Rudolph Brown/Chief Photographer
Police escort Cash Plus boss Carlos Hill from his Norbrook residence last Thursday.

Gareth Manning, Sunday Gleaner Reporter

The weeks ahead look gloomy for the nearly 40,000 investors of Cash Plus Limited as it now appears that its embattled head, Carlos Hill, might have lied about the number of assets he claimed the company owned.

The Carlos Hill-led Cash Plus Group of Companies comprises about 12 operations, spreading across distribution, gaming, tele-communications, entertainment, security, development, industrial and financial services.

Though it is not clear at this stage what the total assets of the company are, Assistant Commissioner of Police in charge of the Major Investigations Task Force (MIT), Les Green, has made it clear that the company does not own either the Drax Hall Estate in St Ann or the Hilton Kingston hotel. He said the purchase deals for the properties were not complete and, therefore, they were not owned by the Cash Plus group.

"There are claims made about the ownership of assets that might not be true, and that is all part of the fraudulent activities that we are investigating," ACP Green told journalists on Thursday, after the police raided Hill's home in Norbrook, St Andrew, and arrested him along with his brother, Bertram. The police confiscated documents, computers and five high-end sport-utility vehicles following allegations of fraud by some Cash Plus investors. The company's chief financial officer, Peter Wilson, was also picked up during the raid, which involved nine residential properties across the Corporate Area.

The Cash Plus melodrama raced to a climax in the last two weeks after the company went to court two Mondays ago to seek approval to appoint a receiver-manager to take over its operations and oversee its disbursements to its lenders. The company had announced that disbursements would commence by April 14.

No funds

Roughly a week after his appointment, receiver-manager Kevin Bandoian revealed that Hill informed him that the company could not source the funds to commence disbursements on the announced date and that there was no indication regarding whether the repayments would ever be made.

Cash Plus Limited started in 2002 as a small investment club offering as high as 200 per cent interest on investments that started from a low end of $100,000. Within five years, the company and its investors/lenders grew exponentially to about 12 subsidiaries and close to 40,000 lenders. It inked big purchases as it gobbled up high-end properties around the island.

Last year alone, the company announced several purchases of high-end properties worth several billion dollars. It brokered a purchase deal of $320 million for the Hilton Kingston hotel and Drax Hall Estate for $7 billion, as well as the Mainland International - hardware giants - for $420 million.

But the purchase of what appeared to be non-liquid assets raised questions about the company's ability to sustain the super interest it returned on investments by its clients.

"It was a Ponzi scheme," opines lecturer and former secretary of the Jamaica Banker's Association, Shirley-Ann Eaton. She has been closely watching the investment scheme for about a year and opines that Cash Plus' fate was inevitable.

"Initially, it starts small with a few people you know, then because the returns are good and more and more people get involved, in order to maintain it, you have to have a larger and larger number of people," she comments.

"None of this (the closure) is any surprise to me," she continues. "It was just a matter of when."

Further, Eaton comments, the scheme made itself vulnerable to scrutiny by the authorities because of the vast publicity it had in the last year. The public deals it made to purchase properties, its public battle with the banks, all made it vulnerable to scrutiny from the regulators and the company's eventual demise.

Lessons to be learned

However, there are lessons to be learned, Eaton says, by both the investors and the authorities. She says people must recognise they have a responsibility to find out if the schemes they invest in are bona fide. "It is very simple to do: You pick up your phone and you call the bank of Jamaica or you call the FSC (Financial Services Commission). There is sufficient information out in the public to know who the regulators are ..." she argues.

Regulators, on the other hand, Eaton says, need to be more vigilant in ensuring there are not activities being carried out in the economy that are outside the boundaries of financial legislation. Though she is not saying the regulators have been tardy in this instance, she says there is always room for improvement.

gareth.manning@gleanerjm.com