Tim Harper has written several excellent articles on Prime Bank
schemes and offshore investment scams. He has graciously consented
to have a few of them reproduced here. For more information
about this freelance writer and his work visit www.timharper.com
He is the author of License
to Steal: The Secret World of Wall Street Brokers and the Systematic
Plundering of the American Investors. The book recently won
a Book of the Year 2000 award from the American Society of Journalists
Too Good To Be True: The Lure of Offshore Investing
A self-employed nutritionist was trying to pay for her elderly mother's
nursing care. An executive was looking for capital to start his own
business. A business consultant wanted to increase an inheritance
to pay for her own retirement. A wealthy charity worker was seeking
seed money for a new foundation. A software engineer and web site
architect simply was investing for a better return on his money.
Those people all trusted a long-haired man in flowing robes who refused
to tell them much about himself, even his real name, but persuaded
them that he could help them earn huge returns, up to 200% a year,
in offshore investments.
The five investors put hundreds of thousands of dollars into those offshore
investments. They were told, among other things, that their money would
be used to buy and sell super-secret bank notes that are traded among the
world's largest financial institutions. They were warned that lawyers,
accountants, bankers and law enforcement officials would deny that such
investments even exist.
In the end, all five lost every penny they invested. When they protested,
they were warned that if they complained to the authorities, the investors
themselves could be targeted by the FBI and the IRS.
This is just one of many offshore scams and frauds going on every day,
according to authorities. They ensnare a broad range of people. Some are
crooks, and some are model citizens. Some are sophisticated investors,
and some are novices who have never owned a stock or bond. Some are government-hating,
privacy-loving conspiracy theorists trying to snatch a share of the riches
they think the wealthy and powerful get from manipulating world financial
markets. And some simply want to hit the big time.
Take the case of software engineer and Web site designer Bob Giuli.
Based in Carson City, Nevada, he has helped design Internet sites for
the Los Angeles Times, Sun Microsystems, Siemens, Oracle, Motorola,
Lucent and other Fortune 500 companies. He runs his own business, has
interests in other companies and has been involved in many different
types of investments.
He regarded himself as a sophisticated investor, and most other people
would regard him as one, too -- at least until he went offshore.
For years, Giuli had heard vague things about the advantages of investing
offshore. Last year, he decided it was time to learn more. He got in touch
with a firm that sponsors informational seminars on offshore investing.
In April 1999, Giuli went on a weeklong Caribbean cruise that featured
a program of lectures and discussions on offshore investing.
One of the speakers was Taansen Fairmont Sumeru, who described his book Sovereignty
Consciousness and his theory that new technology is making the traditional
concept of government outdated. His message was that every person could
be a world citizen -- in effect, his or her own sovereign, with no allegiance
or obligations, including the requirement to pay taxes to governments formed
under the old notion of nationhood.
Giuli, a high-tech entrepreneur and self-made man who believes governments
can and do impose on people's natural rights, was intrigued with Sumeru,
beginning with his appearance -- a slender, balding, middle-aged white
American who wore silky pajamas and robes, with his hair flowing down his
back and mustaches that reached down his chest. Amid the other more buttoned-down
speakers who talked earnestly and urgently about investing and tax avoidance,
Sumeru generated an aura of calm and peace.
After Sumeru's lecture, he and Bob Giuli talked. They went to dinner with
Shirsha, the woman Sumeru calls his consort. Sumeru told Giuli about some
of his own offshore investments, particularly Quantum Gold, a commodities
fund based in the Bahamas that was offering 10% to 14% interest -- per
month. Investors pooled their funds, Giuli was told, and an expert commodities
trader managed it.
They talked about meditating, and Giuli learned that Sumeru was a longtime
transcendental meditation instructor who had been living in Santa Barbara,
California, for several years. Taansen Sumeru was a name he had taken for "spiritual
reasons" years before, but he did not volunteer his original name
or other details about his past.
"He seemed responsible, spiritual," Giuli said. "He was very charismatic." Giuli
was particularly struck with the way that Sumeru (pronounced soo-MARE-oo) talked
about abundance, and how accumulating wealth was part of the "natural way
of the universe."
Giuli, like other investors, was impressed that Sumeru did not seem particularly
concerned about making money. He told them about investments and told them
how they could get in on those investments, but he never seemed pushy.
He wanted to get to know Giuli personally and was keen to share ideas on
how people can "evolve" to do good in the world. Even when Sumeru
could not or would not answer specific questions about the investments,
Giuli and others did not feel like they were about to be cheated. They
figured that Sumeru did not know or care about the gritty details of how
the money was made. Sumeru seemed above all that.
