Any idea what type of sentence or penalty will result?
Maybe they'll use Martha Stewart's sentence as a base... so for his millions he should get out in what- 15-20 years (using very rough mathematics)?
Busted in the Bahamas
Busted in the Bahamas
Real Estate Tycoon Nailed in Fraudulent Transfer from Bank Linked to Money Laundering
Ron Kelly, real estate tycoon and recipient of hundreds of millions of dollars from UFCW Canada's pension fund, CCWIPP, has been found guilty of receiving a fraudulent transfer of $3 million from a Bahamas-based bank shortly before it collapsed in 2001.
According to a report in the Bahamas Tribune and KYC News, Kelly originally tranferred the $3 mil from bank in Panama to buy a 50% stake in the Americas International Bank in March 2001. In September of that year, he transferred the $3 million back to the Banco Altantico (Panama) to pay down a substantial portion of his overdraft there. A month later, the AIB went under.
A liquidator appointed to oversee the wind up of the Bahamian bank challenged the legality of the transfer on the basis that it gave Kelly, who must have known of the bank's imminent collapse, unlawful preference over other creditors. The liquidator also alleged that some the "AIB's clients appeared to have used the bank as a vehicle to launder funds from fraudulent Ponzi schemes. At least one of these allegedly had ties to the Tampa-based Traficante family, one of the US' leading organized crime gangs".
According to the reports, Kelly denied that he was a Director and shareholder in the business and claimed that the $3 milion was being held in escrow while he waited for regulatory approval of his status as a shareholder and that the money was returned to him when approval was not given. He filed 100 pages of affidavits and exhibits in his defence.
Judge Hugh Small of the Bahamas Supreme Court didn't buy it. "The evidence does not support Mr Kelly's case", he stated.
The Americas International Bank was established in 1994 and was controlled by Gary Christie, brother of current Bahamas Prime Minister Perry Christie. Kelly is reported to have developed a professional relationship with the Gary Christie over a seven-year period in which Kelly invested heavily in Bahamas' businesses such as the British Colonial Hotel and the South Ocean Beach Resort.
The hundreds of millions of dollars Kelly pumped into these businesses came from the UFCW's Canadian Commercial Workers Industry Pension Fund. CCWIPP's investments in these two properties (which the pension fund took over in 2000 due to Kelly's financial difficulties) have been reported at $105 million and $155 million at the end of 2002.
As soon as we know the penalty, we'll be sure to share. 
On a different note, however, every time that I think of Ron Kelly, his scandalous past and his lack of business experience at the time that he first hooked up with the UFCW and CCWIPP I wonder:
What was it about this guy that compelled the UFCW to throw its immense pension resources into his enterprises and to continue to pump money to him even after it became apparent that there was no pay off in it for the members?
Let's assume that the UFCW's intentions were honourable (if not misguided) when it decided to fund his first major venture - the hotel at Keele/Hwy. 401 that is the subject of our Mondo Condo series. Let's assume that the UFCW leaders really believed that they were going to create good union jobs for lots of workers. Why did they decide that Ron Kelly's hotel was a good place to park $15 million (for starters).
Kelly had no previous business experience that would indicate he knew what he was doing in the accommodation industry. As far as we know, he did some consulting work and that was about it. He had few if any financial resources of his own.
Ron Kelly was a convicted (although subsequently pardoned) pedophile with a history of exploiting his relationships with others and using his position to cover his tracks. Reports of his predatory escapades with young boys had been published in the Toronto Sun in 1990 and a whole chapter was dedicated to him in Michael Harris's book Unholy Orders which came out in 1991. But in 1992, the UFCW hooked up with him just the same. Either they knew of his trackrecord and didn't care or didn't bother conducting even the most cursory investigation into the background of a guy to whom they were about to lend a huge amount of their members' pension money.
It's absolutely preposterous that a union and the pension fund that it controls would get into such a position with a guy like this. Of all the options they had in terms of where to invest their members' money, where to create those good union jobs (assuming they really believed that was what they were doing), they chose this sonofabitch? Why? That's a question that's going to be answered sooner or later.
All those trustees, investment advisors, accountants, lawyers and others who have been busy raking it in over the years giving CCWIPP their advice on how and where to invest its funds, had better start thinking of a good answer.
quote:
Let's assume that the UFCW's intentions were honourable (if not misguided) when it decided to fund his first major venture - the hotel at Keele/Hwy. 401 that is the subject of our Mondo Condo series. Let's assume that the UFCW leaders really believed that they were going to create good union jobs for lots of workers. Why did they decide that Ron Kelly's hotel was a good place to park $15 million (for starters).
This possibly explains giveaway #1, what about the others?
Well that's just it. The job creationist spin on these investments just doesn't stand up when you look at where subsequent investments went. Of all the various enterprises in which CCWIPP sunk millions, I doubt you'll find a lot of good union jobs. It's sort of like Ron kept asking them for more and more money and they just kept dishing it out.
I recall some reps speaking proudly that they had a hotel in the Bahamas - like it was their own personal hotel. It's like playing businessmen got them so worked up, they just had to do it more and more and more. The only thing that didn't seem to dawn on them is that real businessmen make money - they don't give it away to other businessmen.
CCWIPP has a ton of dough in Worldheart:
quote:
National Post, July 29, 2004 OTTAWA - WorldHeart Corp. has replaced Rod Bryden as chief executive following a disastrous three months in which plans for fast growth fell apart….
