The former founder and managing director of Cayman Islands-based Clover Asset Management, Eric St-Cyr, has pleaded guilty to charges that he conspired to launder the proceeds of a purported bank fraud.
St-Cyr was arrested in Miami in March with Clover investment adviser Joshua VanDyk and Turks and Caicos-based attorney Patrick Poulin following an undercover sting operation by U.S. Inland Revenue Service investigators.
In meetings with St-Cyr and VanDyk, the investigators claimed they were seeking to invest funds with Clover to evade taxes and launder criminal proceeds.
In a statement of facts and plea agreement filed with the Eastern District Court of Virginia, St-Cyr admitted to charges that he and his co-conspirators created layers of transactions involving Turks and Caicos corporations and foundations through which funds were transferred from the U.S. to Clover in the Cayman Islands and back to the U.S. to launder money from a purported bank fraud and hide assets from the Internal Revenue Service.
According to the indictment, St-Cyr and VanDyk told undercover agents posing as a wealthy U.S. citizen, a financial planner and a bank fraudster that their asset management firm would not take any funds from U.S. investors directly. Instead, the money would have to be channeled through entities in the Turks and Caicos Islands before they would be transferred to Clover in Cayman.
Poulin, a Canadian attorney with Turks and Caicos law firm Bishop’s Legal, served as an intermediary in these transactions by setting up the entities and functioning as a director on behalf of the U.S. investors, whose affiliation with the entities would not be identified.
A change of plea hearing for Poulin, who until now has pleaded not guilty, is set for July 11.
Both Van Dyk, who pleaded guilty to the same charges in June, and St-Cyr confirmed that VanDyk indicated in a meeting with the undercover agents that it was acceptable to the co-conspirators to launder the proceeds of a bank fraud scheme “so long as the money was not linked to drugs or terrorism.”
In a separate meeting, VanDyk and St-Cyr told the undercover investigators that the “use of a foundation or corporation as intermediary was the preferable process for money laundering, while the use of a trust was sufficient for tax evasion.”
VanDyk and St-Cyr also indicated that they would charge clients more to launder criminal proceeds than to assist in tax evasion. VanDyk, St-Cyr and Poulin were arrested and charged after an initial test run involving the wiring of $200,000 from the U.S. through the Turks and Caicos to Clover in Cayman in December 2013. In January 2014, undercover agents received documentation identifying one agent as the beneficial owner of a Turks and Caicos entity named Zero Exposure Inc. The documents also authorized the wiring of the remainder of the $2 million in funds from the bank fraud scheme.
However, the agents claimed they first wanted to see how funds would be returned to the United States before they could proceed with sending the total funds. In January this year, $197,115.68 was returned from Clover via the Turks and Caicos Islands to the U.S., according to court documents.
VanDyk and St-Cyr are due to be sentenced on Sept. 5 and Sept. 26, respectively. They face a maximum sentence of five years’ imprisonment, a fine of $250,000 or twice the gross gain or loss, and three years of supervised release, in addition to any prison term.