Antigua Cracks Down on High-Tech Crimes

HODGES BAY, Antigua —  He called himself Dragon, and she was Amber--a notoriously irreverent Internet queen.

Yet neighbors insist that they hadn’t a clue what really went on inside the seaside villa that the gregarious U.S. businessman and young British woman had been renting on this not-so-sleepy Caribbean island.

Nor, they say, did they notice when police quietly set up surveillance late last month outside what authorities now say was the source of a Web site featuring everything from pornography to advice on how to launder money and evade U.S. income taxes through Antigua’s offshore industry.

But it was the talk of the town when police raided the house, seized computer equipment and took Dragon and Amber into custody, along with two other foreigners. Within hours, the four had been sent out of Antigua. Dragon was dispatched to the United States, which had requested his extradition on federal tax evasion charges, Antigua Atty. Gen. Errol Cort said.

The July 25 raid was just the latest bold stroke in an assault by Prime Minister Lester Bird’s government on Antigua’s reputation as a tropical sanctuary for high-tech vice, money laundering and sleaze--a reputation that has brought criticism from the U.S. and European governments in recent years.

In a country of 63,000 that is increasingly dependent on offshore banking and legalized Internet gambling, authorities have tightened laws governing the offshore companies and trusts. New laws have created independent enforcement bodies, which require extensive disclosure of hidden beneficiaries and ownership in the offshore sector, which has long thrived here and elsewhere in the Caribbean behind a veil of secrecy.

And Bird’s government has initiated several high-profile investigations, like the Hodges Bay raid, and prosecutions aimed at sending a clear message that high-tech crime is unwelcome in the twin-island nation.

Antigua’s tougher approach to an offshore industry that it has courted for the past decade to diversify its tourism-based economy is driven in part by international pressure.

The former British colony remains under a year-old U.S. Treasury Department advisory that urges caution to Americans considering investing or doing business here and calls on the Antiguan government to better police its offshore industry--recommendations that Cort said Antigua already had adopted.

European organizations have previously issued similar advisories about Antigua, although the nation was not included in one recent European law enforcement list of uncooperative tax havens.

“If there’s one message I want to get out, it’s that Antigua and Barbuda has been taking and will continue to take a tough stance against money launderers and any other persons who attempt to use our islands for illicit purposes,” said Cort, who took office as the nation’s top law enforcer last year.

The Oxford-educated lawyer added that anyone caught trying “will feel the full weight of the law. We will not stop at anything in prosecuting and bringing these people to justice.”

Former Ukrainian Prime Minister Pavlo Lazarenko, he said, is a clear case in point--one that helps illustrate the global money-laundering problem, which international law enforcement officials say hides billions of dollars in illicit profits every year.

For Antigua, the Lazarenko case began late last year, when the offshore Euro Fed Bank reported suspicious activity in its accounts, in compliance with the nation’s new regulations that took effect last year.

Outside auditors were called in, and Cort confirmed that they traced about $80 million of the bank’s $104 million on deposit to Lazarenko, who fled the Ukraine amid an investigation into widespread official corruption during his administration. He was premier from May 1996 to June 1997.

Lazarenko, who has been detained in the Bay Area since trying to enter the U.S. without a proper visa early last year, was recently tried and convicted in absentia in Switzerland on charges that he had moved stolen public funds from the Ukraine through Swiss bank accounts, Cort said. Some of those funds, Cort added, were wired to the Euro Fed Bank accounts here in an apparent attempt to disguise their origin.

When examiners linked the accounts to Lazarenko, who insists that he’s innocent and has applied for political asylum in the U.S., the Antiguan government froze the funds and later put the bank into liquidation. Now Cort’s office is preparing an extradition request for Lazarenko and pursuing a legal battle to win forfeiture of the money.

The case of the Hodges Bay villa was far less complex. Cort, in fact, was the only Antiguan official who would comment publicly on the raid, or on the subsequent departure of the four foreigners whom police detained but did not formally charge.

Dragon and Amber were well known among the large expatriate community here, although few knew their real names.

Police officials declined to disclose their names, although one privately confirmed that Amber had fled Antigua once before--after a newspaper published photos from her “Amber’s Secret Lusts” Web site in December 1998.

The pictures showed her flashing street vendors and even a police officer in the Antiguan capital, St. John’s.

Most here saw last month’s raid, which police called “a search . . . for suspected Internet pornography materials,” as a crackdown on impunity.

In explaining the group’s swift departure, Cort said: “Our information was that they were wanted in at least two other [countries]. We took the decision to facilitate the request of having these individuals sent to those jurisdictions.”

Antigua has sent criminal suspects to the U.S. under the two nations’ extradition treaty. But the Caribbean nation continues to protect half a dozen American businesspeople who are facing U.S. criminal charges in connection with the Internet gaming industry here.

The U.S. Justice Department has charged those Americans with violating the 1961 federal Wire Act through their Internet sports-betting companies, which are licensed and legal here. A tougher and less ambiguous Internet Gambling Prohibition Act failed in a U.S. House vote last month, but U.S. prosecutors won their first and only Wire Act jury conviction in February, after an Antiguan-based Internet bet-site owner voluntarily returned to face charges in New York. He was sentenced last week to 21 months in prison and a $5,000 fine, pending his appeal.

Antigua insists that it cannot extradite the other accused sports-book owners because their alleged offense is not a crime here.

The U.S. prosecutions, combined with the Treasury Department’s continuing advisory, have infuriated many Antiguans, and their government has asserted that both infringe on the nation’s sovereignty and economy.

“If I were to say we’re disappointed [the advisory] has not been lifted, that might well be an understatement of our feelings,” Cort said. “But I think that when the time is right, they [the U.S. government] will do the right thing.”

He added that Antigua is committed to working closely with Washington and with European nations in fighting money laundering and other high-tech crimes.

“These illicit activities are a global phenomenon, and we must work together to solve it,” he said. “We’re working toward one goal. We’re not here to conceal anything or to protect the bad guys.”