International fraud squad arrests London lawyers

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The Independent Online
A City magistrate and a London solicitor have been arrested by police investigating a multi-million dollar share fraud and international money laundering conspiracy.

Stuart Creggy, 59, and Andrew Warren, 53, both partners in the City law firm Talbott Creggy, were arrested by officers of the newly created National Crime Squad and taken to Marylebone police station. They were later released on police bail to return on 1 October pending further enquiries.

Mr Creggy has been a magistrate at the North Westminster Petty Sessions for 10 years.

Twelve officers from the National Crime Squad, which was set up in April to investigate serious international and organised crime, raided addresses in the City, St John's Wood and Brighton and removed van loads of documents which are currently being analysed.

The arrests are part of an on-going international investigation into a $17m investment share fraud run from New York but believed to have involved professionals including lawyers and a diplomat, in London, Jersey, Canada and Liberia.

Investigators from the Manhattan District Attorney's office, the New York SEC, the National Crime Squad and the authorities in Jersey have spent the past 10 months probing a group of securities companies. These are alleged to have taken part in an share fraud that cost investors around the world more than $17m (pounds 10.18m). Money from the scam is believed to have found its way into deposit accounts at Barclays International in Jersey and ABN Amro in Switzerland.

Last week New York stock promoter Salvatore Mazzeo pleaded guilty in Manhattan to obtaining more than $17m from investors and faces up to 15 years in jail for attempted enterprise corruption.

Mazzeo and others, as yet unidentified, set up 19 ostensibly off-shore companies and used their off-shore status to buy into small cash-hungry companies on the Nasdaq at a discount under Regulation S of the US SEC regulations. The prosecution claims the 19 companies then ramped the price through a series of cross trades before selling them off to unsuspecting investors around the world who subsequently found the stock was hopelessly over-valued or even worthless.

On paper, say investigators, the 19 companies were registered

in Liberia and the British Virgin Islands and beneficially owned by a diplomat, but investigators claim this was a front and that they were owned by Mazzeo and investors in the US. They believe Mazzeo and his co-conspirators who are believed to include two Canadian lawyers, had bribed the diplomat to sign blank forms and in reality the companies were run via London and Jersey.

The authorities in Jersey also visited premises and are believed to have interviewed a number of people in the financial sector under the island's Investigation of Fraud Law although no one has been arrested or charged.

Manhattan District Attorney Robert Morgenthau said: "In this case the nominal foreign investors were phoney offshore companies created specifically to evade the registration requirements of the securities laws. The actual investors for whom the foreign companies were a front were from Brooklyn and Long Island.

"They were shell companies which were supposedly registered in Liberia but were headquartered in Jersey, and managed from London with the purchasing and selling of stock being done from New York, and the companies being owned by people in New York. They were buying and selling stock in US securities and manipulating prices. The ultimate victims were the people who bought the stock in the companies and found the price collapsed."

It was the first big international operation involving the authorities in New York, Jersey, and the National Crime Squad. Mr Morgenthau said: "We have had tremendous co-operation and we are very pleased at the way things have worked."