined. 

By June 1973, the control of Columbus Trust had passed to Mr. Aberle, who acquired a large block of the Butler's Bank shares. Mr. Aberle's shares, which increased to 127,498, gave him controlling interest. Mr. Nottage retained his shares but by then had resigned his position as the trust company's attorney of record to pursue a career in politics. 

According to Bahamian bankers who asked that their names not be used, the association with Mr. Vesco's company cost Columbus Trust many of its customers after allegations of wrongdoing by Mr. Vesco began to circulate in the press. At this point, they said, a different group of clients came to the bank, including a number of people who, according to court records, were eventually investigated by the American authorities for alleged involvement in tax evasion schemes or drug trafficking or both.

Mr. Bowe, a Bahamian citizen who at the time was director and secretary of Columbus Trust, was indicted by a Federal grand jury in 1980 in Pittsburgh as a co-conspirator in a drug smuggling operation. Mr. Bowe was charged with helping marijuana smugglers conceal their income through secret bank accounts in the Bahamas. He is now said to be a fugitive. 

Miami Tax Lawyer Is Indicted
Mr. Eisenberg, a Miami tax lawyer who has done legal work for Mr. Aberle and Columbus Trust, was indicted in 1981 by a Federal grand jury in Houston. The grand jury charged that Mr. Eisenberg helped two executives divert oil company revenues through Columbus Trust and another Bahamian company to evade Federal income taxes. One of the financial institutions used was International Business Transactions Ltd., a Bahamas company, of which Mr. Aberle was secretary, according to the indictment. Mr. Eisenberg is awaiting trial. 

Mr. Eisenberg was indicted this year by a Federal grand jury in Charleston, W. Va,, in connection with an alleged scheme to defraud investors in a coal mining tax shelter program. Early this month he was indicted again, this time in Gainesville, Ga., with 11 other people on charges of smuggling marijuana and cocaine into the United States from a base in the Bahamas. Mr. Eisenberg has pleaded not guilty in all three cases. 

One of the 12 indicted was Mr. Chester, a professional pilot who said he was an American drug informer and said he met Mr. Aberle through Mr. Eisenberg and later had some of his business ventures managed by Mr. Aberle's company. Mr. Chester, who lives in Georgia and on Darby Cay, a private Bahamas island, said in an interview here that Columbus Trust managed the accounts of businesses in which he has an interest. Mr. Chester pleaded not guilty. 

Mr. Aberle could not be reached for comment. The telephone number listed for Columbus Trust in Nassau was not in service. Arthur Christy, a New York lawyer who has represented Mr. Aberle and Columbus Trust in the United States, said Mr. Aberle probably would not comment. In explanation, he cited Bahamian laws that restrict the disclosure of information about clients.
Martin Baach, a Washington lawyer representing Mr. Eisenberg, said neither he nor Mr. Eisenberg would comment on the indictments against his client.



See also Operation Lone Star
and
Ex-Vesco Bank Figures in Drug Probe

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