Back home, Giuli read Sovereignty Consciousness and began meditating.
He also moved quickly to invest in Quantum Gold. He returned forms that
Sumeru asked him to sign, including a non-disclosure agreement prohibiting
investors from divulging details of the investment. Another form was a
non-solicitation agreement requiring investors to assert that they came
to Sumeru asking for information and that he had not solicited investments
from them or offered investment advice.
The printed materials Sumeru sent to Giuli said in part: "An old age
is dying and a new age is being born. The new age is one of the decentralization
of power, and the spread of power and freedom to individuals planetwide.
Congratulations on being among those rising into these higher ways of living."
Sumeru also required potential investors to write a letter about their
work, their "philosophical background" and what they would do
with the money. They were asked to tell him whether they practiced meditation,
and if so what kind. And they were asked what they thought of his book,
available online for $17. "If we feel you are okay, the Quantum packet
will be sent to you," Sumeru's printed materials advised.
Giuli filled out the forms, received a Quantum Gold application
from Sumeru, filled that out and then mailed it back to Sumeru's
address -- Mail Boxes Etc. in Santa Barbara. In June 1999, he deposited
$150,000 in Quantum Gold, wiring the money to the coordinates,
a Barclays Bank in New York, given him by Sumeru. He assumed Sumeru
was getting a commission on his deposit, presumably at least $15,000,
since materials from Quantum Gold offered 10% commissions to "intermediaries" for bringing in new deposits.
Giuli received a statement from Quantum Gold on August 10, 1999,
showing that his account had risen to $166,113.93 -- an increase
of more than 10%. He thought about taking some out, he said, but
he consulted Sumeru, who convinced him to let it roll. The next statement,
on September 10, showed $182,723.32 -- up 10%. On September 28, Giuli
faxed Quantum Gold asking for $50,000 out of his account.
He never got it. He never got back any of the money he invested in Quantum
Gold, interest or principal.
At least, Giuli said, he was smart enough not to put any money into another
offshore investment recommended by Sumeru. It was a bank founded by Sumeru
himself in 1999, as he was telling Giuli and other investors about Quantum
Gold. Sumeru urged them to put money into his new bank based in the island
nation of Grenada -- supposedly a better, safer and more profitable investment
than Quantum Gold.
The Sattva Investment Bank, the Bank of World Peace,
would pay interest of up to 200% a year on certificates of deposit,
Sumeru said. Giuli said many Quantum Gold investors also put money
into Sattva, but he fortunately decided to wait to see how Quantum
Sumeru explained that Sattva Bank would earn its remarkable returns
not from commodities trading, like Quantum Gold, but from "high-yield
investment programs" operating in complex, little-known areas
of high finance typically available only to the top banks in the
According to Sumeru and others who promote them through small offshore
banks, these prime bank instruments, also known as "prime bank
debentures," "prime bank guarantees," "medium
term notes," and "standby letters of credit," allow
the World Bank, the Federal Reserve and the biggest banks in the
world to move money back and forth by discounting large notes they
trade among themselves.
A key selling point used by Sumeru and the many others who promote prime
bank instruments around the world is that governments and large banks do
not want investors to know that such notes even exist. The con men's line
goes something like this: "Banks will tell you these notes don't exist.
Government agencies will tell you that you're being swindled. Don't listen
to them. They're just trying to keep these huge profits for themselves."
The sales pitch appeals to the many people who are suspicious of governments
and banks anyway and who think that "the establishment" is conspiring
to hoard wealth and keep common people from getting rich, too. The con
men warn them that no one will confirm the existence of prime bank notes
and, sure enough, no one does.
Taansen Sumeru's Sattva Bank was supposed to have access to these high-yield
bank trading programs through First International Bank of Grenada, a relatively
new bank founded by Van Arthur Brink, who was known as Gilbert
Ziegler when he grew up and worked in Oregon.
Ziegler, 49, arrived in Grenada in 1997 traveling on a passport
from the Dominion of Melchizedek, an "ecclesiastical state" that
apparently exists only on the Internet, the Los Angeles Times reported
in a recent story about the bank.
Ziegler came to Grenada from Hawaii, where he moved after his Oregon
mortgage-banking company went out of business and he was forced into
personal bankruptcy in 1994. A former church administrator and pastor
who founded Christian fellowships, Ziegler also was named -- but never
charged -- in an Oregon state investigation into securities fraud related
to an offshore trust.
