Five people who never got much past a high school education somehow managed to pass themselves off as sophisticated financial experts and defraud thousands of investors out of more than US$170 million through an offshore bank in Grenada.

Four of them are now heading to federal prison after they promised interest rates as high as 300 per cent through their First International Bank of Grenada, claiming that deposits were safe and sound, backed by the international equivalent of the Federal Deposit Insurance Corporation.

Con game called a Ponzi scheme

In reality, federal prosecutors said, it was a classic con game called a Ponzi scheme - taking money from investors to keep luring more investors into the scheme without ever paying them back - all based on a stack of phony documents.

It left a trail of ruined retirements and even personal bankruptcies.

"Unwitting investors put their life savings and retirement funds into a scheme that was doomed to collapse, rather than into the safe and profitable investment they thought they were getting," federal prosecutors said in a sentencing memorandum.

Douglas Ferguson, Laurent Barnabe, Robert Skirving and Rita Regale all were officers of the First International Bank of Grenada, founded by former Portland mortgage banker and minister Gilbert Ziegler, who died in 2005 while awaiting trial.

The four remaining defendants all apologised to their victims during their sentencing on Monday in the United States District Court, after hearing some of those victims talk about the financial misery they have suffered since the phony bank collapsed in August 2000.

Us citizens affected

Investors were scattered around the world, but most of the roughly 4,000 were U.S. citizens, many of modest means hoping to boost their retirement income.

"Someone who steals people's hard-earned money for retirement should not be allowed out on the street again," said Albert Ashwell, of Raymore, Missouri, who lost US$60,000 in the scheme and blames it for causing so much stress for his wife that she had to seek counseling.

"I hope they rot in hell," said Bob Stone of Portland, who said he was 86 and lost US$60,000.

Although the admitted mastermind of the scam, Ziegler, is dead, U.S. District Judge Garr King said the remaining four shared responsibility for what was "clearly a scheme from the beginning to separate these individuals from their money."

The scheme centred around the First International Bank of Grenada, but also operated a series of banks that included Fidelity International Bank and 13 subsidiary banks from 1996 to 2000, according to court documents.

Prosecutors noted in their memo that the so-called International Depositors Insurance Corp. that was supposed to protect the deposits "was even more of an empty shell" than the bank. "For most of the conspiracy, it was little more than a fax machine in the back room of a law office in the impoverished Caribbean nation of Dominica," the memo said.

The investigation stretched over three continents and eight years, and involved expensive cars, a yacht, a multimillion-dollar home in Las Vegas, a walled estate in Uganda where Brink and Ferguson were arrested as fugitives in May 2004, and claims of a four-pound (1.8 kilogramme) ruby.

The bank began with a phony claim by Ziegler, also known as "Van Brink", that its assets were backed by a 10,000-carat ruby appraised at US$20 million. But it was actually owned by a California man "who had never heard of the bank or Van Brink," prosecutors said.

The bank's assets included financial instruments - documents - "purporting to be from legitimate financial institutions such as the Bank of China, Union Bank of Switzerland, and Dai-Ichi Kangyo Bank worth more than US$10 billion."

Counterfeit instruments

But, "without exception, those instruments were counterfeit," prosecutors said, adding that "many were laughable" while the remaining assets "were nothing more than pieces of paper traded among like-minded con men."

Now, after three years in court, most of the US$170 million invested in First International Bank of Grenada is gone.

About a third went back to investors as phony interest payments, some went to expenses - such as US$30,000 charter jet trips for Regale. Some was lost when the defendants were, in turn, scammed by other con men, but "much of it was simply squandered," said Assistant U.S. Attorney Kent Robinson, who prosecuted the case with Assistant U.S. Attorney Claire Fay.

Skirving was ordered to pay more than US$32 million in restitution, while Ferguson, Barnabe and Regale must repay more than US$26 million.

It appeared doubtful that investors would see much more of their money, with Ferguson living on his monthly Social Security payments, and Regale working in a grocery store while she awaited sentencing.

She was given the lightest sentence after King rejected the government recommendation of nearly four years, ordering her to serve 18 months, citing her cooperation with prosecutors.

Skirving, 59, of Portland, was given the toughest sentence, eight years, while Ferguson, 74, of Portland, must serve nearly 4.5 years.

Barnabe, 68, a Canadian citizen who lives in suburban Lake Oswego, was sentenced to six years and ordered to forfeit his interest in money held in a foreign bank account.

- AP