The fraud trial against former football executives Canover Watson and Bruce Blake started on Friday, five years after their initial arrest and three years after they were charged.
Watson, a former treasurer of the Cayman Islands Football Association (CIFA) and former member of the finance committee of regional football governing body CONCACAF, is charged with receiving secret commissions, transferring criminal property and false accounting.
Blake, also a former CONCACAF and CIFA executive, is facing money laundering-related and false accounting charges.
Both have pleaded not guilty.
In her opening statement, Eloise Marshall, QC, for the Crown, told the jury that the indictment may sound complicated, but the alleged offences were “actually quite simple”.
“At the heart of this case is a theft by Mr. Watson,” she said. “And having stolen the money, he set about spending it or laundering it. He was assisted in doing that by Mr. Blake.”
Purported ‘theft’ through false invoices
The prosecution alleges that Watson, through a company he controlled in Panama, issued three fake invoices amounting to US$1.54 million to CONCACAF for sports equipment that was never delivered.
That company, Forward Sports International Management, had a similar name, but was unrelated, to Forward Sports (pvt) Ltd from Pakistan.
CONCACAF had an existing business relationship with the sports equipment maker in Pakistan because Watson had established a distribution company, Forward Sports Inc., in Panama, together with Kaleel Khawaja, a sales representative for the company, with the aim of promoting the brand within the Caribbean and Central American region.
But the Crown asserts that neither Khawaja nor CONCACAF were aware of the second Forward Sports company that was entirely owned and controlled by Watson.
It is alleged that Watson used genuine invoices by Forward Sports as a cover for, and in the creation of, the fake ones sent by his own company.
At CONCACAF, the prosecution said, the false invoices were “waved through” by General Secretary Enrique Sanz, who was appointed by CONCACAF President Jeffrey Webb, Watson’s friend and close associate.
Marshall said that “Watson stole US$1.54 million from CONCACAF” and that the football confederation had paid out the money thinking it would be used to train young aspiring footballers.
Alleged use of the money and laundering charges
The prosecution alleges that $600,000 of the money was used to pay down a CIFA loan from Fidelity Bank that was secured by personal guarantees from Webb and Watson.
Other funds were sent to Watson through companies he controlled or used to pay off his American Express credit card bills.
About $300,000 were used to buy genuine sports equipment from Forward Sports after CONCACAF officials raised questions about the whereabouts of the items supposedly ordered through the three false invoices, the Crown counsel said.
Watson sent further payments of $200,000 and $300,000 to an account belonging to Blake’s consulting business. However, they were flagged by Cayman National Bank and returned because the amounts were inconsistent with the usual money flows and stated business purpose of the account.
Watson then sent the money to CIFA’s account in Cayman, and from there, with the help of Blake, who was general secretary of the association at the time, to Forward Sports in Pakistan, it is alleged.
Smaller payments from Watson’s Panama company totalling $140,000 to Blake’s company accounts went through after Blake submitted invoices for purported sales commissions and legal and consultancy fees.
One of the allegations against Blake is that he knowingly submitted false information to the bank to justify receipt of payments that he knew had to come from stolen money.
Loan scheme and false accounting charges
The Crown asserts that while $600,000 from Watson’s Panama company had been used to pay down CIFA’s loan with Fidelity, that loan had grown to $1.5 million.
With the bank increasingly unsatisfied with CIFA’s financial situation, Fidelity required further security in the form of a charge over CIFA’s Centre of Excellence building and football pitch in Prospect.
The football centre had been built with funding from world football governing body FIFA.
When, in 2012, FIFA changed its rules, no longer allowing football associations to raise debt using assets created with FIFA money, the Crown said, Watson and, in particular. Webb, to further his career within the football federation, had to find a way to regularise the position and remove the lien.
Some of the required money came from US travel company Cartan, a company that had obtained a contract to arrange all of CONCACAF’s travel and event logistics.
The Crown alleges that Cartan paid $600,000 to CIFA in response to an invoice sent by Watson to Cartan for sponsorship in the same amount.
To justify the massive cash injection into CIFA to the association’s auditors, and to potentially recoup the total of $1.2 million from the football association further down the line, it is claimed that Watson created fake loan agreements and purported that each of the two $600,000 payments were, in fact, loans from Forward Sports in Pakistan and Cartan in the US.
However, the lenders named in the loan agreements were Watson’s Forward Sports in Panama and, emulating the scheme, a Panama company under the Cartan name, also controlled by Watson.
Both loan agreements were signed by Blake on behalf of CIFA.
According to the prosecution, CIFA’s audit firm Rankin Berkower found it suspicious that the other signature, used in both loan agreements, belonged to a company formation agent, Irina Abrego de Espinosa, even though the purported lenders were unrelated companies.
The Crown said an electronic image of her signature had been found on Watson’s tablet computer.
The scheme allegedly unravelled when the auditors requested letters confirming the loans from the genuine Cartan and Forward Sports companies, and Watson and Blake attempted to re-designate the loans as gifts instead.
The auditors subsequently referred the matter to police.
The trial continues Monday.
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