September 26, 2020

Cayman Island investors in Grand Island Funds fraud to receive dividend

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Investors who were defrauded out of approximately US$19 million by four Cayman Islands-based hedge funds known as the Grand Island Funds received an initial dividend of 57 cents in the dollar last month from the liquidators, with the prospect of up to six cents more as a final dividend. The first distribution was made possible after the liquidators received US$7 million from the Funds’ former service providers, directors and other insiders to settle disputes.

In June, 2008, the four funds—three registered with the Cayman Islands Monetary Authority and one unregulated offering—were put into voluntary liquidation by their shareholders. PricewaterhouseCoopers was appointed the funds’ receiver.

Justice Henderson

The Grand Island Fund primarily traded oil. Close Brothers served as the fund’s administrator, and a prominent Cayman businessman, Naul Bodden, served as a director for at least one of the funds.

In August, 2010, it was revealed by Miami based Offshore Alert, that Mr. Bodden had agreed to pay US$3.3 million to settle his liabilities to a fund group he controlled.

The four funds involved are Grand Island Commodity Trading Fund, Grand Island Commodity Trading Fund II, Grand Island Income Fund and Grand Island Master Fund.

The liquidators released Mr. Bodden “from any and all liability” and indemnified Bodden “in respect to reasonable legal fees of defending any proceedings brought against him by various parties up to a maximum of US$100,000”. They also agreed to recommend to the Grand Court that Bodden be “one of the members of the combined liquidation committee of the Funds”, notwithstanding their opinion that his Fund Group was operated illegally from inception.

Robert Girvan, who shared an office with Mr. Bodden, was sentenced to eight years imprisonment after pleading guilty for his part in the massive fraud in October, 2010.

Givan, a Jamaican national, was the former director, trader and fund manager of hedge funds from which he stole the $19 million. He had pleaded guilty to over 21 counts of theft, fraud and money laundering.

The judge at the trial, Justice Alex Henderson, said Girvan appeared to have had a free hand over the funds and raised money from people with the promise of impressive returns.

The Jamaican man later falsified bank statements and other documents, forged signatures of his business partner and transferred money through a complex web of accounts.

Along with the millions which Girvan transferred into accounts for unauthorized trading, significant sums were also transferred to his personal accounts and used for real estate investments.

Of the almost $19 million that Girvan stole, $9 million was lost in unauthorised trading.

The judge made a deportation order for Girvan to be returned to Jamaica at the end of his sentence.

For more on this story go to: www.offshorealert.com/grand-island-funds-dividend.aspx

Highlights are:

Investors may eventually receive up to 63 cents in the dollar

Initial distribution made possible by global settlement agreed during mediation in the Bahamas

Settling parties include ScotiaMcLeod, Close Brothers (Cayman) Limited, and KPMG

Naul Bodden “unable” to make final US$1.66 m settlement payment, gets another two years to pay

Several investors received shares without fully paying for them, claim liquidators

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