Wire Fraud Case

$7 million dollar insurance fraud case

The Story:
Although this investigation is ongoing, the core work was accomplished between February and July 2003.

It began in February, when an attorney in Caracas, Venezuela contacted Nic Smith. This attorney had been referred to Nic by Doug Cole of the Federal Public Defenders Office. The attorney's client was a large insurance carrier in Venezuela, with 45 percent of the country's insurance market. The company had been the victim of a US $7 million dollar wire fraud.

The facts of the case were as follows:

On the 7th of January, 2003, the Dresdner Bank in Hamburg, Germany received a facsimile letter from the company in Caracas, Venezuela, instructing the bank to transfer $7 million dollars to an account at the Seylan Bank in Colombo, Sri Lanka. The credited account was in the name of the company's "Overseas" subsidiary. No such subsidiary actually existed, however. The fax was a forgery, written on the company's letterhead, with forged signatures. (The bank's lack of due diligence in processing this "letter of instruction," is part of another case.)

We agreed to take the case and asked the attorney for a general power of attorney so that Nic could work on the company's behalf in Sri Lanka. Nic also asked for copies of the fax that had been received by the bank.

Nic then found a contact in Colombo, Ravi Ratnasabapathy. He is not an investigator, but a well-placed accountant who understood the local politics, the legal environment and knew people in the business sectors. On a humorous note, in Sri Lanka there is no such profession as "private investigator." The closest thing they have is a "civil bailiff" who attempts to recover property specified in a writ of attachment. That made for some interesting dialogue with everyone Nic met there. They all had the image of Magnum P.I or similar characters from American movies and television.

Nic flew to Colombo and met with his new friend, Ravi, who would prove invaluable throughout the course of the investigation.

The first order of business was to secure local counsel, which we did. Nic had researched some Sri Lankan firms on-line and Ravi's recommendation was in keeping with what he had discovered. We went with a Singhalese firm, FJ&G de Saram, that had 100 years of experience on the island.

At the same time, Nic needed to find out if there was any money left in the bank account that the funds had been wired to. Even though he had powers of attorney from his client and could rely on Ravi's knowledge of the workings of the bank, Nic was aware that getting the bank to cooperate might not be easy. So, prior to leaving the U.S., he had called the FBI's anti-terrorism task force. He asked the agent if the FBI would be interested in a case of a theft of $7 million by wire fraud and the subsequent withdrawal of millions in cash. The FBI said that it would indeed be of interest to them. By informing the Central Bank that the FBI anti-terrorism taskforce was potentially interested in the matter, Nic secured the bank's full cooperation. He soon established that the money had been "flipped" into another account and there was still $3 million dollars in that account. By a quick trip to the Sri Lankan equivalent of the local recorder's office, he learned the name of the individual who had registered the fictitious business name of fake "Overseas Company" - Abdul Ghani Ameen. Our Sri Lankan attorneys then immediately filed a complaint for fraud and for a temporary restraining order against Seylan Bank and Abdul Ghani Ameen. When the TRO was served on the bank, the $3 million that the thieves hadn't withdrawn was safe for the time being.

The next order of business was to find Ameen and question him - a simple statement, but a tall order.

Nic first went to the CID (Criminal Investigation Divison) of the Sri Lanka Police Authority, which is the "equivalent" of the FBI in the U.S. Nic filed a criminal complaint on behalf of the client, and tried to explain the elements of the crime to the Inspector. The CID had difficulty making a decision as to whether or not a crime had been committed that required their involvement. After much haranguing they finally took the complaint and an Inspector of Police was nominally appointed as the "agent in charge." The Sri Lankan police establishment is rife with corruption, and this was an obstacle throughout this case.

Because of the complexity of the crime, Nic doubted that Ameen had either the wherewithal or financial resources to have orchestrated this alone. Over the next several weeks, Nic discovered a business association that Ameen had with a gentleman named Suresh Mirchandani, a local textile merchant who owned a large import-export business and was closely allied with the political party of the President of Sri Lanka. Mirchandani, it was discovered, had been involved in a prior fraud on the People's Bank of Sri Lanka, a case marginally linked to the President of Sri Lanka. Mirchandani had also been involved in a fraud using a forged facsimile letter against another Venezuelan company in 2001, in which the funds were wired to the Republic of Mauritius, an island nation off the southeastern coast of Africa, east of Madagascar. That separate case is pending.

Nic flew to Mauritius and interviewed the former director of operations for a firm that Mirchandani had operated there, the vehicle by which he perpetrated the fraud on the other Venezuelan company. Returning to Sri Lanka, he turned this information over to the CID there.

Nic attempted to locate Ameen in Sri Lanka, but ultimately discovered that he had fled to Pakistan on one of several passports he possessed.

Our focus returned to Michandani. By examining his long distance telephone calls, we learned that two calls had been placed from his offices to Dresdner Bank a few days after the initial fraudulent fax had been sent. This evidence was a lynch pin in the case.

The next problem we faced was how to overcome the reluctance of the Sri Lankan CID to proceed against Mirchandani. Nic soon learned that Mirchandani employed a former CID Inspector as his "Chief of Security." He had been privy to the complaint filed with the CID and had used his security man to dissuade the CID, through bribes, from actively pursuing the investigation.

Through Ravi and others, Nic learned that one of the Deputy Directors of Police had a brother who was well regarded in the Sri Lankan community as a man of integrity and honor. Nic consulted with him privately, and he agreed to speak with his brother, the Deputy Director of the CID, and ask him to move the investigation forward. Within a few weeks, a fire was lit under the CID. Nic helped them determine which property would yield the most beneficial information, and they executed search warrants on Mirchandani's business offices. Among other things, they discovered a rubber stamp with the name of the fake "Overseas Company" imprinted on it - another lynchpin piece of evidence. The hard drives of the business computers were seized, and they also proved to be a treasure trove of information and evidence.

Based on information gathered, the CID then arrested and interrogated Mirchandani's business manager, Mr. Thowfeek. Nic was not present at the interrogations, but learned that the CID resorted to physical persuasion. Thowfeek implicated Mirchandani, who was subsequently arrested and is presently in custody in Colombo, awaiting trial.

Through subsequent court processes, the $3 million still in the Ceylon bank has been recovered. The matter of the remaining US $4 million remains open. During the course of the investigation, we gathered information about Mirchandani's considerable real estate holdings (all in "straw man" title), and promising leads of bank accounts in Panama are currently being pursued. These should be sufficient resources to cover the balance due.