Updated, Monday Aug. 1: Accountant Robert Neil Aspinall was sentenced to three-and-a-half years in prison Monday morning in connection with the theft of nearly US$500,000 from two investment funds he oversaw as director of a major Cayman Islands accounting firm.
Aspinall pleaded guilty Friday to six of 14 criminal charges against him in the case. The other eight charges against him were “left on file” by the Crown.
According to prosecutors, Aspinall would have gotten away with the theft if not for a ruling earlier this year in the U.S. courts.
Court documents provided to the Cayman Compass show Aspinall, who worked for Deloitte at the time, was appointed in 2012 as one of two joint voluntary liquidators to oversee the dissolution of two connected investment funds registered in the Cayman Islands. Insider trading allegations were made against the funds’ U.S.-based investment manager, and the U.S. Securities and Exchange Commission initially won a US$21.5 million judgment against the funds’ manager.
The case was overturned a few years later and the US$21.5 million settlement was reversed. A U.S. district court judge ordered the Securities and Exchange Commission to return the money to creditors and investors in the funds, including the two Cayman funds, Level Global Overseas Master Fund Ltd. and Level Radar Master Fund Ltd.
The Deloitte accounting firm, initially appointed to manage the funds’ liquidation, undertook the task in January to assist former investors in finding and collecting their money. It was during this review that the accounting firm uncovered “a number of discrepancies” – including some cash Aspinall, as the joint voluntary liquidator – had transferred to a Cayman bank account held for a company in the British Virgin Islands he controlled.
The Deloitte review, Crown Counsel Toyin Salako said Friday, “ultimately led to the discovery of Aspinall’s criminality.”
“Had the U.S. courts not reversed the settlement agreement, Robert Aspinall’s criminality would have gone undetected,” Ms. Salako said.
Aspinall voluntarily surrendered on July 22 and has been at Northward Prison since then.
The Crown alleged Friday that Aspinall set up a fictitious company in the British Virgin Islands less than a month after he was named to oversee the liquidation of the two Level investment funds.
A registration for this company, called Freestyle Financial Services Ltd., was set up in the BVI in October 2012, along with a corresponding HSBC bank account in the Cayman Islands under the name Freestyle Fund Services Ltd. The Cayman account received a US$50,314.20 payment the next month from an investment fund called Aslan Capital Master Fund. This payment from the Aslan fund, was accompanied by bogus documents including – prosecutors alleged – the signature of Deloitte Managing Partner Stuart Sybersma purporting to authorize the payment. Mr. Sybersma told prosecutors that he had not signed the documents, and it was determined the signature had been scanned and used without his permission.
Mr. Sybersma also told prosecutors that there was a genuine “advisory agreement” between the Aslan investment fund and a real company called Freestyle Fund Services Company LLC – a name very similar to the one Aspinall used for his fake firm in the BVI. However, the actual agreement with that firm had been doctored to list Aspinall as the “adviser,” Mr. Sybersma said.
“The Crown asserts it was no coincidence that Aspinall incorporated a company in the name similar to Freestyle Fund Services Company LLC,” Ms. Salako said. “By using a company name similar to a genuine company, that assisted him in deceiving his colleagues and concealing his criminality.”
After stealing the US$50,314.20 from the Aslan fund, prosecutors alleged an additional US$453,519.50 was paid into Aspinall’s HSBC account in Cayman from the Level investment funds – the same funds he was appointed to oversee as joint voluntary liquidator.
During the voluntary liquidation of the two Level investment funds, between March 2013 and August 2013, nine payments went into Aspinall’s Freestyle Fund bank account at HSBC, prosecutors alleged, totaling US$453,519.50. The vast majority of the payments were made by Deloitte following instructions given by Aspinall, prosecutors said. In other words, Aspinall controlled the disbursement of the funds as joint liquidator and also controlled the account they were paid into.
Crown Counsel Salako said it is this aspect of Aspinall’s criminal activity that made it particularly damaging to the Cayman Islands, a recognized international financial services jurisdiction.
“You’ve got someone who’s a joint liquidator who’s nicked the funds,” Grand Court Justice Timothy Owen said.
“That is exactly the Crown’s position,” Ms. Salako said.
Defense attorney James Austin-Smith told the Grand Court on Friday that it was Aspinall himself who revealed to Deloitte managers in April the Aslan fund US$50,000 theft, the first time he was asked about it. Mr. Austin-Smith said Aspinall also told the Royal Cayman Islands Police Financial Crime Unit the same story and never sought to dispute the theft allegations once he was found out.
“That is a situation, in my experience, that is unique in this jurisdiction,” Mr. Austin-Smith said.
However, Crown prosecutors pointed out that it was the revelations from the Level investment funds matter in the U.S. that prompted Deloitte to question its former employee in the first place.
Judge Owen noted that Aspinall’s immediate and continued cooperation with authorities was a “powerful mitigating factor” when considering his sentence on the central charges of theft.
“It would be difficult to think of a case where fuller remorse and cooperation had occurred,” the judge said.
Mr. Austin-Smith also noted a number of “powerful” character references were made on Aspinall’s behalf and that no sentence the court might pronounce would be as bad as “his daily experiences and what he’s inflicted on his family.”
“It was one of the most humiliating experiences of his life to explain [to his 5-year-old daughter] that daddy had done something very, very bad and had to go away,” Mr. Austin-Smith said.
Aspinall also agreed to repay the full amount taken from Deloitte, about US$495,000, Mr. Austin-Smith said, plus interest. “He can’t change what he’s done, but he has done everything possible to try and right his wrongs.”