Cayman Islands businessman Canover Watson was ordered Thursday to pay the government US$1.12 million (CI$925,995.58) over his role in the CarePay hospital swipe-card fraud, for which he was sentenced to seven years in prison.
The confiscation order comes almost exactly two years after Mr. Watson’s Feb. 4, 2016 conviction for defrauding the government and various corruption-related offenses in connection with the scheme that prosecutors said benefitted Mr. Watson and others by about US$6.8 million between 2010 and 2013.
Deputy Director of Public Prosecutions Patrick Moran said the court ordered Mr. Watson to pay that sum within six months, but that it was likely the defendant would request an extension of time to pay. Mr. Watson can legally ask for an additional six months, meaning he could delay the payment for up to a year.
If he does not pay within time limits set by the Grand Court, Mr. Watson could have his prison sentence extended for a further six months, Judge Marlene Carter said Thursday.
Mr. Watson is still under investigation in connection with another criminal case involving some US$1.2 million in controversial “loans” given to the Cayman Islands Football Association, which a U.S. federal court lawsuit alleged were actually covert bribes paid to former association President Jeffrey Webb.
Mr. Moran clarified that the present confiscation order does not limit the court in pursuing further confiscation claims against the defendant, depending on the results of any other investigations proceeding against the defendant.
Mr. Webb was jointly charged, along with Mr. Watson, in connection with the CarePay fraud. However, Mr. Webb’s arrest and guilty plea in the FIFA racketeering investigation has delayed his return to Cayman indefinitely. He is due to be sentenced in the FIFA case on March 7.
Justice Carter said the confiscation order against Mr. Watson “does not satisfy any other confiscation order in relation to the same joint benefit” – meaning the US$6.8 million benefit the Crown identified from the CarePay fraud.
Although the funds taken mainly came from two government statutory authorities, the Health Services Authority and the Cayman Islands National Insurance Company, there was no request made for those entities, specifically, to be reimbursed. The money paid by Mr. Watson will likely go into government’s general revenues, but prosecutors said that decision was not one for the Crown to make.
Mr. Watson’s attorney Amelia Fosuhene said earlier in the confiscation proceedings that her client had about US$1 million in available assets, The confiscation ordered Thursday would take all of those assets.
The US$6.8 million figure represents the Crown’s estimate of the full illicit “take” from the public hospital swipe-card contract, which was initially a five-year, US$13 million deal to provide ID cards for Cayman Islands National Insurance Company patients who use the hospital and health clinics. Those cards were to be used as a “real-time” healthcare claims adjudication service, meaning customers who used public health services would be recorded and billed, if applicable, for those services at the time the cards were used.
The claims adjudication service was never fully implemented, and proposals aimed at putting private sector insurance customers onto the CarePay system never came to fruition. The CarePay cards are still in use by CINICO-insured patients.
Prosecutors said during the first stage of Mr. Watson’s confiscation hearing that some US$4.8 million was “creamed” from the CarePay contract and put into a Fidelity Bank account that Mr. Watson set up through sham frontmen.
A further US$1.8 million was spent on the proposed expansion of the CarePay card system – known as the “national rollout” – to private sector insurers. However, subsequent government audits revealed this amount was paid for no legitimate purpose and ultimately went to Mr. Watson and Mr. Webb.
A further $147,000 was spent on a proposed pharmacy contract linked to the CarePay card system that also never happened, prosecutors said.