According to the Los Angeles Times, an affidavit filed in that
case by a state investigator charged that Ziegler recruited investors
to subscribe to an offshore newsletter for $150. Each subscriber was
encouraged to recruit new subscribers. Part of the money from new subscriptions
would be added to the original subscriber's offshore account. The original
subscriber could never get his hands on the money, according to the affidavit,
but it was supposed to grow and be passed along to the subscriber's heirs
After moving to Hawaii, Ziegler worked as an offshore researcher and
business consultant and founded Fidelity International Bank,
registered in Nauru, an island nation of 7.7 square miles and 8,000 people
in the South Pacific.
In Grenada, Ziegler purchased Grenada citizenship and changed his name
to Van Arthur Brink, a name that he later said came to him in a vision
while meditating. He transformed Fidelity International Bank into First
International Bank of Grenada. The bank's financial stability was
reportedly based on a ruby that bank documents said had an appraised
value of $20 million. Officials in Grenada and elsewhere now question
whether there is such a gem, whether it was worth $20 million, and whether
the bank ever owned it.
First International Bank of Grenada, which quickly became known in Grenada
and among investors as simply First Bank, promised annual interest rates
of 200% or more on certificates of deposit, based on high-yield earnings
from prime bank instruments trading. Within months, however, the bank
had become a frequent target of David Marchant's investigative newsletter,
Offshore Alert, based in Miami, that warns readers of offshore frauds
around the world.
Marchant's newsletter alleged that First Bank was a fraud; there was
no such thing as high-yield bank instruments, and there was no such thing
as risk-free 200% annual returns.
Marchant accused Brink of running a Ponzi scheme, a pyramid under which
money from new depositors was used to pay interest to old depositors
-- and thereby draw in even more new deposits. Marchant predicted that
the pyramid would collapse. (For more on Ponzi
Marchant, who has been publishing Offshore Alert since early 1997,
said in an interview that he and other journalists covering the First
Bank story had been contacted by the Royal Canadian Mounted Police and
the FBI. He said there are "literally thousands" of similar
offshore frauds going on around the world at any given time.
In response to Marchant, Brink issued a long written refutation and counterattack,
and accused Marchant of being part of a conspiracy by banks and governments
to discredit First Bank, silence Brink and keep their secrets of high-yield
prime bank instruments. Brink said he had proof -- although he did not
provide it -- that Marchant was being paid, apparently by the FBI, to
write articles criticizing First Bank.
In the autumn of 1999, Brink resigned as chairman of First Bank and moved
to Uganda, where he said he was going to establish humanitarian aid programs
and help build a new monetary system. He has since been accused of taking
tens of millions of dollars with him.
At about the same time that Brink was leaving Grenada, First Bank and
its sub-banks, including Sattva Bank, stopped paying interest to depositors. That
was also about the same time that Quantum Gold stopped paying its investors.
Some investors who found both investments through Sumeru wondered if
Quantum Gold was somehow linked to First Bank. But Sumeru said in an
interview that there was no business connection between Quantum Gold
and Sattva Bank; the only link was that he had told investors about both
In the months since, many investors -- although not all -- asked Sumeru
to help them get their money back from Quantum Gold, Sattva or both.
Some blamed him for their losses. In response, he insisted that he had
not advised, encouraged or recommended anything, and said he had not
guaranteed they would make money. He told some of them they should not
have put all their eggs in one basket.
Gigi Carroll, a travel agent who arranged transportation and hotels
for participants in some offshore information seminars where Sumeru
spoke, laughed at Sumeru's assertions that he did not actively
advise or encourage people to invest. "He solicited people.
People came to him, and he made recommendations," she said
in a telephone interview. She speculated that the reason he required
people to sign a nonsolicitation agreement was to protect himself
from securities laws.
I always wondered why he wanted those letters if he wasn't soliciting," she
Carroll said she invested $10,000 in Quantum Gold. She heard Sumeru and
his clients talking about how much money they were earning. She didn't
realize until it was too late that those profits were all on paper. "I
got beautiful invoices every month. On paper it was going up," she
said. But that's all she ever got -- beautiful invoices. She never got
any of her money back.
A number of people, including Bob Giuli, said they were suffering not only
financial losses but also "spiritual abuse." He believed he had
found in Sumeru a kindred soul, someone who was different than most financial
advisers, someone who could be trusted and would never intentionally hurt
others, much less steal their money.
One woman who invested in Quantum Gold said she trusted Sumeru because
of his transcendental meditation connections. Carole Speight, who grew
up in Dallas and moved to Hawaii several years ago to start a TM center,
said a fellow meditator in Hawaii introduced her to Sumeru. The two of
them told her about Quantum Gold.
