• Court of Appeal slams ‘material non-disclosure’

• In case involving ‘philanthropist’ Rudolph King

• Discrepancy’s ‘potential to destroy’ fraud claim

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

An “inexcusable” blunder by the Attorney General’s Office and its US counterparts has resulted in the Court of Appeal refusing to refreeze the alleged $1.5m proceeds from an international fraud.

Appeal justice Milton Evans, in a unanimous May 27, 2021, ruling backed by his two fellow justices, blasted Bahamian prosecutors for failing to resolve “inconsistency in the evidence” supporting claims against several defendants who include flamboyant “philanthropist”, Rudolph Kermit King, and a local “non-profit” group.

The failure to resolve discrepancies over the date when a US bank account was closed resulted in “a material non-disclosure” to both the Supreme Court and Court of Appeal that was now “too late to cure”, Justice Evans determined, especially given that this fact “had the potential to destroy” the entire basis for the case against Mr King, Celebrating Women International and the others.

Damian Gomez QC, representing the former two defendants, was first to expose the contradictory evidence involving the Atlanta-based account at Sun Trust Bank when he filed a March 16, 2021, objection to the bid by the Attorney General’s Office to overturn Justice Cheryl Grant-Thompson’s initial Supreme Court verdict that removed the restraining order on the $1.5m.

In his submissions, Mr Gomez noted that the instructions sent to the Attorney General’s Office by US federal prosecutors detailed that the Sun Trust account had been closed on January 23, 2015. This date was almost 12 months prior to the December 11, 2015, to January 9, 2016, period when the $1.5m was alleged to have been transferred from that facility to two Nassau-based accounts with Royal Bank of Canada (RBC).

The former minister of state for legal affairs pointed out that, if the January 23, 2015, date was accurate, it would have been impossible to transfer the $1.5m as alleged to the RBC account since the Sun Trust facility was long closed.

As a result, Mr Gomez asserted there was “no nexus between the alleged offence” and the $1.5m. That sum had subsequently been transferred from RBC to a CIBC FirstCaribbean International Bank (Bahamas) account belonging to attorney Monique Gomez’s law firm, where it was being held on behalf of Celebrating Women International in a client account.

Other documents held by the Attorney General’s Office showed the closure date for the Sun Trust account as being January 2016, but the discrepancy was never raised or cleared up during multiple Supreme Court hearings or before the Court of Appeal prior to it finding that Celebrating Women International should be added as a named defendant.

Appeal justice Evans wrote that the non-disclosure allegations concerning the Sun Trust Bank account’s closure date had “exercised our mind” at the Court of Appeal, adding that “it has potentially serious ramifications”.

He noted that Shaka Serville, lead prosecutor representing the Attorney General’s Office (and the US as requesting state), had sought to explain away the January 2015 date as “a typographical error”. He argued that this date appeared only once in the evidence, and there were multiple documents to show the actual closure data was January 2016.

Appeal justice Evans, though, said that if the January 23, 2015, date was not an error “it goes to the root” of the Attorney General’s Office’s case. He added that Mr Serville accepted that, in failing to pick up the discrepancy, there had not been full and frank disclosure of all material facts to the Bahamian court.

Describing Mr Serville’s case as arguing that the non-disclosure was “innocent”, Appeal justice Evans wrote: “This submission on its face appears to be reasonable. However, there are two concerns. Firstly, in order to determine that a typographical error occurred and to correct the same would require the input of the person who prepared the documents.”

However, no such person had provided evidence to the Court of Appeal to enable it to determine which date was the correct one. “There is no doubt in my mind that the appellant had a duty to disclose the issue relative to the date of the closure of the bank account at Sun Trust Bank. This they did not do,” Appeal justice Evans wrote. 

“This fact is exacerbated by the fact it was not disclosed to the trial judge during the trial and, even more fundamentally, there is no evidence that it was disclosed to the court during the application for the restraint order.......

“In these circumstances I do not see how this court can ignore what I consider to be a material non-disclosure,” Appeal Justice Evans continued. “The material which was not disclosed had the potential to destroy the substratum of the appellant’s [Attorney General’s Office] application under the Mutual Legal Assistance (Criminal Matters) Act.

“It was incumbent on the appellant to resolve this issue at the earliest possible opportunity. It must be assumed that the appellant read the documents submitted by the requesting state [the US] in their entirety before commencing the proceedings.

“It must also be assumed that the officials of the requesting state read the documents before submitting them with their request for assistance. As such the failure to recognise the inconsistency in the evidence is inexcusable.”

Appeal justice Evans said it “would not be proper” to allow the Attorney General’s Office to introduce fresh evidence at this stage, and added: “I accept Mr Gomez’s submission that it is now too late to attempt to cure this non-disclosure. The appellant must suffer the consequences of what flows from the lapse of duty to give full and frank disclosure.”

Those consequences include the removal of Celebrating Women International as a defendant, together with the Court of Appeal declining to reinstate the restraining order that froze the $1.5m in the Monique V.A. Gomez & Company law firm’s client account.

The only part of the appeal by the Attorney General’s Office to survive was its challenge to the damages awarded against it by the Supreme Court for breaches of Mr King’s and Celebrating Women International’s constitutional rights.

Celebrating Women International and its unnamed “beneficial owners and sole directors” had claimed they were “victims” of the $1.5m asset freeze, and that RBC had cancelled their banking relationship and accounts as a result. However, the Court of Appeal declined to take any action on this issue.

The non-profit’s website contains numerous photographs featuring Patricia Minnis, the Prime Minister’s wife, and then-governor general Lady Pindling, along with other members of Nassau high society at various dinners and award ceremonies.

One photograph on its home page, of a book signing at Government House involving Princess Michael of Kent, from the UK, appears to capture Mr King standing directly behind Lady Pindling, but that that does not necessarily prove a connection between him and Celebrity Women International and no evidence has been produced to support such an assertion.

The Attorney General’s Office had sought to overturn the October 23, 2019, ruling by Justice Grant-Thompson where she discharged the restraining order placed on funds in the two RBC accounts, which were in the names of Jonathan Reid, David Valdez-Lopez, Anthony Albert Allens, Greg Harry Smith, Celebrating Women International and CWI International.

The restraining order had been obtained at the behest of the US attorney for Washington state’s western district, as part of a probe into a scheme that defrauded Boeing, the giant aircraft and defence manufacturer.

In its appeal, the Attorney General’s Office argued that no evidence had been presented to show the funds were derived from “legitimate” activities and the judge had failed to consider the removal of the freeze may “completely dissipate the funds”.

It also alleged that the judge had failed to distinguish between the US Mutual Legal Assistance Treaty (MLAT) request and “domestic police criminal proceedings”, basing her ruling on the latter and not the pleadings before her. Justice Grant-Thompson also found “the nexus.... between the fraudulent funds in the Boeing scheme from Sun Trust Bank and the Celebrating Women International account at RBC was tenuous at best”.

However, the Attorney General’s Office said there was a clear paper trail showing the funds moving from the Sun Trust account in Atlanta to the RBC accounts in the name of Celebrating Women International over the 2016 New Year period.

Justice Grant-Thompson also found that the alleged fraud’s perpetrator had not been identified, and that the whole affair was a fishing expedition. However, the Attorney General’s Office argued the US had “provided bank statements in the name of Celebrating Women International, in whose bank account Boeing’s funds were deposited, albeit the identity of the beneficial owner was elusive”.