Financial newsletter Offshore Alert has reported that the island of Grenada has once again been implicated in an investment fraud case in the United States, this time also involving St Vincent and the Grenadines. Verlin Swartzendruber, aka Joseph Severin is the latest person suspected of perpetrating an investment fraud through a Grenada-domiciled company and was arrested in Texas on June 26, 2008, some 19 months after a warrant for his arrest was issued at the US District Court for the District of North Dakota. He is expected to appear before a federal judge in a United States court on September 2, 2008. The 66-year-old is scheduled to answer to allegations that he fraudulently obtained between $12 million and $16 million from approximately 500 investors in a scheme that was based in Grenada and St Vincent and the Grenadines. Previously, Swartzendruber was criminally indicted on November 14, 2006 on six counts of wire fraud, three counts of money laundering, one count of conspiracy to commit money laundering and one count of conspiracy to defraud the United States. However, the case remained under seal until after his arrest. Other alleged accomplices have also been charged in the matter. They are Swartzendruber’s son, 30-year-old Byron Don Swartzendruber, who was indicted on one count of conspiracy to defraud the United States; and Frederick Keiser, who is currently serving a 12-year prison sentence that was imposed on him on November 7, 2007 after a jury found him guilty of multiple counts of wire fraud, money laundering, conspiracy to defraud the United States and conspiracy to commit money laundering. The younger Swartzendruber will not be standing trial for his indictments after Assistant US Attorney Brett Shasky informed the court that the parties had “reached an agreement” and asked that the trial be taken off the court’s trial calendar. According to an affidavit sworn by Special Agent with the Criminal Division of the IRS, Gerard Keller, Verlin Swartzendruber was alleged to have been involved in a number of “fraudulent investments schemes that have involved activities occurring from North Dakota to St Vincent and Grenada, West Indies, and then to Switzerland and Spain”. Swartzendruber served as the head of Preferred Group Ltd., a St Vincent corporation, with offices in St Vincent and Grenada, Keller said in his affidavit. “He also served as the head of Preferred Trust and Management Ltd (PTM), a Grenada corporation, with offices in St Vincent and Grenada, West Indies.” Keller said that the accused’s activities was commonly known as a “prime bank” scheme, which solicits investors and claims that their funds will be used to purchase and trade "prime bank" financial instruments on clandestine overseas markets in order to generate huge profits in which the investor will share. However, Keller noted that the Securities and Exchange Commission (SEC), as well as the International Chamber of Commerce and the International Monetary Fund (IMF) have in the past issued public warnings against prime bank instruments, which they caution do not exist, nor do so-called trading programmes allegedly involving such instruments. Keller also indicated that Swartzendruber’s co-conspirator, Keiser, purchased a lease company in PTM in order to “participate at a higher profit level on investors’ funds he brought into PTM”. Offshore Alert reported that over a 12-month period from January 2000 to January 2001, Keiser allegedly received nearly $950,000 in bonuses from investors’ funds, while “the vast majority” of those who invested in that time “received nothing”. It was alleged that funds were transferred to Keiser’s account in Minot, North Dakota from accounts at the National Commercial Bank in St Vincent & The Grenadines and from Bank Crozier, in Grenada, while Swartzendruber also allegedly misappropriated investors' funds for his personal purposes, including investing approximately $1 million in real estate in Spain. This is not the first time that Swartzendruber has been exposed by Offshore Alert for fraudulent activity. In 2000, the newsleter exposed his involvement in bogus schemes, and also revealed where Grenada had issued him a passport under the name Joseph Severin and granted him an unrestricted trust licence to operate one of his companies. Reprinted from Caribbean Net News caribbeannetnews.com