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Bahamas Island Owner Accused Of $40m Fraud

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JOSEPH CAMMARATA

• Sandy Cay proprietor ‘stole’ from other scam victims

• Bahamian financial provider ensnared in the fall-out

• Principals impersonated by scheme’s perpetrators

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The owner of a private island in the Abacos has been accused of masterminding a $40m fraud that has also ensnared a Bahamas-based financial services provider in the fall-out.

Joseph Cammarata, owner of Sandy Cay, which is located close to Man-O-War Cay, is facing both criminal and civil charges in the US over allegations that he and two co-conspirators stole monies that were intended to compensate the victims of securities frauds.

And Cotswold Group, which is based at Goodman’s Bay Corporate Centre, and two of its senior executives have also been caught up in events. The company, together with Stephen Dickson and Todd Callender, are all mentioned multiple times in court documents seen by Tribune Business although there is no suggestion that any of them have done anything wrong.

While neither Cotswold nor its two executives are named as defendants by either the US Justice Department or the Securities & Exchange Commission (SEC), court filings disclose that they allegedly provided fiduciary services to Mr Cammarata and his co-conspirators, holding positions as nominee directors and opening bank accounts for some of the entities involved.

Dustin Ruta, an accountant with the SEC’s enforcement division, asserted in a November 3, 2021, affidavit that Sandy Cay’s owner and his fellow accused, Erik Cohen and David Punturieri, even resorted to impersonating Mr Dickson and Mr Callender in e-mails and phone calls in a bid to further their fraud.

There is no indication that the Cotswold duo knew how their names were being misused, but Mr Ruta alleged that funds derived from the scam went to bank accounts and entities supposedly controlled by the Bahamian financial services provider’s Barbados subsidiary.

And Mr Dickson and his “spouse”, who is not named in the court documents, were said to have received $145,000 from Mr Cammarata over a five-year period between January 2016 and January 2021. The funds came from two entities named in the scheme, one of which - Sandy Cay - “is a reference to a private island located in The Bahamas that is owned by Cammarata”.

The SEC, the US capital markets regulator, yesterday persuaded the eastern district Pennsylvania court to issue a temporary restraining order over all Mr Cammarata’s assets, including Sandy Cay. This means that, for the moment, he cannot sell or otherwise dispose of his Bahamian private island.

Although Mr Cammarata and his two co-conspirators have been indicted by the US Justice Department, it is the SEC lawsuit that provides the greater detail on allegedly long-running scheme that began in 2014 and picked on the victims of securities frauds in the US.

In effect, the trio are being accused of submitting false or “sham” claims to relief funds that were created to distribute the monies recovered from securities frauds to victimised investors. Around 400 such claims were purportedly made during the scheme’s lifetime.

“Starting in approximately 2014, defendants orchestrated a scheme to steal money from distribution funds established for the benefit of securities fraud victims,” the SEC alleged. “Defendants stole at least $40m from approximately 400 distribution funds that formed as a result of resolutions of securities class actions and SEC enforcement actions.”

These so-called distribution funds were designed “to distribute money obtained through settlements or judgments to injured investors. Defendants’ ill-gotten gains include more than $3m that they stole from distribution funds from SEC enforcement actions”, the regulator added.

“Defendants defrauded these distribution funds (and their rightful beneficiaries) by submitting false claims and falsified supporting documents to the distribution fund administrators in the names of at least three entities that did not trade in the underlying securities, and thus were ineligible to recover.

“False documents submitted by defendants include false securities trading records, including false security position reports, brokerage statements and other documents purportedly generated by the sham client broker/dealers,” the SEC continued.

“However, the sham clients did not engage in such trading. Instead, defendants used broker/dealer logos and report templates to fabricate trading records and other documentation. When creating the phony trading records, defendants chose how much to claim in losses.”

The principal entity allegedly employed by Mr Cammarata and his co-conspirators was AlphaPlus, set-up as a “claims aggregator” that combined purported claims from investors defrauded by securities scams.

And they also used Quartis Trade & Invest, a Bahamas-domiciled “private algorithmic trading fund”, to submit “false claims of securities transactions” to the distribution funds charged with returning monies belonging to defrauded investors to their rightful owners. A Gibraltar-based vehicle, Nimello, was used for the same purposes.

Multiple Abaco and real estate contacts yesterday confirmed that Mr Cammarata is Sandy Cay’s owner, having purchased the island some years ago. “He was in town very recently,” one contact said. “He’s building a very big house there [Sandy Cay], and he was bragging about making all this money mining Bitcoin.”

Further research by Tribune Business established that Mr Cammarata has figured prominently in post-Hurricane Dorian restoration, and presently sits on the Board for the Man-O-War Relief Fund. This newspaper also tracked down You Tube footage posted by Mr Cammarata that provided aerial footage of Sandy Cay taken via a drone.

Mr Ruta’s declaration, meanwhile, detailed how Mr Cammarata and his co-conspirators allegedly took their deception to new heights while potentially leaving Cotswold and its principals in the dark, too.

“In addition to creating and submitting phony documents and lying to distribution administrators, the individual defendants made additional misrepresentations to distribution fund administrators,” the SEC accountant alleged.

“For example, defendants created and used sdickson@quartistrade.com and todd.callender@nimello.com in order to impersonate Stephen Dickson, a named director of Quartis, and Todd Callender, a named director of Nimello, in communications with distribution fund administrators.

“I have reviewed communications in which Dickson and Callender use different e-mail accounts other than the Dickson Quartis e-mail account and the Callender Nimello e-mail account to communicate with the individual defendants or bank officers, including communications relating to Quartis and Nimello.”

The deception was not confined to e-mails. Mr Ruta alleged: “Similarly, in a phone call on January 5, 2021, Cohen spoke with a distribution fund administrator and falsely represented himself to be Callender.

“I have been informed by a special agent of the FBI that the FBI determined that the phone call originated from ‘Phone Line One’, a line administered by ‘Telecom Provider One’, and that the voice impersonating Callender is likely Cohen.”

Mr Ruta also alleged that Speedroute Technologies, another entity involved in the scheme, was “purportedly owned” by Cotswold’s Barbados subsidiary but, in reality, was controlled by Mr Cammarata and his co-conspirators.

“Speedroute Technologies is purportedly owned by Cotswold Insurance (Barbados), an entity that upon information and belief is effectively controlled by Callender, one of the two named directors of Nimello,” he claimed.

“Speedroute Technologies has two named directors, including Dickson, one of the two named directors of Quartis. From January 2016 to January 2021, Dickson and his spouse received more than $145,000 in payments from PB Trade and Sandy Cay, entities controlled by Cammarata.

“In or around March 2015, Cammarata contacted Metropolitan Commercial Bank to open a bank account for Speedroute Technologies. Cammarata represented to Metropolitan that he had no ownership interest in Speedroute Technologies and that Dickson would need to sign for the account,” Mr Ruta continued.

“Cammarata then co-ordinated a physical meeting between Metropolitan and Dickson so that account opening documents could be executed. The Speedroute Technologies bank account was later funded via a $100,000 wire initiated by Cammarata.” Hundreds of thousands of dollars subsequently moved between the Speedroute accounts and facilities controlled by Cotswold (Barbados).

Mr Dickson was said to be out of office yesterday when Tribune Business called seeking comment, while Mr Callender was in a meeting. This newspaper’s detailed message about the nature of the inquiry was not returned before press time last night.

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