Research paper exploring the origin, pervasiveness, and propagation of fraudulent activity in the West Indies.

1. Nathan Cooper
Bloodshed: The Maturation of Systemic Fraud in the Caribbean
Florida Atlantic University
ACG66867
Dr. Carl Pacini

2. BLOODSHED: THE MATURATION OF SYSTEMIC FRAUD IN THE CARIBBEAN 1
Abstract
As fraud is normalized in the global market, little is being done to abate it in
countries lacking the regulatory infrastructure of their larger neighbors. In the
Caribbean, specifically, fraud is blatant and provokes only more fraud. Is there any
discouragement to not engage in fraudulent activity if law enforcement does not
effectively penalize it? What is the end of fraud should it perpetuate itself? This paper
concludes that over time in isolation, systemic fraud leads do violence and death.

3. BLOODSHED: THE MATURATION OF SYSTEMIC FRAUD IN THE CARIBBEAN 2
How a Fringe Stole Christmas
Holiday in the Bahamas
The dominos were gavels, and each judge had a say! The wind discreetly clowned
around with the greenery and orchids, as the quiet blue sky played jury. A bag of candy
passed through the hands of one person to another, on a chain you could not avoid
being a link in! The fried grouper you screened yourself, but the coconut pie was
escorted to you! And yes, the sun was abrasive on this outdoor function. But this was
recess from my life; this was Christmas in Bahama Land.
I had spent the past month completing my first semester as a grad student in
South Florida, “while” working two jobs, “while” sitting back-to-back parts of the
Uniform CPA Examination. Needless to say, I was awaiting this time of refreshment in my
beautiful country with the best family in the world! Yet, there was something present,
putrid, vile and disgusting, that made me sick to my stomach with anger and an
abandon to resolve.
The Questionable Transaction
There was talk around town of the government’s latest debacle. For the holiday
season, a bid to decorate one of the most popular areas for tourist and locals alike was
won by Florarama; a business owned by a former member of the reigning political party.
That was not the main controversy. The people’s issue had to do with the quality of the
business’ work and the costs paid by taxpayers to complete it (Smith, 2016).

4. BLOODSHED: THE MATURATION OF SYSTEMIC FRAUD IN THE CARIBBEAN 3
Normally jovial, my family members who already saw these decorations changed
demeanors at the mention of the telecast. They turned their heads and stuck up their
noses in disapproval of what seemed to be another failure of the government. Insults
were hurled at the Prime Minister before they digressed into lighthearted mockery of
the tourist-street destination. Still, I needed to see the project with my own eyes before
taking any of what they said to be factual. Bahamians are skillful at making grandiose
exaggerations.
Public Criticisms
Here is what one local said about the decorations: “these vulgar things are crimes
against good taste [and] humanity”. Other commentary was more crass, “They should
have given that contract to [the Special Needs] School… the end result would have been
10 times better”. Everyone had an opinion on Florarama’s work, “Stop insulting these
majestic trees with foolishness… Jesus is not pleased” (Rolle, 2016).
Personal Concerns
My sister who lived on the island was kind enough to take me to see what the
uproar was about. I reasoned in my mind that the work could not be “that” bad.
However, her kindness left me sorry and sincerely ticked off by it all. The government
justified their decision to give the former politician the job by claiming it was the lowest
bid. This proved factual. However, my angst was driven by the amount of money
involved! The government had material bills outstanding with many hard-working

5. BLOODSHED: THE MATURATION OF SYSTEMIC FRAUD IN THE CARIBBEAN 4
Bahamians, including with my own uncle. The government publicly released the amount
of their payment for Florarama’s services - $334,000 (Smith, 2016).
Figure 1. Job contracted to former politician’s business (Davis, 2016).
Facing Fraud
I did believe my eyes, but I could not believe my gullibility in thinking that the
injustice which plagued my nation as a kid, would have been remedied with time and
development of the country. Perhaps my hope was misplaced since I could not do
anything about it. Now, since I am studying Forensic Accounting and gaining
professional skills I can apply in the field, I see myself one day actually do something
about the financial ill.