Speight, who prefers to be called Lalita, admitted that she was and is
an inexperienced, unsophisticated investor. But her 90-year-old mother
needed extensive nursing and medical care, and Lalita was afraid her mother's
$30,000 in life savings would quickly be eaten up. On the other hand, Quantum
Gold's promised 10% to 14% monthly returns would provide a steady cash
flow for her mother's expenses. So Lalita put her mother's $30,000 savings,
plus another $10,000 she borrowed against a credit card, into Quantum Gold.
She believed her mother would receive at least $4,000 a month from that
Lalita, who works as an herbal nutritionist and no longer practices TM,
never received any monthly payments. When she wrote to Sumeru asking what
had happened, he wrote back that he was not at fault. "The caveat
emptor was very clear in the contract," he told her. "No guarantees.
Period. Each investor was given the responsibility upon himself or herself
to accept the risk. The risk was clearly stated. By speaking in a poisonous
way to me, you are only amusing and saddening me. You are biting the very
hand that could be a blessing to you."
Sumeru blamed the Quantum Gold problems on "dark forces." When
Lalita suggested hiring a private investigator, Sumeru told her that he
already had arranged for an investigator to work on the case, but could
not give her any details:
"All I know is that a recent acquaintance who is on a very, very high level
in the trading and financial world was sympathetic to my description of what
happened to the Q investors, and he called one of his very highly placed investigators.
He did this only on the condition that his name stay out of any mention to anyone
else, because he has a powerful career and has no direct concern with our problem."
Finally, Sumeru scolded her: "Rather than contributing to the solution,
you have simply consumed my time, and you have shown no respect for the
blessings I have been trying to bring to the world."
Lalita said she talked with the FBI in Hawaii, but decided against pursuing
criminal charges -- for now -- because it is still difficult for her to
believe that she was intentionally cheated. "I thought, these people
can't be criminals, they're my friends. They're meditators," she said.
Besides Sumeru's laid-back, peace-and-love appeal, some investors were
all too eager to disdain the normal returns available to the unadventurous
and supposedly uninformed masses -- people who put their money into traditional
banks, mutual funds and even a raging bull market.
A Santa Barbara business consultant who inherited $150,000 wanted to put
it away for her retirement, but she decided traditional bank returns and
mutual funds did not pay enough. She talked to several stockbrokers, but
didn't trust them. Speaking on the condition of anonymity, she recalled, "I
was drawn in by the spiritual aura of Taansen."
She also believed what he told her about prime bank notes. It made sense
to her that the government would deny that prime bank notes exist. She
was convinced that government and bank conspiracies keep everyday people
poor and ignorant, and the warnings about prime bank notes were mere scare
tactics so that the banks would not have to share those profits with anyone
She said that after she invested in Sattva Bank, she began recruiting friends
to invest. Sumeru told her she would be rewarded as a registered contractor
(RC), and would receive commissions. A few weeks later, after she reckoned
that she would be owed at least $25,000 in commissions, she asked Sumeru
when she would start getting the money. He told her that he and other bank
officials had decided she could not be an RC after all. "He told me
I was not spiritually evolved enough," she said.
Incredibly, she said she is preparing to invest $50,000 in another offshore
program promising returns of 100% or more a year from prime bank note trading.
Yes, she knows that the government says prime bank notes do not exist,
but she said, "I do believe they exist." Her $150,000 loss the
first time, she insisted, was merely bad luck, the result of investing
with the wrong people. On the new investment, she said, she had found the
right people, people she could trust.
Another California investor, speaking on the condition of anonymity,
said the thing that attracted him to Sattva Bank was Sumeru's assurance
that the bank's emphasis was going to be on attracting investors
who wanted to use their high returns for good works.
It was philanthropic. It was a way to make money and to do good," said
the investor, who has done considerable volunteer work with charities
and foundations. "One person wanted to start a cancer clinic,
and they thought the bank would help." Other investors were
raising money for foundations and charitable programs to help children,
the poor and deprived ethnic minorities, he said.
"A lot of people today are trying to reconcile spirituality and money. Here's
a guy who comes along and says he's figured that out. They take your vision or
your project you're involved with, and they describe how you can accomplish that.
It's a pretty compelling thing," he said.
The investor said he had hoped to make enough money to finance a new charitable
foundation of his own. He admitted, however, that 200% annual returns also
were attractive to him as a personal investor, and so was Sumeru's offer
for each investor to become a "conduit" or agent who could get
commissions for getting their friends and relatives to make deposits, too.
