The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The US Government cannot seize $8.106 million in assets that belonged to convicted con man, Derek Guise Turner, because they had already been declared the “property” of Loretta Butler-Turner’s family and other defrauded Bahamian victims.

The Court of Appeal, in a long-awaited ruling handed down yesterday, found that there were “no assets in the Bahamas” to which the US Justice Department’s $55 million forfeiture order against Turner could be attached, due to previous judgments obtained by the FNM deputy leader’s family and other investors.

The Butler family and their companies, Franklyn Holdings and Milo B. Butler & Sons Investments, had initiated proceedings against Turner - who is still living in the Bahamas - and his companies in 2005, and subsequently obtained default judgments against him.

The Butlers and their fellow Bahamas-based investors had agreed a plan to distribute the more than $8 million raised from selling Turner’s Bahamian real estate assets, but the US Justice Department objected to this.

Represented in the Bahamian courts by the Attorney General’s Office, the US Justice Department argued - ultimately unsuccessfully - that the $8.106 million be “repatriated to the United States and made available” to all victims of Turner’s multinational fraud.

The Court of Appeal, backing the Supreme Court’s decision, rejected this on the grounds “that there were no assets in the Bahamas to which the December 2009 Forfeiture Order could attach”.

A previous forfeiture Order, dated February 2006, was “nullified” because Turner had succeeded in appealing the length of sentence - although not the conviction - that he received.

Turner and his companies were represented in the Court of Appeal case by Harvey Tynes QC and now-minister of state for legal affairs, Damian Gomez, who was then in private practice.

Setting out the background to the dispute, the Court of Appeal noted how Turner induced Peter Davis, a Bahamas-based investor, to place $4.7 million with him - over a seven-month period between February-September 2001 - for investment purposes.

Mrs Butler-Turner and her family, including Franklyn Butler Snr and husband Edward Turner, also placed funds with Turner’s unregistered investment scheme.

Tribune Business revealed previously that the Butler family had invested a total $2.75 million with Turner’s financial fraud. The New Zealand-born con man is unrelated to the FNM deputy leader and her family, though.

“The funds were used by Turner to acquire Paradise Island Garden Villas A and D, Lot Number 5 Ocean Club Estates, Paradise Island, and Turning House, 700 Bay Street,” the Court of Appeal judgment disclosed.

These assets were acquired in the name of Turner’s Turning Properties Ltd. 700 Bay Street was previously the headquarters of Mohammed Harajchi’s now-defunct Suisse Security Bank & Trust, and is now home to the offices of Davis & Co, the law firm of Deputy Prime Minister Philip Davis.

Following the property purchases, the US Justice Department issued a Mutual Legal Assistance Request (MLAT) to the Attorney General’s Office on April 29, 2005.

This was followed by an October 5, 2005, restraining Order to prevent Turner selling his Bahamian real estate assets, or disposing of funds held in a Scotiabank (Bahamas) account.

After being charged with money laundering, mail fraud and wire fraud, Turner pleaded guilty to the latter. A preliminary forfeiture order was granted against him in the US courts on August 9, 2005, in the amount of $16.707 million.

Turner was initially sentenced to 240 months’ imprisonment by the US courts in February 2006, at which time a $55.094 million forfeiture order was entered. This required him to relinquish his two Scotiabank (Bahamas) accounts and all Bahamian real estate assets.

Meanwhile, Mr Davis and the Butler family had taken out separate proceedings in the Bahamian courts against Turner in a bid to recover their lost funds.

They obtained restraining orders against Turner’s assets themselves, and under an August 17, 2007, Supreme Court Order, the four properties were sold for a collective $8.106 million.

“The parties had reached an agreed position for presentation to the Court for a distribution of the proceeds on a pro rata basis when, by Order of Justice Albury dated December 21, 2009, the Attorney General was granted leave to file and serve submissions in opposition to the settlement agreement,” the Court of Appeal ruled.

Just three days earlier, the US appeals court had reduced Turner’s sentence to 87 months, and entered a final forfeiture order worth the same $55 million against him.

The Attorney General’s Office sought to register that order with the Supreme Court on October 12, 2010, on the grounds that Turner’s former Bahamian assets were still frozen by an Order made by then-Chief Justice Sir Burton Hall.

But Justice Stephen Isaacs threw this out, finding that the forfeiture order was “incapable of registration” due to the earlier judgments obtained by Mr Davis and the Butler family.

Michelle Dean, from the Attorney General’s Office, had argued that the Criminal Justice International Co-Operation provided for the forfeiture order to be enforced in the Bahamas.

Arguing that the Act was designed to boost the Bahamas’ co-operation with other countries in criminal cases, she had urged that “in the interests of justice, there should be recognition of all the victims of Turner’s fraudulent schemes, not only the Bahamian claimants”.

However, the Court of Appeal agreed with Mr Davis’s attorney, ex-attorney general Carl Bethel, that his client’s judgment - and that of the Butler’s - meant there were no assets left to attach the forfeiture order to.

“We are of the view that there were no assets in the Bahamas to which the December 2009 forfeiture order could attach, as these had been declared the property of the respondents,” the Court of Appeal ruled.

It added, though that the Attorney General’s appeal was “appropriate and not whimsical”, and so each party had to pay their own legal costs.

As revealed previously by Tribune Business, Turner has been back in the Bahamas since August 2011, although living a far more modest lifestyle than his previous Paradise Island existence.

He is understood to still be living in rented accommodation in Ocean Place, a complex on the Cable Beach strip located close to the $2.6 billion Baha Mar development.

And Turner’s abode is across the street - almost opposite - the residence of Prime Minister Perry Christie and his family.

Mr Christie, in a 2007 election campaign rally, blasted the FNM for granting Turner permanent residency in the Bahamas, and many observers have questioned to Tribune Business why this status has not been revoked in light of his US conviction and jail sentence.

The Bahamian court proceedings have attracted attention as far away as Australia, given that Turner’s victims there were awaiting the Court of Appeal’s ruling.

They had hoped the US Justice Department would win, because then the $8 million proceeds from this nation could be pooled with the Australian recoveries.

Had the US Justice Department won, and an asset pool featuring US and Australian creditors been formed, the latter would have recovered “15 cents in the dollar”, as opposed to “7.02 cents in the dollar” - a more than 100 per cent increase or doubling of the recovery.

Tribune Business understands that the US Justice Department is likely to appeal the Court of Appeal verdict to the Privy Council.