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Lawyer Seeks $108 Million From Ponzi Scheme

That dollar amount from a news report in the Jamaica Observer sure grabbed my attention, until I realized it was $108 million in Jamaican dollars. Still, even when converted to U.S. money, that is $1.5 million -- not hay by any standard. According to the report, that is the amount (plus interest) that a Texas lawyer loaned to the Jamaica-based company Cash Plus, with a promise of 10 percent per month return. If it sounded too good to be true, it was. On March 31, Jamaica's Supreme Court put the company into receivership and appointed a PricewaterhouseCoopers partner from New York, Kevin Bandoian, to manage it.

The lawyer, identified in the article as Sandra Robinson of Houston, is one of "scores" of lenders who have sued the troubled company, but hers is the biggest lawsuit to date in the recovery she seeks.

Robinson said in her affidavit, filed on May 14, that between January and August 2007 she loaned Cash Plus J$101,354,102.80, with the promise of a 10 per cent per month return on the money loaned. According to the affidavit, Robinson at March this year was owed J$98,500,000 plus interest.

Earlier this week, the receiver issued a report estimating that the company had only 16 cents to pay for every dollar it owed creditors. Bandoian's report made the company sound like a classic Ponzi scheme, as he wrote that "monies used for repayment appear to have come directly from the funds received from lenders, as Cash Plus did not appear to have sufficient income-generating activities to support the interest payments on these deposits and to pay staff and other operating costs."

The exact nature of the company's business seems muddy. In 2006, owner Carlos Hill rebuffed government pressure to register as a financial or investment company. At the time, the company reported its businesses as including prepaid calling cards, distribution services, telecom services, real estate management and construction. Hill was released on bail after his arrest last month on charges of fraud. News reports say documents found during the arrest connect Hill to billions of dollars in overseas financial institutions.

As for lawyer Robinson, the State Bar of Texas directory shows only one by that name in Houston -- listed as employed by the Houston Police Department.

Posted by Robert J. Ambrogi on May 23, 2008 at 10:46 AM | Permalink | Comments (1)


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