"The bank attracted a certain kind of people -- naïve, for sure, but they
were interested in putting forward some kind of social project," the California
investor said. "They played upon the good intentions of the investors. It
was so insidious."
He said that when he complained to Sumeru and other officials of Sattva
Bank, they claimed that they had lost their money, too, and warned him
that asking questions could jeopardize the return of everybody's money. "That
enabled them to say they were in the same boat we were in. There was a
lot of blaming the victims. They said, ‘Because you're asking questions,
you're creating fear.' Their response was, ‘That hurts what we're
trying to do.'"
He concluded: "I can't tell you how many people I've heard from who
have been devastated, common people -- people all over the world, people
living on farms, people trying to send their kids to college."
Unhappy investors set up e-mailing lists and newsgroups to share
information and try to lay the groundwork for an effort to recover
their money. Many of the postings railed against Brink and Sumeru,
and there was considerable discussion about Quantum Gold's assertions
that the money apparently had been taken by the fund's commodities
trader, identified by Quantum Gold as Peter Dennis, who
supposedly was handling the Quantum Gold money.
A number of e-mail updates from Quantum Gold, signed only by the "administration," reported
on efforts to track down Peter Dennis, urged investors to be patient,
cautioned against asking too many questions for fear of slowing
down the investigation, and ultimately asked investors to send
in more money to help pay for the recovery.
One investor warned fellow victims not to be lulled by assurances that
Sumeru or anyone else involved in Quantum Gold really was doing anything
to get the money back: "If you think those who lost your money are
doing anything on your behalf no matter what it looks like, consider
this. Only if they appear to be doing something can they blame the problem
on others. Deferring responsibility, accountability and authority has
been the name of the game."
One newsgroup posting that created a buzz was from a non-investor who
identified himself as Philippe Carrier, 23, a Canadian who had worked
for First International Bank of Grenada in 1997 and 1998. He said he
had been managing a Mail Boxes Etc. in Montreal when he was recruited
by a friend working at First Bank to come down and help set up a comparable
in-house business services operation for the bank: Mailing, faxing, copying
Carrier's posting described how Van Brink had come to Grenada with his
bank, but without a real administrative structure. Brink teamed up with
Larry Barnabe, a Canadian who had moved to Grenada. Carrier said Barnabe
and Brink set up a network of companies that brought more than $100 million
into First International Bank of Grenada.
These companies included the International Deposit Insurance Corporation
(IDIC), whose name, Carrier said, was chosen because it sounded like
the United States' Federal Deposit Insurance Corporation. In marketing
materials for First Bank and its sub-banks, including Sattva Bank, IDIC
is portrayed as an insurer that would protect investors from losing their
money. "Each account at the bank is unequivocally insured through
IDIC," promotional documents claimed. "IDIC guarantees the
safety of all principal and interest, while requiring larger cash reserves
and enforcing more conservative policies than its U.S. sound-alike."
Carrier, however, maintained -- and many investors have come to agree
-- that IDIC was a shell and a sham that was set up by Brink solely to
lure in cautious investors and was never intended to insure anyone's
Other new companies established by Brink and Barnabe included one that
set up offshore investment seminars. Sumeru began appearing at those
seminars, talking about Sovereignty Consciousness and Sattva Bank.
Another company was established to pay commissions to investors who acted
as independent contractors (ICs) and brought in new deposits: If an IC
brought in a friend who deposited $100,000 and left it in First Bank
for a year, for example, the IC could end up with $24,000 in commissions.
Another company collected fees from investors to register them in Grenada
as international business corporations (IBCs) before they made their
offshore deposits. Yet another company, World Investors Stock Exchange
(WISE), was supposed to be a stock exchange only for companies that
contributed to improving the world. Carrier said WISE was created solely
as another avenue to bring in money from investors. Unlike a typical
stock exchange where investors buy individual shares that are not guaranteed,
investors in WISE could buy shares whose principal and interest were
totally guaranteed by a Stock Value Bank Guarantee (SVBG), an
instrument provided by First Bank.
"A percentage of every share sold on WISE is set aside in a deposit-insured
bank to guarantee a return of principal and reasonable earnings," WISE documents
said. A three-year SVBG guaranteed that the investor would be returned 119% of
the original investment, while the five-year SVBG guaranteed 135% and the 10-year
SVBG guaranteed 211%.
After First Bank began getting bad publicity, Carrier said, Brink took
new deposits into a new sub-bank named Crown Meridian so that
investors would not necessarily know that their money was going into
First Bank. Later, Brink began collaborating with other people, such
as Sumeru, to set up more sub-banks; eventually there were 15 to 20 sub-banks,
including Sattva Bank, Carrier said.
