CarePay trial: Football cash funneled into 'sham' account, claims Crown

Prosecutors said Wednesday that US$250,000 from the Cayman Islands Football Association found its way into a Fidelity Bank account initially set up to take in payments from the public healthcare system for the CarePay patient swipe-card contract. 

Some of that money from the football association and other cash due from the CarePay contract payments was used by Caymanian businessman Jeffrey Webb to put a US$300,000 down payment on an Atlanta, Georgia area home in 2011, the Crown alleged. Webb was the president of the football association at the time the transactions occurred. 

Cayman Islands businessman Canover Watson – the former treasurer of the football association – and Webb received at least an additional US$200,000 from the first tranche of payments for the CarePay patient swipe-card contract for the local public hospital system in December 2010, it was further alleged. None of that money appeared to go toward the development or implementation of the CarePay system, Crown prosecutors said Wednesday. 

In fact, prosecutors said, it appeared Watson may have attempted to mislead his business partners in Jamaica about how much was actually being paid for the development and implementation of the swipe-card system so that he and Webb could keep some of the money. 

Prosecutors’ allegations came thick and fast on day three of Watson’s and his former personal assistant Miriam Rodriguez’s corruption trial. The two are charged in connection with payments that prosecutors allege were illicitly siphoned from the local Health Services Authority and the Cayman Islands National Insurance Company in schemes Watson allegedly directed as chairman of the health authority’s board of directors. 

Webb, who is currently facing charges in an unrelated investigation in the U.S., is also charged in the CarePay contract investigation. However, he is not facing trial in connection with those allegations at this time. 

US$686,000 divided by three  

After the hospital patient swipe-card contract was awarded in December 2010, a total of US$686,000 was put into the Fidelity account set up for a company named AIS (Advanced Integrated Systems) Cayman Ltd. that was ostensibly the local partner in the CarePay contract, along with Jamaica-based AIS and another firm called Health Adjudication Systems in St. Lucia. 

Prosecutors have alleged that AIS Cayman Ltd. was set up and controlled by Watson and Webb, but that “sham” directors were put in place as straw men to officially “run” the company. 

After some confusion regarding the initial payment, a total of US$686,000 was deposited into the AIS Cayman account at Fidelity; however, only US$425,000 was paid to Health Adjudication Systems, run by Jamaican businessman Douglas Halsall, prosecutors said. 

The lion’s share of the rest, about $200,000 was evenly split between Watson and Webb, Deputy Director of Public Prosecutions Patrick Moran said. 

According to Mr. Moran, bank records showed about US$100,000 went to an account controlled by Webb and another US$100,000 went to the account of a company called P & W Distributors, controlled by Watson. Another US$50,000 was taken out in cash withdrawals from the AIS Cayman Ltd. account in two transactions during the last week of December 2010. It was not possible to specifically determine who ultimately received the cash.  

“Such large cash withdrawals … were unlikely to be needed for the implementation of the CarePay project,” Mr. Moran said. 

‘Our exposure’  

Several weeks after those account withdrawals occurred, Webb received an email from a man named John Thompson, an information technology employee at the Cayman Islands Health Services Authority. 

The Feb. 12, 2011 email, read out by prosecutors during the trial’s opening speech, indicated Mr. Thompson’s belief that he had introduced Webb to Mr. Halsall the previous year, bringing about negotiations between the Cayman government and AIS Jamaica regarding the hospital swipe-card system. 

The email expressed Mr. Thompson’s frustration that he had been “excluded from all of this” and indicated his feeling of disrespect that Webb and an unidentified colleague had “received $200,000 and I [referring to Mr. Thompson] only received $4,000.” 

The email was referring to the money paid to Webb and Watson as part of the CarePay contract, prosecutors alleged. 

“I am ready to blow the lid on this,” Mr. Thompson’s email read. 

The next morning, email records show Watson emailed Mr. Thompson stating that the subject could be discussed. Watson then received a private email from Webb that referred to “our exposure” in the matter referenced. 

CIFA funds  

On April 6, 2011, a few days before the second payment from the CarePay contract was due to come into the AIS Cayman Ltd. bank account, US$250,000 “fell into” the account that “wasn’t public money,” according to Mr. Moran. 

That money came from the company called Black Holdings Ltd., with the funds originating from the Cayman Islands Football Association, the senior prosecutor said. 

Mr. Moran said about US$200,000 of that amount went to a Wells Fargo account in the U.S. that Webb was using to pay for a home he was seeking to acquire in the Atlanta, Georgia metropolitan area. 

In order to facilitate financing for the purchase of that home, Mr. Moran said, it appeared that Watson drew up an entirely bogus employment contract for Webb. The contract, prosecutors said, named Webb as the managing director of AIS Cayman Ltd. dating back to 2008, even though the company was not registered until late 2010. The contract stated Webb’s earnings at US$180,000 per year, that he worked from 8:30 a.m. to 5 p.m. Monday through Friday and that he was an employee of the company’s director, Joscelyn Morgan. 

“This document is so false, we suggest, that it cannot have been intended for anyone in Grand Cayman to be fooled by it,” Mr. Moran said. 

Payment confusion  

Cayman Islands government healthcare managers did not know who they were supposed to pay the US$686,000 to after the CarePay contract was signed in December 2010, prosecutors said during opening speeches Tuesday. 

According to the initial negotiations for the five-year hospital swipe card system contract, the company presenting bids to government was AIS (Advanced Integrated Systems) Jamaica. However, when the contract was signed by the Health Services Authority Board, another company – Health Adjudication Systems of St. Lucia was identified as the vendor with its local partner, AIS Cayman Ltd. 

The initial “start-up” payment for the CarePay swipe-card system was supposed to be half funded by the Cayman Islands Health Services Authority, with the other half paid by the Cayman Islands National Insurance Company. 

However, former CINICO managing director Carole Appleyard ultimately declined to pay the US$343,000 due for the contract, at least immediately, because of stated concerns that the St. Lucia company was unknown to insurance company officials. 

The debate over who was to be paid was “resolved quickly,” according to Mr. Moran, because “there was a lot of money at stake.” 

With CINICO officials declining to pay, Health Services Authority CEO Lizzette Yearwood agreed to pay the full amount of US$686,000 from the HSA budget in order to “move the project forward,” with the understanding that CINICO would reimburse the hospital system for its half of the money, the court heard. 

Fidelity account  

In order to deposit the money, which was due to be paid on the date the CarePay contract was signed, prosecutors alleged that Watson and his friend and business associate Webb made arrangements to open an account at Fidelity Bank in the Cayman Islands. 

This was done, Mr. Moran s
aid, via a letter submitted to the bank by Eldon Rankin, one of the named directors of AIS Cayman Ltd. 

“We suggest Mr. Watson wrote the letter … in Mr. Rankin’s name,” Mr. Moran said, raising doubts during the proceedings as to whether Mr. Rankin’s signature on the document was authentic. A fax number listed on the letter from Mr. Rankin was the same as the fax number listed on Watson’s business card. 

Both Eldon Rankin and the other alleged “sham” director of AIS Cayman, Joscelyn Morgan, were long-time friends of Watson’s and Mr. Rankin had even “closer ties” to Webb, Mr. Moran said. 

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