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Bank Guarantee Fraud

 

This is a very simple fraud.  A businessman or investor requires access to capital for his own purposes.  Let us say that the individual wants a line of credit of $50million or more.  That individual or business discovers that to obtain such a line of credit means paying very large sums in fees, commissions and probably even worse means providing huge quantities of security.  An easy alternative is to succumb to the blandishments of an individual who says that all you have got to do is pay a one off sum and you will have a guaranteed bank facility. 

 

Usually what will happen is that the individual will be told that one of the AAA banks will provide a guarantee for, say, $50 million subject to a payment of $1million as a fee.   Obviously the businessman says he is not going to pay until he has seen the facility from the bank.  Arrangements are therefore made for the $1million dollar fee to be lodged in an escrow account, usually either with a solicitor in London or with a fiducaire in Switzerland.  The solicitor or fiducaire has clear instructions that he is not to release the monies until such time as the facility letter is to hand.

 

In due course a facility letter from a major bank does arrive appropriately signed at the bottom guaranteeing the $50million facility.  The fiducaire releases the money.  The investor then calls upon the bank to honour their facility.  It is at that stage that the investor discovers that the two people who sign the facility either never existed or if they did exist had no authority to grant the facility and have left the bank or there is some other fraud involved.

 

The investor quickly attempts to hold the fiducaire or solicitor to account.  He discovers that the “usually crooked” fiducaire or solicitor has a good excuse in that he did what he was told in releasing the monies when the facility letter came to hand.  The investor then attempts to trace the monies and discovers they have moved through various different bank accounts and have ended up either in Lithuania, The Virgin Islands, or another location where it becomes increasingly difficult to either trace the monies or to recoup them. 

 

In our experience the prime target for recoupment in cases of this sort should be the solicitor/fiducaire.