Carrier's posting in the newsgroup created a flurry of responses. Some
said it was a plausible look inside Brink's operation. Others made disparaging
remarks about Carrier and said his claims could not be true. Brink himself
posted a 16,000-word response, concluding with ridicule for Carrier's
suggestion that unhappy investors call the FBI. "And by so doing,
cooperate in making certain that everyone suffers a maximum amount of
financial damage," Brink wrote.
In a subsequent telephone interview for this story, Carrier added details
to his previous statement. "All the time I was there I never saw
them do any actual banking. There was no banking department in the bank," he
Carrier, now back in Canada working in an administrative job for a pharmaceutical
research firm, said First Bank's handful of locally hired clerks did
keep busy -- recording new deposits, paying commissions to ICs and, in
the beginning at least, sending out interest payments to investors. But
he doesn't think there was any real interest. Instead, he said, he believes
both IC commissions and interest payments came out of new deposits.
"I think it was a pyramid," he said. He said he never saw any evidence
of any prime bank notes trading, or any other kind of trading, investments or
business deals by the bank. The sole focus was to bring in more deposits, he
said, rather than trying to make money from those deposits.
Carrier left Grenada not because he was troubled by what was going on
at First Bank, but because he was fired after complaining that he wasn't
getting paid on time. Brink supporters in the newsgroups tried to discredit
him by claiming he had been fired for theft and had a prison record,
but Carrier denied all the accusations.
Looking back, he said he regrets some of the things he did in Grenada,
such as helping investors do paperwork that would allow them to evade
U.S. taxes, and helping train ICs to sell onshore -- a violation of U.S.
law since they were unlicensed and were promoting unregistered securities. "In
my heart I didn't do anything wrong. I didn't do anything illegal. But
I was part of a system that was illegal," he said.
Carrier predicted that Brink would probably never go to prison for stealing
money. "Nobody can ever prove he took any money. You won't get him
on charges that he stole any money. But you can get him for organizing
systems that showed people how to defraud the government, and how to
evade their taxes," Carrier said.
Carrier said he has not been in contact with the FBI or other authorities,
but said he knows at least one person who worked at First Bank and is
cooperating with the FBI. If asked, he said, he would be willing to testify
to everything he wrote in his newsgroup e-mail.
Last August, Grenada's government took over First Bank operations.
The government announced that funds were missing, and that it was
cooperating in an investigation with the U.S. Department of Justice
and the FBI.
For the first time, Grenada government officials publicly expressed
doubt about First Bank. They admitted to the Associated Press that
they did not know if the bank's reported income for 1999 --$26 billion
-- was accurate. If true, that would have made it the most profitable
company in the world. The government official put in charge of the
bank's operations said it appeared that millions had been taken out
of First Bank by Brink and various associates.
Bob Giuli and other investors hired a private investigator, Lyle Smith,
president of Intercontinental Capital Management, Ltd., of Sacramento,
California, who specializes in recovering foreign assets. Giuli, who has
prepared a 105-page declaration for use in any legal action, said he hopes
that criminal charges can be brought against Sumeru. He said he had not
been in contact with the FBI, but other U.S. investors have told him they
are cooperating with authorities.
"It is my testimony that the net effect of solicitations of Dr. Taansen
Fairmont Sumeru, Ph.D., is in violation of United States Code in multiple
instances, he did profit by these transactions, that he did collect money through
the mails, and last that he has, individually or in concert with others, failed
to honor written warranties, failing to return invested monies," Giuli said
in his declaration.
However, the private investigator, Lyle Smith, said he will concentrate
on recovering assets. He said he was uncertain about what charges could
be brought against Sumeru. "He never touched any money directly. He
knew better than that," Smith said.
Giuli and other investors also hired a Grenada law firm and obtained an
order from the Grenada Supreme Court that restrains Brink, Sumeru, Quantum
Gold, First Bank, Sattva Bank and others from spending any of the up to
$372 million that the investors say they invested.
In a telephone interview and in e-mail exchanges this fall, Sumeru seemed
bewildered that the investments have gone sour, and that anyone would blame
him. He said he does not feel that he has done anything wrong. He emphasized
that he has not fled, that he is still in Santa Barbara, and that he is
still talking to investors. However, about a month later, Sumeru was making
plans to leave the country in search of a "spiritual community" where
he could settle.