CCWIPP lost a ton of dough in Rod Bryden's Terrace Corporation:
quote:
[9] In paragraph 24 Mr. Bryden addresses the value of the residual/beneficial share interest in the Ottawa Senators Hockey Club Corporation and Palladium Corporation. He states as follows:
24. The residual/beneficial share interest in OSHC Corporation shares and Palladium Corporation shares that Terrace has sold consist of the residual value of these shares that would remain after the payment of the secured interests of Covanta, J.P. Morgan, and Ogden Canada through various pledges and charges that were listed in my Affidavit of January 31st, 2002. In my view, in the view of all of the secured creditors and in the view of Deloitte & Touche LLP who were appointed by Justice Chadwick to advise him whether there is any equity in Terrace's shares in Palladium Corporation or OSHC Corporation, the residual value of these shares is nil….
It looks like AFM Hospitality may bite the dust. CCWIPP has tons-o-dough in this dog too:
quote:
IN THE MATTER OF THE SECURITIES ACT,
R.S.O. 1990, CHAPTER S.5, AS AMENDED (THE "ACT")
AND
IN THE MATTER OF
AFM HOSPITALITY CORPORATION
NOTICE OF TEMPORARY ORDER AND HEARING
(Subsection 127(9))
WHEREAS the Director made an order under paragraph 2 of subsection 127(1) and subsection
127(5) of the Act on the 22nd day of July, 2004 (the 'Temporary Order'), a copy of which is attached, that trading in the securities of
AFM HOSPITALITY CORPORATION (the "Reporting Issuer")
cease for a period of fifteen days from the date of the Temporary Order;
AND WHEREAS the Temporary Order was made because the Reporting Issuer failed to file its
audited annual statements for the year ended December 31, 2003 and interim statements for the three–month period ended March 31, 2004 as required under Ontario securities law (the 'Default');…
CCWIPP has lent Father Ronnie hundreds of millions. Will they ever recover any of it?:
quote:
KYC News, July 24, 2004
The owner of a Hilton hotel in the Bahamas was the recipient of a $3 million fraudulent preference from a Bahamas-based offshore bank shortly before it collapsed, a court has ruled.
Canadian national Ronald Hubert Kelly, a 60-year-old former Catholic priest and convicted pedophile, received the transfer from Americas International Bank on September 4, 2001….( full story available at KYC News http://www.offshorebusiness.com/ )
South Ocean was bought for $18 million by Father Ronnie. CCWIPP dumped close to $60 million into it. Scotia Bank has bundle in but it has first dibs on the property when it goes belly up. CCWIPP only leases the golf course, but they are promising to pump tens of millions more into this $18 million dollar property. Will CCWIPP dump it when the loan hits $100 million (let's not forget that CCWIPP already has close to $200 million into the British Colonial).
quote:
…South Ocean Golf & Beach Resort is closing immediately to undertake a complete renovation programme and elevate the property to its four star plus status.
Although plans have not been finalised, the renovation programme is expected to take up to 15 months and will include the complete restoration and refurbishment of the Resort's ocean front guest rooms; the South Ocean Golf Course, its clubhouse and related facilities; and all food and beverage, guest services and administrative facilities. Costs are still being finalised. …
… "The decision to close the property during the renovation period was very difficult. We regret the direct and immediate impact the closing will have on our staff and their families. However, the restoration programme will solidify the Resort's future by allowing us to establish a unique position in the market." …
All in all, it hasn't been a good week for CCWIPP. (hey we haven't even told you about the Pinestone Resort in Halliburton, now have we? Stay tuned.
The Pinestone Resort is another story. The CCWIPP wound up with this dog a long time ago. It's in deep financial difficulty. Delta Hotels is owed close to $2 million for managing the property. The Ontario and federal governments are owed lots of taxes. The courts ordered a forced sale of the property a while back. And the place is a virtual ghost town. Shoot a cannon through the place and chances are that you won't hit anyone.
The big question is, how is the Pinestone worked into the CCWIPP's financials?
We can hear the screeching tires, now we wait for the crash.
Stay tuned.... 
The Tribune's story was facinating:
quote:
...some AIBC clients appeared to have used the bank as a
vehicle to launder funds from fraudulent Ponzi schemes. At least one of these allegedly had ties to the Tampa-based Traficante family, one of the US' leading organised crime gangs. No accusations have been made against Mr Christie, bank officers, directors or shareholders.
Why on earth would Ron Kelly try to buy an offshore bank? I guess one could also ask why he would be buying anything when he couldn't pay CCWIPP the money owed them?
I found the following :
quote:
THE CANADIAN CONNECTION
In September 1989, it was revealed that Canadian banks have been laundering drug money on an enormous scale. Notorious in this regard is the Bank of Nova Scotia (BNS) which has laundered $100 million in drug money through its Miami and Caribbean branches. The money was sent to the BNS' Bahamas and Cayman Islands branches from Miami and then wired to its New York office where the funds could be withdrawn by the original depositors.
In 1981 and 1983, U.S. authorities subpoenaed records of the Bahamas and Cayman Islands BNS branches in connection with two investigations of drug trafficking. The bank gave up the documents only after being fined $1.8 million for delaying their release. BNS asked no questions about large cash deposits, ignored normal banking practices, and hid its depositor's identities by keeping minimal records. Also, BNS employees in the Caribbean were given thousands of dollars in "tips" by their clients for their "understanding."
Isn't the BNS Ron Kelly's favourite bank? I've heard that it's the bank that holds paper on South Ocean and possibly some on the British Colonial.