Cash4Titles defendant Patrick Tibbetts was sentenced to three years imprisonment yesterday for money laundering.
But he was allowed to remain on bail pending appeal because of an allegation of juror bias.
Few details were made public. However, before Michael Wood QC began speaking in mitigation for Tibbetts, he asked to deal with ‘matters that have arisen in the last ten days or so’. He referred to an affidavit that had been delivered to Chief Justice Anthony Smellie, who was the trial judge, and to the Crown.
Mr. Wood did not name any parties involved because the Chief Justice had requested that names not be mentioned and because it was sensible not to at this stage.
But, he pointed out; the Financial Reporting Unit had already made some enquiries and had confirmed some of the facts stated in the affidavit.
For whatever reason, Mr. Wood continued, a juror had failed to indicate, on the jury selection form, a number of specific facts that would go to the juror’s impartiality. That same juror also chose to remain silent while a particular witness gave evidence for some two days.
[As reported in the Caymanian Compass at the start of the trial in May 2004, over 150 potential jurors had filled out questionnaires as to their possible connection with defendants, witnesses or various entities including certain banks and law firms.]
Mr. Wood said it was inevitable that Tibbetts’ convictions would be quashed, so it was wrong for him to spend any time in custody at all.
Tibbetts was found guilty 3 February 2005 of assisting two key Cash4Titles figures to retain the proceeds of criminal conduct.
An essential ingredient of the charge was that he knew or suspected that Richard Homa and Michael Gause were persons who were or had been engaged in criminal conduct, or had benefited from criminal conduct.
Mr. Wood said the judge had to sentence on the basis of suspicion rather than knowledge, and decide when it was that Tibbetts became suspicious.
This was important in determining how long Tibbetts was involved in what had turned into a Ponzi scheme and how much investors had lost during that time.
Mr. Wood reminded the court that C4T founder Richard Homa had signed a formal agreement in July 1999 with the US Securities and Exchange Commission and FBI in July 1999 but had begun cooperating with them in March or April.
US authorities thereafter directed the flow of funds although they could have – and should have — shut the operation down.
Further, American authorities chose to keep the Cayman Islands authorities in the dark and allowed the scheme to run another six or seven months (until Michael Gause was arrested in October 1999). Investors’ losses could have been avoided, Mr. Wood said.
He also pointed out that the Bank of Bermuda was not prosecuted, although there were procedures that should have been put in place for monitoring C4T accounts.
After a brief adjournment, the Chief Justice said he was prepared to sentence on the assumption that the jury had properly convicted Tibbetts.
The Chief Justice said he accepted that the jury had found Tibbetts had the necessary suspicion, as distinct from knowledge.
Taking the most favourable view on which the jury may have properly returned its verdict, Tibbetts would have been involved in putting at the disposal of Homa and Gause further amounts of some six to 10 million dollars of investors’ money.
‘The fact is, the moment you became suspicious, you had a legal, moral and fiduciary obligation to report your suspicions and so prevent the further misappropriation of investor funds,’ the Chief Justice told Tibbetts.
Loss of his good character is a significant punishment to a professional person, the judge acknowledged. He also was obliged to consider whether further financial orders will be made against the defendant, but that was a separate matter for another day.
The legitimate public concern and expectation in Cayman is that serious offences of money laundering be deterred, the Chief Justice said. The sentencing process is aimed at achieving that objective.
The law provides for a maximum of 14 years imprisonment and a fine without limit. In a previous case of money laundering involving some $140,000, that defendant was sentenced to 18 months, the Chief Justice noted.
With all this in mind, he imposed the term of three years, to commence from any future date of incarceration. He said he expressed the sentence that way in deference to the procedural steps to be taken in light of the allegations of bias involving a juror.
Those allegations, if proven to be true, were likely to result in a successful appeal, the Chief Justice indicated.
He adjourned for at least six weeks any application for confiscation of Tibbetts’ assets. The one property mentioned in court was his share in Fidel Murphy’s Irish Pub and Restaurant.
Acting Solicitor General Cheryll Richards told the court that the Crown’s valuation of this property was in issue and an examination of the business accounts had not been completed.
As to Tibbetts’ appeal, it was not known at press time whether it could be dealt with during the next meeting of the Cayman Islands Court of Appeal, scheduled for 29 March through 15 April.