Sumeru insisted that he had no idea where the missing money might be. He
said he still believes that prime bank notes are real, and it is possible
-- as Brink claims -- that the money was secretly seized by governments
and big banks that want to keep the public from learning about prime bank
However, Sumeru also said he reluctantly accepts the possibility that Brink
absconded with money from First Bank. "Some people are firmly convinced
he is a crook," Sumeru said in an e-mail. "Others are firmly
convinced he is a victim. I really don't know. I wish I did. Time well
No matter who took the money, Sumeru said he, too, was a victim who had
lost money. Unlike investors in his bank, however, Sumeru refused to divulge
any particulars: How much he had invested, how much he had withdrawn in
commissions or interest, and how much he was owed in commissions and interest.
Brink, in an exchange of e-mails from Uganda for this article, said he
did not have any of the money. He intimated that the money had been spirited
away and that he had been defamed in the media as part of a conspiracy
that included American intelligence agents and the Organization for Economic
Cooperation and Development. The Paris-based OECD, made up of 29 of the
world's most industrialized countries, has been spearheading an international
effort to clean up banking practices in tax havens known for secrecy, fraud
In response to a question about whether investors would ever get their
money back, Brink said, "Not if the forces (OECD-oriented operatives/sympathizers)
that wish to crush private offshore banking have their way."
Brink said it is understandable for Sumeru to suspect him of taking the
missing money: "Taansen is a genuinely sincere man and, I believe,
an honest man. Taansen now suggests that it now appears that I ran off
with a lot of money? My guess is that he's in the infancy of his awakening
to how truth is mishandled in the press. But since he's a good man and
an intelligent man, he'll figure it out on his own soon enough."
Brink also suggested that Sumeru might be distancing himself from Brink
publicly because Sumeru would need credibility before offering any new
investment opportunities to friends and acquaintances.
After being interviewed for this article, Sumeru put forth a number
of friends and business associates to vouch for his character. Even those
who had invested with Quantum Gold or Sattva Bank and lost their money
said they did not blame Sumeru. But everyone who spoke up for Sumeru
had one thing in common with the unhappy investors: they had all lost
One man, Ed Spencer, who said he is an Alaska-based businessman and traveling
Baptist evangelist, said he bought CDs in Sattva Bank. He said he believes
he may have been defrauded, but added, "Taansen had nothing to do
"The problem apparently was with First Bank's management," Spencer
An Australian woman, a mother of two young children who said she manages
money she inherited, said she had been friendly with Sumeru for several
years. Speaking on the condition of anonymity, she said Sumeru had "referred" her
to Quantum Gold and received a commission from her deposit. But she emphasized
that she did not blame him for what appears to be a lost investment. She
said other investors have made Sumeru out to be the bad guy because of
his appearance and his beliefs.
"Taansen is being targeted irresponsibly, simply because he is different," she
said. "I'm not happy with my investment choices, but I'm willing to accept
the responsibility for my decisions." She said she is not convinced that
Bob Giuli or anyone else can produce any evidence against Sumeru.
So where are the missing funds from Quantum Gold, First International Bank
of Grenada and Sattva Bank? Where's the money? Who can answer the questions
about what happened to the Quantum Gold and First Bank money? Bob Giuli
believes Taansen Sumeru can answer all the questions.
But Taansen Sumeru is not answering any more questions. In his last telephone
interview for this story, he said he had been "bankrupted" by
the Quantum Gold and Sattva Bank scandals and had been forced to give up
his Santa Barbara home because he could no longer afford to live there.
He said he was "going traveling," planning to visit a series
of "spiritual communities" around the world in hopes of finding
one where he would settle.
The Santa Barbara woman who lost $150,000 in Sattva Bank said she believes
Sumeru is trying to avoid prosecution. "I think he is a scared little
rabbit," she said.
"The problem is we trusted him," Bob Giuli said. "We had confidence
in him. But the word ‘con' comes from confidence."
Giuli knows it will be difficult to find any of the missing money, let
alone retrieve it, and it will be difficult to bring criminal charges against
Sumeru or Brink or anyone else. "The secrecy laws are rigid in these
countries," he said. "The problem is that the laws not only protect
the innocent, but they also protect the guilty."
The paper trail is convoluted, and parts of it are either missing or obscured
by the offshore banking structures that allow fraud to hide behind secrecy
A PricewaterhouseCoopers creditor's liquidation report contains the
results of an analysis of the hard drive taken from Van Brink's laptop,
which shows that about 80% of the settings on his browser pointed to
porn sites. They also discovered the bogus assets "assignment" to
FIBG of the "carved red ruby" which was said to be known as "Boy
on a Water Buffalo".
$470,403 of assets have been recovered so far and it is estimated that "net
realizations before professional fees and other administrative costs
will range from a high of $7.4 million to a low of $1.7 million". They
also estimate that $125 million of clients' principal was deposited at
FIBG and its many sub-banks, which is down from the estimate of $206
million when the liquidation began.
