A former investment adviser with Cayman Islands-based Clover Asset Management has pleaded guilty to charges of laundering the proceeds of crime.
Joshua VanDyk was arrested in Miami in March together with Clover managing director Eric St-Cyr and Patrick Poulin, a Canadian attorney and partner in Turks and Caicos Islands-based law firm Bishop’s Legal.
The arrests followed a sting operation during which Mr. VanDyk and Mr. St-Cyr allegedly agreed to launder criminal proceeds for undercover agents of the Internal Revenue Service with the help of Mr. Poulin.
While Mr. St-Cyr and Mr. Poulin have pleaded not guilty and are due to stand trial on July 21 in the District Court for Eastern Virginia, Mr. VanDyk changed his plea on June 12. For the offense, he faces a maximum penalty of five years in prison, a fine of $250,000 or twice the gross gain or loss, and three years of supervised release in addition to any prison term.
He is due to be sentenced on Sept. 5.
In the criminal information attached to the plea agreement, Mr. VanDyk admitted that he conspired with the other defendants to conceal the nature, location, source, ownership and control of proceeds of crime. According to the indictment, undercover agents had met with the defendants to seek help regarding the laundering of $2 million from a bank fraud scheme.
During the meetings, Mr. VanDyk and Mr. St-Cyr allegedly explained that Clover would not take on U.S. clients directly. Instead clients would establish offshore entities, such as corporations, trusts and foundations to channel funds to the Cayman Islands.
In a statement of facts in support of the guilty plea, Mr. VanDyk agreed that the defendants created layers of transactions, including the creation of offshore foundations and corporations, through which their U.S. clients could launder criminal proceeds and hide assets from the Internal Revenue Service.
Mr. Poulin allegedly established the offshore corporations and served as a nominal board member instead of the U.S. clients, who wired money through these entities to Clover. The asset management firm, which, in turn, managed and invested the funds, did not disclose the investments and investment gains to the U.S. government and the IRS, the statement of fact said.
Clover clients were able to monitor their investments online using anonymous, numeric passcodes.
An initial test run in December 2013 involved the wiring of $200,000 from the U.S. through the Turks and Caicos to Clover in Cayman. Undercover agents received documentation identifying one agent as the beneficial owner of a Turks and Caicos entity named “Zero Exposure Inc.” and authorizing the wiring of the remainder of the $2 million in funds from the scheme. In January 2014, $197,115.68 was returned from Clover via the Turks and Caicos Islands to the U.S., according to court documents.
In his plea agreement, Mr. VanDyk agreed to provide further information on the case, which is likely to be used in the indictment of Mr. St-Cyr and Mr. Poulin.