Banking Expert Witness Discusses Illegal Securities Sales Using Caribbean bank


Business Expert WitnessA banking expert witness opines on a case involving a securities dealer who was convicted of illegal securities sales using a Caribbean bank. The defendant in this criminal case was convicted of selling unregistered securities, selling securities without being a registered dealer and fraudulent sale of securities with an aggregate value of more than $100,000. The defendant worked at an investment firm. He was contacted by state security officials and told he should not be selling viatical contracts because viaticals are securities and he was not registered to sell securities. Seven months later, state securities officials executed a warrant on the defendant’s office and seized numerous investment materials, including certificates of deposit (CDs), which the state contended constituted securities. The defendant had been offering CDs through international banks doing business in the Caribbean. The defendants’ clients purchased the CDs after the defendant assured them that they were safe. Following the purchases, the buyers received initial interest payments and then received nothing. The state filed numerous securities violations against the defendant and he was convicted in state court on three counts. An appeals panel reversed his conviction. The state then appealed and the case was remanded.

Question(s) For Expert Witness

  • Describe the benefits of using an offshore bank.

Expert Witness Response

The bank in this case is an offshore bank. It was not approved to do banking in the United States. An offshore bank is an institution that is not permitted to operate in the country that issues its charter, in this case, the United States. The banking laws and regulations for an offshore bank in the Caribbean country in this case requires one to fill out an application, pay a filing fee and pass a criminal background check. There is almost no supervision of these banks in the country, since they do not actually operate in the charter country. Further, this country has no government deposit insurance plan in place and there have been several bank failures there. There is no formal, enforced regulatory scheme for an offshore bank such as the bank at issue in this case.

The expert is a national bank examiner with the U.S. Treasury Department.

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