The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

A Miami resident who defrauded investors of more than $8 million using a Rum Cay real estate scam has been found guilty by a US jury, despite an ‘army’ of Bahamian attorneys insisting that he had good title to the land.

A release issued last week by the US attorney for south Florida confirmed that a jury had convicted Lawrence Foster of eight fraud-related counts in relation to his Paradise Is Mine company.

Foster, who is now in jail awaiting sentence on January 5, 2015, and his scheme received $8 million from around 90 investors after promising “that it owned land in the Bahamas and would use investor funds to develop the island of Rum Cay”.

However, no funds were ever sent to the Bahamas, and investor money was instead used by Foster and his associates to fund their lifestyles and pay associated expenses.

Foster, according to court records seen by Tribune Business, appears to have been tried twice on the same charges - both times having been found guilty.

While trial transcripts for the second trial are not yet available, those for the first, obtained by Tribune Business, reveal how numerous Bahamian attorneys, either as witnesses or the writers of title opinions, were involved in both the trial and giving title opinions on the land ‘Paradise Is Mine’ was selling.

Among those called as ‘witnesses’ to aid Mr Foster’s defence were:

• Philip McKenzie, managing partner at Davis & Co, the law firm of Deputy Prime Minister Philip Davis.

• Kenneth Toppin, a former law firm partner of ex-FNM Cabinet minister, Desmond Bannister, and former Bar Association president, Ruth Bowe-Darville. Neither of whom were involved in the Paradise Is Mine affair.

Those Bahamian attorneys whose title opinions were employed as Foster’s ‘defence exhibits’, suggesting that there was ‘clean title’ to the property he was selling, included:

• Thomas Evans QC

• Philip Lundy of Priderock Chambers

• Wayde Christie

• And, also mentioned in the trial transcripts, is FNM Senator and former attorney-general, Carl Bethel.

Mr Toppin said that it was Mr Bethel who, in 2003, incorporated Sunward Holdings, the company that owned the Rum Cay property that Foster/Paradise Is Mine were purporting to sell to foreign investors.

At trial, Mr Toppin, a director of Sunward Holdings, said Paradise Is Mine/Foster were merely marketing the land Sunward owned on Rum Cay, and that there was otherwise no connection between the two entities.

However, in their indictment of Foster and at trial, US federal prosecutors alleged that Sunward Holdings was owned/controlled by Billy Wayne Davis, whose name has featured regularly in relation to ‘land speculation’ on Rum Cay.

Foster’s indictment noted that Mr Davis “purported to own real estate” on Rum Cay, but said he had been convicted in the north Alabama federal court in 1994 for “providing false information on a loan application concerning land he purportedly owned in the Bahamas”.

And the indictment added: “Various websites on the Internet contained information that reflected poorly on the character and truthfulness of B. W. D. (Billy Wayne Davis), and contained information that raised doubt about B. W. D’s claim to own land in Rum Cay in the Bahamas.”

Foster, who filed for bankruptcy in 2012, and had several bank-related lawsuits against him, was alleged to have solicited investors to either buy real estate on Rum Cay or make loans secured on land on the island.

Paradise Is Mine claimed to be a $4 billion real estate company in its marketing materials, with more than 16,000 acres of Bahamian real estate under its control.

All this was false, and Paradise Is Mine concealed the fact it was selling/using Rum Cay real estate that it did not own, but was allegedly owned by Mr Davis and his company.

And the US federal authorities’ indictment suggested that it was highly questionable whether Mr Davis had proper ownership/clean title to the subject land in the first place.

There is nothing to suggest that any of the Bahamian attorneys who appeared as witnesses, or gave title opinions/did company incorporations in relation to Paradise Is Mine/Sunward did anything wrong in relation to the case. Indeed, none have been charged.

Yet the entire episode shows just how vulnerable the Bahamas is to having its good name used, exploited and besmirched by unscrupulous foreigners to generate ill-gotten gains.

The Tribune has run numerous stories on how Rum Cay, over the past decade, had become a hub for foreign land speculators, who were carving/parcelling up large tracts of Bahamian real estate for sale to over buyers.

In many cases, there were major question marks over whether these speculators properly owned (had good title) to the land they were selling, with Mr Davis’s name prominent among them.

Yet successive administrations, both FNM and PLP, have seemingly shown little appetite to curb the rampant ‘speculation’ that is still going on in many Family Islands, Rum Cay having been a prime example, despite the great damage this threatens to do to the Bahamas’ reputation as a safe, attractive haven for second home owners and foreign direct investment (FDI).

Mr McKenzie, the trial documents show, was brought in as an ‘expert witness’ on land title opinions in the Bahamas.

He was hired, according to the transcript, by Arnold Johnson, a 10-year client of Davis & Co who owned land adjacent to the Paradise Is Mine/Sunward Holdings property, to testify on three title opinions given by Messrs Evans, Lundy and Christie respectively.

Mr Evans’s, which was specifically requested on Foster’s behalf for the first trial, plus those of Messrs Lundy and Christie, were all deemed to be good by Mr McKenzie.

He also reviewed documents showing the property’s transfer to Sunward Holdings by Newport Harbour, and the agreement between Paradise Is Mine and Sunward.

Mr McKenzie thus concluded that Sunward, and by extension Paradise Is Mine, had good title/ownership to the land they were purportedly selling to investors.

However, US prosecutor Ron Davidson wrung three critical admissions from Mr McKenzie. They were:

• It was possible for all the title opinions issued by the Bahamian attorneys to be wrong.

• Mr McKenzie also conceded that he relied on only the opinions of the other attorneys, and took a week-and-a-half to perform the investigation - when he would normally “take a few weeks” and possibly a month.

• And Mr McKenzie also admitted that he was unaware of two pieces of evidence, both from 1994, including an FBI interview, where Billy Wayne Davis admitted to “never having” - and paying - $ 1 million to the estate of the late Effie Knowles for land in the Bahamas.

Mr Davis and others have frequently relied on the Effie Knowles estate as their ‘root of title’ to land on Rum Cay.

Mr McKenzie, meanwhile, said he also took into account a 2004 title dispute on Rum Cay, which was handled - and successfully won - by Mr Philip Davis while in private practice, in forming his opinion.

Mr McKenzie, though, appeared anxious at trial not to state Mr Davis’s current position as Deputy Prime Minister of the Bahamas. He said: “My senior partner, who is doing something else for the moment, is no longer with the firm for the time being, but he represented Mr Johnson and those in that case, and so we have that from 2004.”

Mr Toppin, meanwhile, under cross-examination by US federal prosecutors, admitted he recognised Billy Wayne Davis’s signature in connection to Sunward Holdings.

He also said a lawsuit filed against Sunward and Billy Wayne Davis, in relation to their ownership of the land on Rum Cay, was dismissed after the Bahamian Supreme Court refused to give the plaintiff leave to serve the action outside this nation.

Foster and Paradise Is Mine used alleged ‘option agreements’ with a host of celebrities to induce investors to hand over their money.

Among those whose names were used were ex-NFL quarterbacks Joe Montana and Warren Moon, former linebacker Ray Lewis, boxer Roy Jones Jnr, basketball star Clyde Draxler, and Olympic gold medallist Carl Lewis.