The liquidator says that finding out what happened to clients' funds
and establishing accurate figures for FIBG's assets and liabilities has
been difficult because of the chaos in which it was operated. Many records
have disappeared, along with the people who operated the bank.
Offshore Alert says that Van Brink is currently hiding out in Uganda.
Authorities say it is difficult to recover money lost in offshore scams
and difficult to send the con men to prison. Frauds are often hard to
prove, with convoluted paper trails stretching across many different
jurisdictions. Offshore scams have become so prevalent that authorities
simply don't have the resources to prosecute them all.
In addition, many victims are reluctant to help authorities. Some refuse
to believe they were conned. Some are too embarrassed to admit it. And
many fear that they will get in trouble themselves -- for evading taxes,
for example, or illegally hiding assets -- if they step forward.
A number of investors who lost money in Quantum Gold or Sattva Bank
said they were considering going to law enforcement authorities, but
they were afraid.
One investor went so far as to telephone a regional FBI office in hopes
of asking some anonymous questions to see if he had violated any laws
by investing offshore. He got a special agent on the phone, but when
the agent put him on hold the investor hung up in a panic, afraid that
his call was being traced.
The investor had been told that because he had invested offshore, he
would find himself in trouble, too. He was fearful that cooperating with
authorities would lead the IRS to begin combing through his returns for
recent years, and would lead the FBI to target him for money laundering.
The investor had been told that even if authorities recovered some of
the money, they would first use it to defray the costs of their own investigation
rather than return it to the people who had been bilked.
Nonsense, says the FBI.
Roy Handley, supervisor of the money-laundering unit at FBI headquarters
in Washington, said someone who has been cheated in an offshore scam
is not automatically viewed as a crook who is trying to hide assets or
evade taxes. "We will treat that person as a victim," he said
in an interview. "If a victim is upfront and open with me, I will
do all I can to help."
He said victims have little to fear if they earn their money honestly,
meet U.S. bank reporting requirements when moving money offshore and
intend to pay their taxes on offshore returns. "It's the intent
of the person involved in the situation that determines whether there
is any illegality," Handley said.
He said investors moving money offshore in search of higher returns are
not automatically suspected of money laundering. The laws on money laundering,
he said, cover attempts to hide money earned from specific unlawful activities,
such as drugs, prostitution or embezzlement.
And money laundering, Handley said, does not necessarily mean that the
money has gone offshore. It covers putting the proceeds of the illegal
activities into any bank, whether in the United States or any other country.
At the same time, he said, even victims who have dirty hands should be
advised to come forward. It's better to cooperate and make a deal, he
said, than to try to hide and then accept stiffer consequences when caught. "If
you were involved in something illegal, you need to talk to us about
it now instead of later," he said. "The first one on the bus
gets the best seat. The first victims to come to me are usually the clean
Handley said con men who warn their victims that they will get into trouble
themselves and won't get their money back anyway are playing into the
prejudices of people who are wary of the power of the government to invade
At the same time, he conceded that there are no guarantees that victims
will recover any of their money. It is sometimes difficult to determine
who the investors are or how much each invested. Offshore banking secrecy
laws often hinder investigations, and the money frequently has simply
disappeared with the fraudsters.
"We want to help people," Handley said, "and if that includes
getting their money back, all the better. But there are no promises."
SEC Rules Against Offshore Scams
Investors who believe they have been the victims of an offshore securities
fraud should remember that the Securities and Exchange Commission regulates
only the issuers and sellers of securities -- not buyers.
There are no provisions that prohibit people from buying illegal securities
-- only against selling them," said John Heine, a spokesman for the
People selling securities or advising on investments -- offshore or onshore
-- are subject to prosecution for a number of potential violations, including:
securities or acting as an investment adviser without the
securities that are not registered with the SEC, but are
required to be registered under the Securities Act of 1933.
or omitting material facts concerning securities offered
for sale, whether or not registration is required. For example,
it is unlawful in certain situations to sell securities while
withholding important information that could affect the buyer's
investment decision, such as recommending an investment while
knowing that the investment will not pay off.
or fabricating prices of securities.
or illegally pledging customers' funds or securities.
a securities business while insolvent.
or selling securities from or to customers at prices not
reasonably related to current market prices.
their responsibilities to treat customers fairly.
In addition to SEC violations, people promoting offshore investments
may also face prosecution for mail fraud -- using mail to send
promotional materials for investments that may be illegal or fraudulent.