CarePay trial – Crown: Webb’s Georgia home purchase was ‘money laundering’

False contract, employee used to get U.S. bank loan

Cayman Islands businessmen Canover Watson and Jeffrey Webb made up a bogus employment contract for Webb and used a Cayman Islands Football Association employee to maintain the ruse required to obtain a U.S. bank loan that allowed Webb to buy a mansion in Loganville, Georgia, Crown prosecutors alleged Thursday.

Deputy Director of Public Prosecutions Patrick Moran alleged that the purchase of the Georgia home was nothing more than an attempt to launder the money Webb illicitly received from the proceeds of the Cayman Islands Health Services Authority’s CarePay patient swipe-card contract. The five-year, US$13 million deal was signed in December 2010.

Watson, the former health authority board chairman, assisted in Webb’s scheme by helping Webb enter details of a false employment contract stating that Webb was paid CI$180,000 per year as the general manager of a company called AIS (Advanced Integrated Systems) Cayman Ltd., prosecutors alleged.

It is alleged that Watson directed the hospital’s CarePay contract award to AIS Cayman, which he and Webb controlled from behind the scenes through the use of frontmen directors.

The Crown alleges both Webb and Watson personally benefitted from the award of that contract.

During the prosecution’s cross examination in Watson’s criminal trial Thursday, Watson admitted he did assist Webb with some details of the employment contract, but only to the extent that Webb instructed him. He denied that the purchase of Webb’s home in Georgia amounted to an attempt to legitimize the proceeds of the CarePay contract.

The false employment contract for Webb stated he had been an employee of AIS Cayman Ltd. since 2008. The company was not formed until 2010. It stated he worked at an address on 37 Fairbanks Road in George Town, a condo complex where he did not own any property.

It also stated that Webb worked for Joscelyn Morgan, receiving CI$15,000 per month. Mr. Morgan’s last known occupation in Cayman was as a bookkeeper at an auto parts store.

“Are you saying this is not a false contract?” Mr. Moran asked

“Yes,” Watson replied.

“If you had created this it would have been a very, very inappropriate step to take knowing it was going to go to a bank?” Mr. Moran asked “It’s entirely inappropriate, if not criminal, to draft that contract”

“It would be inappropriate, yes,” Watson replied.

“That was all your work, wasn’t it?” Mr. Moran asked.

“No,” Watson said.

At this point, trial Judge Michael Mettyear intervened, asking, “What you said before was it may had been me [referring to Watson], Webb or Webb dictating to me.”

Watson said he knew Webb had input on the contract, but that he did not specifically recall who had drafted it.

This bogus contract, prosecutors said, was sent to Wells Fargo bank in the U.S. to secure a loan for the Loganville, Georgia property which Webb purchased in 2011.

In order to keep up the ruse, prosecutors said, an employee of the Cayman Islands Football Association, Beverley Melbourne, was listed as an employee at AIS Cayman Ltd. Her contact details, including a phone number, were placed on the bogus employment contract, prosecutors said.

“CIFA held Beverley Melbourne’s work permit, didn’t they?” Mr. Moran asked.

Watson said that was correct.

“Someone would have to tell her to lie if she answered that phone?” Mr. Moran asked.

“I wasn’t party to this, Mr. Moran,” Watson said. “I did not tell Ms. Melbourne to lie.”

In addition, a “pay stub” found on Watson’s computer at his office at Admiral Administration was given to Webb, prosecutors elicited. That payment, which supposedly took place in 2010, showed Webb receiving US$300,000 in bonuses from AIS Cayman.

“This is a false doc, isn’t it, Mr. Watson?” Mr. Moran asked.

“I didn’t create this document … looking at it now, it appears to be false,” Watson said.

“It was clearly created for the purpose of the Wells Fargo transaction [the bank loan], isn’t it?” Mr. Moran asked.

“It’s obviously to do with that,” Judge Mettyear stated.

Watson replied that he accepted this was the case.

Mr. Moran pointed out this document was on Watson’s computer at Admiral.

Watson agreed that it was, but said it was possible Webb might have gone on his office computer or his laptop and sent the documents to himself.

“Creating the [employment] contract, using Beverley Melbourne’s telephone, drafting the letter to Wells Fargo, and, I suggest … this salary summary [showing the bonuses] … all of those activities were to help Mr. Webb launder some of the monies paid to him from the CarePay contract by taking them out of the AIS account and putting them into the Wells Fargo account to pay for the house,” Mr. Moran alleged.

“No,” Watson said.

Black Holdings

On April 6, 2011, US$250,000 was transferred into Webb’s Wells Fargo account in Georgia from a company called Black Holdings. This money, it has been revealed in previous trial proceedings, originated from the Cayman Islands Football Association.

The money ultimately went to help pay off a portion of Webb’s home loan in Georgia, both prosecutors and Watson have alleged.

About five months prior to the April 2011 payment, prosecutors alleged that Watson helped a local businessman named Peter Campbell set up Black Holdings. Watson denied that he helped Mr. Campbell set up Black Holdings, but said he did forward certain documents to Mr. Campbell, who was a friend, that he would need to create the firm.

“When you found out Peter Campbell was investing 250,000 in AIS, did you speak to Mr. Campbell about it?” Mr. Moran asked

Watson said he simply did not recall.

“The reason you say you cannot recall is because you know you never did,” Mr. Moran said.
Watson said he did not know that.

Fidelity account

After the CarePay swipe-card contract was signed on Dec. 21, 2010, a local account for AIS Cayman Ltd. was established at Fidelity Bank, at Webb’s request, jurors in the trial heard Wednesday.