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The aim of this paper is to shine the spotlight on systemic fraud in the Caribbean.
I will seek to answer questions such as: “What is systemic fraud? What catalyzed this in
the Caribbean? How pervasive is it now?” and “How far will it go?”.
Fraud Origins
Early Civilization
To discover what fraud in the Caribbean might lead to, we first must understand
and learn where it has been. Accounts of fraudulent activity or at least the prevention of
it can be traced back to the earliest of civilizations like Ancient Egypt. Pharaohs would
have scribes keep records of barters, incoming and outgoing commodities for his
household and kingdom. This means that fraud was a risk since 3000 BC, before money
as we know it was even invented (Carmona & Ezzamel, 2007)!
Modernization
Fraud has certainly come a long way since then. With the propagation of coins
came the propagation of fraud. In the late 1600s, England suffered a monetary crisis
because of the “coin clipping” outbreak. People would shave or clip the silver coins to
roughly half their weight on average (Carey, 2013)! What if your boss paid you your
normal wage and you did not find out that it was only half of what they owed you until
you went to deposit it in the bank? I do not know about you but I would be furious!
However, if everyone was coin clipping, why would a person in their right mind not
conform and coin clip too?

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Capitalism, a Catalyst
This battle between self-interest and public-interest is a struggle that Adam
Smith acknowledges in his discourse on capitalism. Specifically, he admits that power
players like regulators and the government have a track record of making decisions in
isolation with an intent to “deceive and even oppress the public” for their sole benefit. If
the Father of Economics is right in this assessment, this predatory attitude has created a
financial ecosystem where fraud is plainly a means of survival. If fraud was once sparse,
it is now systemic (Henry, 2012).
Fraud’s Pervasion in Paradise
Real Pirates of the Caribbean
Since the days of Henry Morgan, Calico Jack, and Blackbeard, hiding
treasure and/or blood money within the islands never seemed to lost its appeal. As
pirates saw the Caribbean as a safe-haven from their government, many still see the
Caribbean as a safe-haven from taxes. Some persons even utilize the islands’ unique
banking system to “bury” money. This is why the US Department of State recently
blacklisted almost all of the countries in the Caribbean for money laundering (Yagoub,
2017).

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Anne Galvin (2012), an astute anthropologist, performed research that compared
colonial pirates in the Caribbean to the region’s “profiteers”. She said:
Order created by illegal but licit activities including piracy and organized crime
has been used in the colonial and contemporary Caribbean to maintain social
control.
Fraud-Fathers
Galvin does well in describing the “tone at the top” of the Caribbean’s economic
environment. In 1985, the Chief Minister (equivalent to the President) of Turks and
Caicos was arrested on drug-related charges with the Minister of Commerce (Pelligrino).
In 1986 and 1987, the International Monetary Fund’s senior economist charged the
Caribbean country of Trinidad and Tobago with fraud (Weissman, 1990). In 1988, the
Prime Minister (equivalent to President) of the Bahamas was accused of accepting
hundreds of thousands of dollars from drug-traffickers seeking protection in route to
the U.S. (Leusner).
By the Numbers
Unlawful conduct like fraud seems to be a part of the Caribbean’s DNA, as noted
above, even its first political leaders were neck-deep in scandal! To this day, little has
changed. If we view a regions’ first political leaders as fathers, their sons only grew
worse.

9. BLOODSHED: THE MATURATION OF SYSTEMIC FRAUD IN THE CARIBBEAN 8
According to a recent report from Global Financial Integrity, it is estimated that
the Caribbean has had over $162 billion illegally moved through its islands for the
decade ending 2013 (2015)! To put that into perspective, the World Bank reported that
each person earns an average gross domestic product of $9,000 in those same countries
(2014)! How much more income could an islander earn annually if there was less
fraudulent activity?
Recent Trickeries
Fraud can be a stand-alone industry represented in the Caribbean. It is
continually evolving and increasing in measure. Fraudsters seem to congregate in and
target the Caribbean to exploit or “capitalize” on the opportunities offered in among the
archipelagos.
Fake University Degree
For example, take Dr. Benjamin Weisman, a business professor of Mercy College.
He received an honorary doctorate from International University; an institution he
himself founded in the Caribbean. It consisted of no faculty members, yet awarded 11
different graduate degrees (Bartlett & Smallwood, 2004).
Fake Nation Scam
Another example of fraud unique to the Caribbean may be the Principality of
New Utopia, a “tax-free, trouble-free, enlightened and libertarian” country. Never heard
of it? That is most likely because the U.S. Securities and Exchange Commission shut it

