Olint hope
Published:Wednesday | March 30, 2011 | 12:00 AM
Smith promises to repay investors, pleads guilty to 23 charges in the US
Arthur Hall, Senior Staff Reporter
Burnt members of the failed Olint investment scheme may just get back their money after all.
David Smith, the former head of Olint, has committed to make full repayments to every investor in the scheme.
But there is no indication yet where Smith will get the money to make the repayments, especially since he is now destined for a lengthy stay in an American prison.
The commitment to repay investors was given by Smith yesterday as a key part of a plea deal he entered into with United States prosecutors to reduce his prison time and prevent his wife from being dragged before the courts.
Faced with a maximum sentence of 40 years in prison and fines which could exceed US$1 million, Smith pleaded guilty to 23 charges in the US District Court in the Middle District of Florida.
With his guilty plea US prosecutors have agreed not to charge his wife, Tracy Ann, but any other person involved in the scam might not be so lucky.
Rat out cronies
Smith's plea deal includes a provision to squeal on the other persons who participated in what the American prosecutors described as a Ponzi scheme which defrauded US$200 million from thousands of investors in Jamaica, The Turks and Caicos Islands and Florida.
He could receive a reduction in his sentence if he provides the prosecutors with "substantial assistance" in the prosecution of anyone else.
The disgraced former socialite has also accepted that US authorities can seize any and all of his assets.
Already the prosecutors have indicated that they will be going after US$128 million which Smith obtained through wire fraud proceeds; a property which he purchased in Florida; precious gemstones, metals and jewellery they seized last January, and US$40,104 which he transferred to a couple in 2006.
Under the plea deal Smith admitted he was guilty of four counts of wire fraud, one count of conspiracy to commit money laundering, and 18 counts of money laundering.
In outlining the case against Smith, which he accepted as factual, US prosecutors said for more than three years he executed a scheme to defraud thousands of investors.
According to the prosecutors, the scheme started in 2005 when Smith incorporated Olint in Panama with its principal place of business being Kingston, Jamaica.
The prosecutors said Smith solicited, or caused others to solicit, persons to open accounts in what he dubbed Olint Foreign Exchange Trading Club.
According to the prosecutors, Smith had promised that, "... Club members could expect a high return on their investment each month with only 20 per cent of their investment at any risk. In truth and in fact Smith knew those representations were false."
They charged that Smith set up an elaborate scheme to con persons into believing that their investments were solid when, in fact, he was using any new money to pay early investors who made demands for the repayment of their money.
"Smith transferred and caused to be transferred ... clients' money to his personal bank account which he used to finance a lavish and expensive lifestyle and from which he and others received millions of dollars in goods, services and other benefits," said the prosecutors.
According to the prosecutors, Smith purchased a US$2-million residence in The Turks and Caicos Islands and made a downpayment on a Lear jet.
They also claim that Smith enjoyed "frequent travel on the jet; hosting guests and paying all their expenses at hotels and restaurants, and sponsoring a jazz festival in Jamaica".
The prosecutors also noted that Smith purchased expensive vehicles for himself and his friends, gambled at casinos and made political contributions.
No sentencing date has yet been set for Smith but the prosecutors have indicated that they will suggest to the court that he receive a downward adjustment in his sentence because of his plea deal.
While noting that the court is not bound to accept their recommendations, the prosecutors also indicated they would not oppose Smith's request that any sentence imposed in the US run concurrently with his prison time in The Turks and Caicos Islands.
Last year, Smith received a sentence of just over six years in prison in The Turks and Caicos where he pleaded guilty to fraud and conspiracy charges.