Webb asked Watson to do the “quick write-up to open the bank account” and to get identification information from two men, Eldon Rankin and Joscelyn Morgan, whom Crown prosecutors have referred to as the “sham” directors of AIS Cayman.

Watson testified that he wrote the letter to Fidelity to open the account and that the number of his fax machine at Admiral Administration was placed on the form. Neither Webb nor Mr. Rankin, Webb’s stepfather, dictated the words on the bank account form to Watson. Watson further testified that he did not speak to Rankin at all before opening the account that had the man’s signature on the bank form.

“It seems Jeff Webb couldn’t even open an account at his own bank without your help,” Mr. Moran said to Watson during cross examination. Webb worked at Fidelity Bank until the end of 2012.

“You’d have to ask Mr. Webb,” Watson replied.

“Did you not ask Mr. Webb ‘why am I doing this?’ You were the chairman of the Health Services Authority,” Mr. Moran asked

“I did not see an issue with drafting the [bank] letter for which I had the information,” Watson replied.

Judge Mettyear interjected that Watson, under questioning by his attorney Trevor Burke, QC, last week stated he had “nothing to do with opening the bank account” at Fidelity. The account ultimately received some US$6.8 million in payments from the CarePay contract between December 2010 and August 2014.

“Did you think it appropriate for the chairman of the HSA to be drafting a letter opening bank accounts for this company?” Mr. Moran asked.

“Absolutely,” Mr. Watson replied, adding that he was merely trying to speed things along and assist the HSA implement a system that would save the government healthcare system up to US$12 million a year.

Mr. Moran further alleged that Watson and Webb were trying to hide the existence of a Cayman Islands bank account for AIS from their Jamaican partners on the CarePay deal.

“Did Douglas Halsall [AIS Jamaica owner] know a Fidelity account was being set up?”

Watson said he did not know if Webb, whom he identified as the “local contact” for AIS Jamaica, had spoken to Mr. Halsall about it at that stage in December 2010.

Snipped signature

In April 2013, more than two years after it was opened, Fidelity Bank marked the AIS Cayman account as “high risk” and asked Webb to provide more information on the account regarding the source of its funds, evidence of business contracts and personal information about Mr. Halsall – who was ostensibly a 40 percent owner of the local company.

Watson testified that the bank knew Mr. Halsall was one of three directors of AIS Cayman Ltd. along with Mr. Rankin and Mr. Morgan.

However, prosecutors pointed out that a document in Fidelity’s file that described Mr. Halsall as a director of AIS Cayman had the date on it “changed by hand” to December 2010.

“What was going on here, Mr. Watson?” Mr. Moran asked.

“I don’t know, I did not complete this document,” Watson replied.

Watson responded to the bank’s 2013 request for more information on the Fidelity account, jurors heard, by filling out a “know your customer” form on behalf of Mr. Halsall and lifting the Jamaican businessman’s signature from the December 2010 CarePay contract. The signature was electronically pasted onto the bank form, prosecutors elicited.

Mr. Moran asked whether Watson had Mr. Halsall’s permission to lift the signature. He replied that he had spoken via telephone to Mr. Halsall’s daughter in Jamaica and had received approval to “snip” his signature and place it onto the bank’s due diligence form.

“It was your idea to snip his signature?” Mr. Moran asked.

“Yes,” Watson said, given that he had the approval of Mr. Halsall’s daughter, who was also an executive at AIS Jamaica.

The bank ultimately did not accept the snipped signature and Watson had to go back to AIS Jamaica the next day, emailing a copy of the filled out bank form and seeking Mr. Halsall’s original signature.

BVI company

In June 2011, Watson confirmed he began the process of setting up a “shell company” in the British Virgin Islands that came to be called AIS Consulting Ltd.

Watson testified earlier that he opened the company account, expecting to receive anywhere from US$100,000 to US$1 million per year in earnings, due to a consultancy contract he was contemplating accepting with AIS Jamaica, the owner of the CarePay system software program.

Prosecutors suggested Watson opened the consulting firm for a very different purpose – hiding profits he was skimming from the CarePay contract.

“Why didn’t you choose to keep the AIS income in Cayman?” Mr. Moran asked Watson.

“There was no advantage to choosing the BVI … other than people in Cayman wouldn’t know about it.”

Watson testified that the BVI, while offering essentially the same services Cayman did, was less expensive and had a “slightly less rigorous” regulatory regime.

On June 26, the Crown stated, Watson contacted an attorney in the BVI seeking his assistance in establishing a bank account for the consulting company. An hour after that email was sent, Mr. Moran said Watson sent an invoice to the government Ministry of Health for US$1.2 million.

That money represented the first payment owed for the proposed expansion of the CarePay swipe-card system to private sector insurers and healthcare providers in the Cayman Islands. The expansion never happened. The Cayman Islands government paid a total of US$1.8 million for it between 2011 and 2012.

The same day, June 26, Watson’s secretary Miriam Rodriguez was instructed to obtain a “certificate of good standing” on behalf of AIS Cayman Ltd.

“You needed [the certificate] for your BVI venture, didn’t you?” Mr. Moran asked.

Watson said he did not recall that being the reason and didn’t recall requesting Ms. Rodriguez to obtain the certificate for him.

Eventually, Watson said, he did not take up the consulting job with AIS Jamaica and decided to stay on at the HSA.

He testified that he was simply “too busy” to deal with ongoing matters at his private sector firm Admiral Administration and a separate position at AIS.