Hugh Wilson, Contributor
David Smith pleaded guilty in the Supreme Court of the Turks and Caicos Islands to two counts of money laundering and two counts of conspiracy to defraud. Under the Turks and Caicos Islands Proceeds of Crime Ordinance, the conviction triggered a mandatory confiscation hearing. At the hearing, the Supreme Court calculated Smith's benefit from his particular criminal conduct in the sum of at least US$220 million. This is called the recoverable amount.
Smith was able to convince the court that the amount available to satisfy the recoverable amount was US$20,919,950.53. Thus a confiscation order was made in that sum. This included cash gifts totalling US$8.475 million.
Smith has until October 24, 2012 to pay the confiscation amount of US$20.9 million, failing which he will serve a further eight years in prison by default.
In the confiscation order, Smith's assets were listed as well as several cash gifts made to the major political parties in Jamaica and several prominent politicians. The People's National Party (PNP) was gifted US$2 million, in addition to a further US$25,000; the Jamaica Labour Party (JLP), US$5,000,000; Sally Porteous, US$100,000; Daryl Vaz, US$50,000; and one P.J. Patterson US$1 million.
Both the PNP and the JLP acknowledged receiving the gifts, but denied the amount claimed in the confiscation order. The PNP claimed it received US$1 million. On the other hand, P.J. Patterson strongly refuted ever receiving US$1 million or any other sum from Smith. We are yet to hear from the JLP as to the amount it received.
These strident denials must be viewed against the background that a court-appointed receiver had the benefit of documentary evidence. This formed the basis on which the prosecution was able to identify the recipients of the cash gifts. Neither the PNP nor the JLP can provide conclusive and irrefutable evidence to contradict the allegations contained in the confiscation order.
Interestingly, Bobby Pickersgill, speaking on behalf of the PNP, declared that the party was not under a moral obligation to return the cash gift. We are yet to hear the JLP's position. Pickergill's declaration is based on a misunderstanding of confiscation law.
The question is not whether the recipient of a tainted gift is under a moral obligation to return it, but whether there is a legal obligation to do so. Under the Turks and Caicos Islands Proceeds of Crime Ordinance, a gift will be regarded as being tainted if the court finds that the accused has a criminal lifestyle.
Criminal lifestyle is a statutory concept which is defined in the ordinance. The ordinance listed certain offences which are designated criminal lifestyle offences. These include money laundering, conspiracy, among others. Recall, Smith pleaded guilty to money laundering and conspiracy to defraud. It follows that Smith has a criminal lifestyle.
The court would treat any gift, cash or otherwise, as being tainted if it was made by him within a period of six years preceding the start of criminal proceedings against him in the Turks and Caicos Islands. Moreover, a gift is tainted, irrespective of when it was made, if it consisted of property (including cash) that was obtained as a result of or in connection with Smith's particular criminal conduct.
Therefore, the cash gifts received by the PNP, JLP and the others persons are tainted by Smith's criminal conduct. According to both parties, these gifts were used to finance their respective political campaigns.
AUTHORITIES SLOW TO ACT
The Turks and Caicos Islands authority failed to act with reasonable promptitude in preserving the cash gifts from the risk of dissipation by the recipients of the gifts. They had sufficient time, during the pretrial period, to apply to the Supreme Court in that jurisdiction for a restraining order prohibiting the dissipation of the cash gifts.
The fact is, Smith defrauded at least 6,000 investors, including several churches and secular organisations, of at least US$220 million by mass deceit. He misled his investors into believing that he was trading their investments on the foreign-exchange market when, in fact, he was operating a massive Ponzi scheme.
Therefore, the recipients of tainted gifts, if they are still in possession of the gifts or a part thereof, have a legal obligation to return it. The cash gifts were derived from the proceeds of crime. However, if the cash gifts have been exhausted or dissipated on the financing of political campaigns, there is nothing to return. The legal consequence is that if the tainted gifts are irrecoverable, Smith will have to serve an additional period of imprisonment.
In confiscation law, although a person is given a gift which is tainted, it is still treated as the assets of the accused and it is irrelevant that the accused cannot recover the gift. Even though the confiscation order is against Smith, this does not absolve the recipients of tainted gifts from complying with the confiscation order.
It is against this backdrop, that the PNP, JLP and the other recipients of tainted gifts, have a legal obligation to return the money to the relevant authority in the Turks and Caicos Islands.
Hugh Wilson is an attorney-at-law. Email feedback to firstname.lastname@example.org and email@example.com.