Two Cayman Islands asset managers, Eric St-Cyr and Joshua VanDyk, and Turks and Caicos attorney Patrick Poulin have been arrested and indicted in the United States for alleged money laundering.
All three were arrested March 12 following an undercover operation during which Mr. St-Cyr, managing director at Clover Asset Management, and Mr. VanDyk, wealth management adviser at the same firm, allegedly agreed to launder criminal proceeds, as well as other funds, for the purpose of tax evasion.
According to the indictment filed under seal with the U.S. District Court for the Eastern District of Virginia six days prior to the arrests, Mr. VanDyk and Mr. St-Cyr met with three undercover agents on March 7, 2013, in Miami.
During the meeting, one of the agents, who had a pre-existing relationship with Mr. VanDyk, posed as a wealthy U.S. citizen who was interested in investing money offshore without declaring it to U.S. tax authorities. A second agent claimed he was a U.S. citizen looking for ways to launder criminal proceeds from a bank fraud and to avoid taxes. The third agent assumed the identity of a financial planner who represents U.S. citizens.
During the meeting, Mr. St-Cyr and Mr. VanDyk allegedly explained that their firm, which in the indictment is referred to as Company C, does not take on any U.S. clients directly. Instead, clients would set up corporations, trusts or foundations in foreign jurisdictions and move their funds through these entities to the Cayman Islands. Foreign attorneys would allegedly act as intermediaries in these transactions. Mr. VanDyk and Mr. St-Cyr also stated that “clients of Company C like the fact that nothing that Company C does touches the United States,” according to the court filing.
In another meeting on July 16, 2013, one of the undercover agents reiterated his interest in moving the proceeds of a bank fraud. “VanDyk indicated that this was acceptable to the co-conspirators so long as the money was not linked to drugs or terrorism,” the indictment stated.
Mr. VanDyk allegedly recommended that the agents use Mr. Poulin, a partner with law firm Bishops in the Turks and Caicos Islands, as an intermediary.
In a meeting on Sept. 11, 2013, Mr. Poulin told two of the agents that he could set up an offshore foundation for the funds and that the undercover agents would not be identified as members or advisers of the entity.
The undercover agent suggested that he wished to initially move $200,000 of a $2 million fraud to Company C in the Cayman Islands.
The agents signed the paperwork to establish an offshore foundation called Zero Exposure Inc. in a follow-up meeting with one of Mr. Poulin’s law partners, and with Mr. Poulin participating by teleconference, on Dec. 11, 2013.
On Dec. 17, 2013, an undercover agent wired $200,000 from a Bank of America account in Arlington, Virginia, to an escrow account of the Turks and Caicos law firm.
A day later, Mr. Poulin confirmed receipt of the funds and that the foundation had been established. He subsequently wired the money to the Cayman Islands, where “VanDyk and St-Cyr confirmed receipt of the $200,000 and began to invest and manage the money on behalf of [the undercover agents],” the indictment said.
On Jan. 12, 2014, Mr. Poulin sent documentation to the agents which identified one of the agents as the beneficial owner of Zero Exposure Inc. and authorized the transfer of the $2 million that were purported to be part of a bank fraud scheme to Turks and Caicos and subsequently to an account with Company C in the Cayman Islands.
When the two undercover agents met with Mr. St-Cyr and Mr. VanDyk in the Cayman Islands on Jan. 16, 2014, “VanDyk and St-Cyr indicated that use of a foundation as intermediary was the preferable process for money laundering, while use of a trust intermediary was sufficient for tax evasion,” the indictment said, adding “VanDyk and St-Cyr also indicated that they would charge clients more to launder criminal proceeds than to assist in tax evasion.”
In the meeting, the agents claimed they wanted to see how the money would be returned to the United States before engaging in further business with the three defendants.
According to the court filing, Mr. St-Cyr then called Mr. Poulin, who agreed to serve again as the intermediary and the funds were liquidated and transferred from Cayman to the Turks and Caicos Islands on Feb. 3. On Feb. 14, Mr. Poulin wired the money from Turks and Caicos to an entity in Chesterfield, Virginia.
Mr. VanDyk, an American citizen, has been released on bail after posting a $250,000 bond. Mr. St-Cyr and Mr. Poulin, both Canadian citizens, remain in custody.