The founder of Cash4Titles, Charles Richard Homa, came to Cayman last May from a US prison to give evidence in the trial of Lewis Rowe and Patrick Tibbetts.
The defendants are charged with assisting Homa and another C4T figure, Michael Gause, to retain the benefit of criminal conduct. The defendants managed companies set up by Homa or Gause or investors in C4T.
In summing up the evidence and instructing the jury last week, Chief Justice Anthony Smellie reminded the jury Homa had said he was serving a five-year sentence for fraud and other offences and had to pay restitution of over US$150 million.
C4T had started out in 1993 as a small, short-term loan business, in which customers put up their car titles as collateral and paid high interest. Money was then raised for C4T to expand.
Homa had told the court that he chose to cooperate with the US Securities Exchange Commission in the spring of 1999. Funds stopped being raised completely on 15 October 1999 when the SEC froze the accounts. (Gause, the principal money raiser, was arrested that day.)
Homa explained that by 1999, C4T had 1800 investors totalling $250 million. This required $20 million to service and ‘we could not do it. We were taking in money anywhere we could…. We were having difficulty making interest payments to investors, who had been promised monthly payment.
The SEC wanted all the paperwork for C4T. Homa said his only choice was to flee the US or cooperate. He said he chose to cooperate to get a sentence reduction and preserve as much of the money as possible.
After US authorities became involved nothing was done differently, except for slowing down the monthly interest payments, he commented.
The Chief Justice advised the jury as to how the SEC involvement should be treated.
Notwithstanding that the SEC from after the spring of 1999 was really in control of what Homa could do regarding Cash4Titles- if the jury were satisfied on the evidence that a defendant knew or suspected that Homa was misappropriating investors’ funds and facilitated him in so doing, the fact of the SEC’s involvement allowing that to happen – ‘distasteful as we from the Cayman Islands perspective might regard that to be’ – would nonetheless be an irrelevant consideration.
The Chief Justice also pointed out that Homa testified he was under express instructions, which he fulfilled, not to let other participants – including the defendants – know he was acting under SEC direction.
The judge noted that defence attorneys had said this was only consistent with the defendants not knowing what Homa was up to and not being able to ascertain what was really going on with C4T in the US.
Of his own knowledge, Homa said, he did not know if Rowe was aware that investors’ money was being used to pay other investors. The same went for Tibbetts. ‘It was never discussed by me with either one of them,’ Homa said.
Homa detailed his relationship with Rowe and Tibbetts and commented on numerous documents, which were also reviewed with the jury via computer monitors.
A key ingredient in the charge of assisting someone to retain the benefit of criminal conduct is ‘knowing or suspecting’ that the person was or had been engaged in criminal conduct or had benefited from criminal conduct.
The Crown’s case is that the defendants knew or suspected that Homa and Gause were using investors’ money for their personal purposes and to pay interest due to early investors.
Early in the Chief Justice’s summing up, he reminded the jury that the Prosecution must prove the defendants guilty; the defendants do not have to prove innocence.
He also pointed out that Homa and Gause were to be regarded as accomplices. It is dangerous to convict on the uncorroborated evidence of an accomplice. To the extent that the jurors would rely on such evidence, they should see if there is independent evidence that supports accomplice evidence.
The summing up continues this week.