Financial Crime World

Four Executives of Grenada’s Phantom First International Bank Face Jail Time and Millions in Penalties for Fraud

In a landmark case, four top executives of the now-defunct First International Bank of Grenada were found guilty of defrauding over $170 million from thousands of unsuspecting investors. The scam, which came to light in 2008, resulted in the bank’s collapse six years earlier in 2002.

The Fraud Unraveled

The Executives, who include a former mortgage banker, are now facing significant prison sentences and hefty fines. The investors, hailing from around the world, were lured into depositing their savings into the phantom bank with false promises of outrageous returns as high as 300%. :

  • Assurances of high returns: The fraudsters boasted about having a 10,000-carat ruby worth $20 million backing their assets.
  • Counterfeit documents: False documents were used to add credibility to the scheme.

The Court’s Ruling

The court’s ruling resulted in prison terms for the executives:

  • One was given an eight-year sentence and ordered to pay more than $32 million in restitution.
  • The remaining three will serve prison terms, in addition to paying over $26 million in restitution.

The bank’s founder, former mortgage banker Gilbert Ziegler, passed away in 2005 before facing trial.

A Cautionary Statement from Financial Institutions Bureau (FIB)

A spokesperson for the Financial Institutions Bureau (FIB) made the following statement:

“The First International Bank of Grenada serves as a stark reminder of a classic Ponzi scheme. By perpetuating false high returns, the criminals obtained funds from original investors to pay others. Our advice to investors is to exercise due diligence before partaking in investment schemes promising short-term and unusually high returns.”

Recovery of Lost Funds

For those who fell victim to the First International Bank of Grenada, there is little likelihood of recovering their lost funds. Approximately one third of the $170 million invested was funneled back to investors as phony interest payments, while a significant portion was siphoned off on extravagant expenses:

  • Extravagant expenses: Significant portions of the funds were lost to extravagant expenses.
  • Lost to other cons: A considerable amount was also lost when the executives fell prey to other cons.

The Extent of the Scheme

The reach of the scheme extended beyond the First International Bank of Grenada:

  • Related banks: Several related banks like Fidelity International Bank and 13 subsidiary institutions were also implicated.
  • Fraudulent financial instruments: During the trial, prosecutors unveiled the discovery of fraudulent financial instruments worth over US$10 billion purportedly from reputable financial institutions.

Consequences and Conclusions

“With a fraud of this magnitude, it is inevitable that a vast quantity of forged documents and a web of fake banks would be employed to mislead investors and hinder detection of criminal activity,” said the prosecutor.

Despite the significant loss of funds, it remains uncertain whether the perpetrators will be able to pay substantial amounts back to their victims. With one in custody, receiving social security benefits, and another working at a grocery store, prospects appear bleak for the return of investors’ funds.