HOUSTON - A man from Scottsdale, Ariz., pleaded guilty on Thursday to conspiracy to launder money, announced U.S. Attorney Kenneth Magidson, Southern District of Texas. The investigation was led by the Internal Revenue Service Criminal Investigations (IRS-CI) with the assistance of U.S. Immigration and Customs Enforcement's (ICE) Homeland Security Investigations (HSI).
Edmund Hugh Benton, 63, of Scottsdale appeared before U.S. District Judge Sim Lake on Oct. 6 and pleaded guilty to conspiring to launder money.
According to court documents, Benton admitted to conspiring to launder the proceeds of a fraud scheme that sold fake liability insurance policies to a "benefit association" operated from Texas called Global Property Owners Association, Inc. (GPOA). The insurance was purchased by apartment complexes, condominium associations, bars, restaurants and a company called Shoreline Cruises, Inc., which operated a 40-foot tour boat called the Ethan Allen on Lake George, N.Y. The tour boat operator discovered its insurance policy was fictitious after the Ethan Allen sank on Oct. 2, 2005 in a tragic accident that claimed the lives of 20 elderly tourists.
Benton obtained liability insurance for GPOA members in 2003 from Heritage Mutual Surety Limited (Heritage), a company in the Caribbean island of St. Vincent. Heritage was controlled by a fugitive in Barbados through another St. Vincent entity called Tri-Continental Exchange, Ltd. Benton admitted knowing that GPOA was not licensed or authorized to sell insurance in Texas, that Heritage did not have the ability to pay claims, that Tri-Continental Exchange Ltd. was subject to cease and desist orders from insurance regulators, and that the fugitive, "Robert Lewis Brown," was not using his real name. Benton also acknowledged receiving proceeds of the fraud in an account he maintained in the Bahamas.
Benton now faces a maximum of 10 years in federal prison without parole to be followed by up to three years of supervised release, a fine of up to $250,000 and an order to pay full restitution to victims.
Judge Lake has set Benton's sentencing for Jan. 19, 2012. Benton has been held in pre-trial custody since March 3, after U.S. Magistrate Judge Nancy Johnson found that he presented a serious risk of flight, having gone to great lengths to hide his whereabouts and use offshore entities and bank accounts.
Five other defendants were charged along with Benton. Christopher Purser pleaded guilty Wednesday to conspiracy to commit wire fraud. Two others are set to begin trial before Judge Lake on Oct. 31, 2011, while the remaining two are pending extradition.
During this four-year investigation, the U.S. government also received extensive and valuable assistance from the governments of St. Kitts and Nevis and also St. Vincent and the Grenadines. Investigators also received valuable assistance from the governments of the Bahamas, Nicaragua, the Philippines and Australia.
Assistant U.S. Attorneys John R. Lewis and Belinda Beek, Southern District of Texas, are prosecuting the case.