U.S. seeks extradition of Caribbean Ponzi schemer

Fri Aug 27, 2010 5:33pm EDT

Related Topics

* Jamaican financier at center of big Caribbean fraud case

* He is accused of swindling investors out of $300 million

* Case is one of Caribbean's biggest Ponzi schemes

By Kevin Gray and Pascal Fletcher

MIAMI, Aug 27 (Reuters) - U.S. authorities want to extradite from the Turks and Caicos Islands a Jamaican banker accused of running a Ponzi scheme that bilked investors out of nearly $300 million in one of the Caribbean's biggest financial fraud cases, a law enforcement official said on Friday.

U.S. prosecutors have filed criminal charges against David A. Smith, who is currently under investigation but on bail in the Turks and Caicos, a British overseas territory.

Smith faces fraud, money laundering and other charges in the Turks and Caicos, said John Briggs, the deputy senior investigator of the Turks and Caicos special investigation and prosecution team.

"It's alleged that he's run a Ponzi scheme to the tune of about $300 million," Briggs told Reuters.

In a court filing earlier this month in Orlando, Florida, U.S. prosecutors say Smith defrauded thousands of investors from the United States, Jamaica and other Caribbean territories, promising his investments in foreign currency trading would yield monthly average returns of 10 percent.

Among the affected were investors in Florida, which has been hit by a number of high-profile Ponzi schemes in recent years, including fallout from the massive fraud scandals surrounding convicted Wall Street swindler Bernard Madoff and accused Texas financier Allen Stanford.

Briggs said U.S. authorities have "formally applied for extradition on a number of counts ... but the outcome of that will be that they've got to wait until the case here (in Turks and Caicos) is completed," he said.

Smith was due to appear on Sept. 28 in a Turks and Caicos court, where he would either plead guilty or face trial, Briggs said.

Smith's lawyer in the Turks and Caicos, Oliver Smith, refused to comment on the charges against his client.

LAVISH LIFESTYLE

In the U.S. case against him, prosecutors say Smith used the money to bankroll a lavish lifestyle, including collections of gemstones and jewelry, and he paid out early investors with new cash from investors in a classic Ponzi scheme.

Many prominent Jamaicans were allegedly among his victims, including leading politicians and doctors in Jamaica, where Smith set up an investment house called Olint. His business links included a Florida currency trading company.

Jamaican authorities shut down Olint's offices there four years ago, but Smith moved on to operate out of the Turks and Caicos, located north of Haiti and the Dominican Republic.

In Jamaica, Smith was a well-known philanthropist and supporter of a popular church attended by wealthy Jamaicans. He offered to pool investors' money and some allegedly even sold their houses and used the proceeds to invest with Smith.

In a move that mimicked Madoff, whose $65 billion Ponzi scheme collapsed and was exposed during the global economic crisis, Smith regularly sent statements to clients showing their investments were generating profits, prosecutors said. (Additional reporting by Horace George in Kingston; Writing by Kevin Gray; editing by Matthew Lewis)

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