Jim King of Rogers, Ark., was in deep financial trouble back in 1986. His satellite dish antenna business was going under, and he needed someone with money and faith to invest in it.
He stumbled into a $2 million deal that was too good to be true. He came dangerously close to joining the list of people who have done business with shell banks on Anguilla, a British dependency and tax haven in the Caribbean.
Anguilla has only 7,000 island residents, but there are 42 banks catering to offshore customers. The U.S. Treasury Department has warned American banks about dealing with the same bank that offered King $2 million, and an FBI source confirmed that the bank is under investigation.
But King did not know the pitfalls. While asking around about possible sources of venture capital, he learned about United Bank International (UBI) in Anguilla.
According to King, a UBI representative calling himself "Mr. Greene" offered King a $1 million loan. All King had to do was pay a $15,000 fee up front. King hesitated, and then he said Greene offered another million. "They were good," King says of the sales pitch. He agreed to pay the fee, but on a hunch canceled at the last minute.
That may have been his smartest decision. FBI agents, who later asked him about his encounter with UBI, told him he was lucky.
The Chinese government was not. The Chinese Foreign Trade office recently filed a complaint with Anguillan authorities asserting that UBI had issued the Chinese a useless $1 million letter of credit for a huge shipment of shrimp. After some arm-twisting by British officials, the Anguillan authorities raided UBI and revoked the bank's license in May. But in July, UBI issued a $600,000 letter of credit to a Fort Lauderdale, Fla., doctor for a fee of $60,000. An attorney for the doctor now says his client cannot find a bank in the United States that will honor the UBI letter.
A source at the U.S. Comptroller of the Currency told our associate Dean Boyd that in 1987 the Treasury Department issued a warning to American banks that UBI was not authorized to do business in the United States.
The Chinese government has hired a Miami lawyer, John Mattes, to prepare a lawsuit against UBI. Mattes says UBI is nothing more than a one-room storefront with stationery, but no tellers, no money and no credit.
UBI's manager is a Miami man, Michael De Bella. The Treasury Department and American banks have been watching De Bella for years. He has not been charged with anything. FBI sources told us they have had trouble determining court jurisdictions and getting cooperation from Anguillan authorities. Anguilla needs the money that offshore banks bring in, and authorities there cannot afford to shake up their thriving banking business.
De Bella told us that the allegations are "not true." He said he will win the case against the Chinese government and claimed that the shrimp they sold him was "bad." And what about the letters of credit from UBI that U.S. banks won't honor? De Bella said he discharged his end of the deal by issuing the letters and it was not his fault if other banks would not honor them.