10. BLOODSHED: THE MATURATION OF SYSTEMIC FRAUD IN THE CARIBBEAN 9
down before it rose out of the sea. Persons have been so bold to even try and form
fraudulent countries in the Caribbean (Fineman, 2001).
Fake Bank
Perhaps the gravest example of traditional fraud in the Caribbean must do with
Allen Stanford. Compared to Bernie Madoff, Stanford led a Ponzi-scheme based out of
the Caribbean. Stanford was a self-made billionaire who found Stanford International
Bank Limited. Yes, he created his own bank in the Caribbean (Jessop, 2012).
Fraud’s End
Systemic Fraud Matured
Fraud does not only result in economic turmoil, but social tragedies as well.
Oftentimes, fraud breeds other criminal offenses. In fact, I would suggest that fraud
matured is manslaughter; the maturation of fraud is death. Like a little white lie, the
effects of fraud compound over time. What started as one tiny deed incubated in
secrecy, could become a widespread pest which plagues the whole land.
Bahamas
In the capital of the Bahamas, a banker who accused his former business partner
of stealing $20 million from a client was beaten and stabbed on different occasions as
suits and countersuits regarding the fraud were going on. Soon, the banker was
murdered, and to this day no one has been imprisoned for his murder although all signs
point to his former business partner (Marchant, 2013).

11. BLOODSHED: THE MATURATION OF SYSTEMIC FRAUD IN THE CARIBBEAN 10
Around the time of the innocent banker’s assassination, the conviction rate for
murder was a mere 31%. Approximately 7 out of 10 murderers never went to jail. Since
then, the court system has improved and successfully detained 7 out of 10 murderers
placed on trial (Johnson, 2017). Even though the country is doing better with locking up
the guilty, fraud is still married to murder as one of the country’s greatest threats
according to the U.S Overseas Security Advisory Council (2016).
Jamaica
On the island of Jamaica, there are ground wars over proceeds from fraud rings.
The island has one of the highest murder rates in the world, and their Minister of
National Security says that over 50% of the island’s murders are related to the systemic
fraud (Evers, 2015).
One of the nation’s world-famous recording artists, Vybez Kartel, testifies to the
culture of fraud in one of his hit songs. Although he is locked up for murder charges in
the U.S, his lyrics perfectly describe the mindset of casual fraudsters in Jamaica and
perhaps the Caribbean at large.
“Big up every scamma, we make U.S. Dolla… Every ghetto [youth] will live
like Tony Montana… Build up [the] house [for your] mama… [Some] call it
scam, [I] call it reparation” (Chappell, 2017).
As expressed in the quote above, fraud has not emerged onto the scene as a taboo, nor
is it looked down upon. It is encouraged via mainstream media in the Caribbean.

12. BLOODSHED: THE MATURATION OF SYSTEMIC FRAUD IN THE CARIBBEAN 11
Other Examples
Fraud in the Caribbean is “young” compared to its pervasiveness in other regions.
Let us glance at Greece, where fraud has been systemic since the 1800s. “Their banks are
on lockdown, their supermarket shelves are ransacked and pensioners are sobbing in
the street” (Italiano, 2015).
Let us also notice El Salvador, whose former president is currently facing fraud
charges. El Salvadoran women would be forced to marry and their newly-wed husbands
would be killed so the insurance money can be collected and distributed (Pleasance,
2017). Is it any surprise that the nation plagued by such fraud is also ranked number one
as the murder capital in the world?
Conclusion
Although fraud and homicide seem unrelated at first, a closer look reveals that
lies upon lies will over time convert to murder upon murder. Should we observe any
nation, region, or society where fraud prevailed, the outcomes and results are the same
unconditionally. From 17th
century Britain to modern-day Greece, systemic fraud only
begets death. The reality of fraudulent activity and deceit, trickling down to the affected,
may become a rationale to propagate it. Hopefully, the Caribbean responds proactively
and not reactively, lest systemic fraud constricts itself tighter to the culture.

13. BLOODSHED: THE MATURATION OF SYSTEMIC FRAUD IN THE CARIBBEAN 12
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