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By Trevor Jones
Sometimes, more goes missing than can be believed. Lloyd’s was hit with a spate of coffee related claims from Columbia, where incidentally, they were tearing up coffee plants to put in Cora. One of the folks fronting for this sort of claim was Munther Bilbeisi, a Jordanian whose brother was high in the diplomatic service. Bilbeisi also got up to his neck in BCCI scams, and he eventually reported a burglary at his home with valuable artworks and antiques stolen.
The coffee fraud was worth $4 million, and the staged theft was worth $2 million. Lloyd’s appointed a lawyer to fight and he proved both claims false. Last October, however, Lloyd’s sued the lawyer, James Dougherty, for over billing them for $7.1 million.
Now, just hold on a minute. The claims were for a total of $6 million, and Dougherty charged $7.1 million in fees? Somebody would have noticed, surely, even with Lloyd’s lack of sense. Solet’s go through it slowly.
Lloyd’s hired Dougherty to expose Munther Bilbeisi, a onetime Boca Raton resident and Jordanian businessman who was trying to win millions in claims from Lloyd’s. Dougherty helped defeat Bilbeisi’s attempt to collect millions after falsely reporting to the insurance company that a high-grade shipment of Guatemalan coffee had been switched for a lower grade.
Dougherty also disproved a Bilbeisi claim for a lost Chinese vase and oriental rugs. Bilbeisi, indicted on US tax evasion charges, remains a fugitive and is believed to be outside the United States.
Dougherty claims he has little money these days. His attorney is a public defender paid by taxpayers.
That doesn’t add up to $7.1 million or for any reason to pay it out. So what did he get into?
Dougherty claimed in court that underwriters had agreed to his over billing. He says he uncovered an “illegal Lloyd’s arms agreement” that necessitated travel to Jordan and South America. Talking to the usual “close associates,” we learn all roads seemed to lead to Guatemala and BCCI. We went back to the records at the time.
Bank documents suggest that former Panamanian leader Manuel Noriega apparently had links to a coffee smuggling scheme run through the Bank of Credit and Commerce International.
Noriega’s former vice minister of the treasury, Gerardo Harris, received at least $2.5 million from a coffee smuggler in 1984,according to a 1990 internal report prepared by BCCI’s Miami attorneys.
“These factors suggest the strong possibility that the (BCCI) Panama Agency was used … to control and conceal the disbursements and proceeds and protect them from detection by US law enforcement,” according to the report.
The ousted Panamanian leader was convicted in Miami on ten drug and racketeering charges, accusing him of taking millions of dollars in bribes to protect cocaine smuggling operations.
The charges represent only a small part of the money Noriega made on smuggling through Panama’s free trade zone, said Richard Gregorie, a former federal prosecutor who brought the indictment.
Some investigators believe Noriega’s most lucrative scheme was evading international export quotas in the early 1980s by re-labeling Colombian coffee as that from Panama or other nations.
Smugglers could make three or four times their investment, depending on the volatile price of coffee if public officials cooperated.
The report by the Holland and Knight law firm dealt with BCCI and Munther Bilbeisi, a Jordanian businessman accused of illegal arms dealing and coffee smuggling, who is under indictment in Miami and Guatemala.
Bilbeisi used BCCI to hide payments to Harris, who ran the coffee exporting company Financiera Del Atlantico in Panama’s free trade zone. Very little of the $2.5 million went to the coffee company itself, said the document, released during the US Senate investigation of the bank.
Some of the money went to Deutsch Bank and Union Bank of Switzerland, both of which were used for Noriega’s personal accounts, the report said. Other funds went to Refco Inc., in Miami, which was also used to hide drug funds, according to a later indictment and conviction of two money launderers here.
Harris not only served in the treasury under Noriega, he is reported to be a close associate of Carols Duque, who allegedly ran the free trade zone and collected commissions for Noriega, said the Holland Knight report.
Noriega made Duque President of Panama before he was toppled in the US military invasion in December 1989.
So coffee becomes mixed with cocaine, gunrunning and the biggest bank fraud ever. Now we’re getting near what might have cost $7.1 million in fees.
After a six-week trial, the panel found Dougherty, 57, guilty on all nine counts of an indictment that accused him of over billing Lloyd’s for thousands of hours that were never worked, and for costs that were never authorized.
Worse for Dougherty, US District Judge Daniel T. K. Hurley revoked his bail, ordered him to prison and announced in open court that he would add time to the lawyer’s sentence because he (the lawyer) lied on the witness stand. The judge did not elaborate.
The extraordinary case marked one of the few times nationally that a jury has found a lawyer criminally liable for padding his client’s bill. The underwriters claimed Dougherty over billed them by $1.6 million, and rang up incalculable amounts in excess costs.
“They are very pleased with the verdict, and they believe that truth and justice have prevailed,” said Miami attorney Jon Zeder, who took over for Dougherty in 1992, after Lloyd’s fired Dougherty during an April Fool’s Day confrontation in London.
The claims were long gone in 1992. So what was he doing? From the witness stand, Dougherty testified that the case was so far-ranging that Lloyd’s gave him free rein to spend whatever it took to defeat Bilbeisi, who also dealt in the arms trade, and once owned a lavish Boca Raton estate.
Dougherty did not deny that he over billed his client, but he testified that the over billings were part of an “understanding” he had with Lloyd’s to receive additional cash to fund the cost of his international investigation, which led him to Central America.
But several underwriters returned to Miami from London to rebut that assertion in court.
And Mulvihill urged the jury to reject Dougherty’s defense, calling him a “thief with a pen” whose entire life was “a deception. “Besides the bills, Dougherty also padded his resume, lying about serving in Vietnam and about graduating from Notre Dame’s law school with honors. He was a C student.
Hurley has yet to set a sentencing date, but it is likely that Dougherty faces at least five to seven years in prison under federal sentencing guidelines, not counting the additional time promised by the judge.
It sounds as if he got in over his head, and some of those shadowy government employees who operate in those areas are protecting their masters. Or he just invented the whole thing.
Trevor Jones is the Editor of Insurance Security Services Newsletter (London, England01713748353) and, for lack of a better description, acts as an investigative reporter who concentrates on insurance company shenanigans, especially those of the offshore or surplus lines market variety. Here he speaks of some lawyer shenanigans.
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