By Al Lewis — A DOW JONES NEWSWIRES COLUMN
A Swiss bank with a drop box in the Cayman Islands makes a fortune by illegally handling financial transactions for Iran.
In doing so, it helps an “Axis of Evil” nation skirt international sanctions for its nuclear ambitions.
The bank then puts its ill-gotten gains from this scheme into the U.S. real-estate bubble, knowing full well what is about to happen next.
It lends the money to wealthy American resort developers, who are too stupid and too greedy to realize they are over-financing their properties and will face bankruptcy when the entire U.S. economy is wiped out in a wave of lending fraud.
The Swiss bank with the Cayman address just wants to ruin these developers so it can foreclose on all their hotels, restaurants, shopping malls, condo complexes, private clubs, swimming pools, ski runs, golf courses and casinos.
It’s an international “loan-to-own” scheme. And, no, I am not trying to top the last Tom Clancy novel.
I read it in a $24 billion, federal lawsuit filed in Idaho this week against Credit Suisse (CS) and the U.S. company that allegedly helped it inflate appraisals for the alleged frauds, Cushman & Wakefield.
Both companies deny these mind-boggling allegations, but haven’t said much else. In fairness, I imagine it will take a long time to address this twisted tale of international intrigue and bloated financing, line by line.
But here’s what can’t be denied: Credit Suisse recently agreed to pay a $536 million fine and acknowledged that it violated U.S. sanctions by secretly doing deals with Iran.
It reportedly handled transactions for Iran’s Atomic Energy and Aerospace Industries organizations, which are on the U.S. list of weapons-of-mass-destruction peddlers.
The lawsuit calls the Iranian case and the ill-fated resort deals “reciprocally unlawful schemes,” each maintaining the financing of the others.
It calls Credit Suisse “an international banking predator,” and accuses it of everything from mail fraud to money laundering and racketeering.
One of my favorite allegations says Credit Suisse’s resort lending programs must be illegal because the global banking giant ran them through a Cayman Islands drop box.
“By doing so, Credit Suisse, like most entities who set out to engage in unlawful conduct, effectively admitted the unlawfulness of its schemes,” the lawsuit reads.
Now this is enjoyable spy-novel plotting: There is no legitimate reason to bank in the Caymans, so the FBI should find everyone using a Cayman address and ship them to what is left of Gitmo.
The lawsuit seeks class-action status to represent more than 3,000 people who invested in vacation homes in Lake Las Vegas in Nevada, Tamarack in Idaho, Yellowstone Club in Montana and Ginn Sur Mer in the Grand Bahamas.
The New York Times reports that owners in the Yellowstone Club include Microsoft Corp.’s (MSFT) Bill Gates and former U.S. vice president Dan Quayle.
When the working man claims he was victimized by predatory lenders, he is often the butt of jokes. But don’t laugh at the potential litigants in this case because they are in the multimillionaires’ club and can afford the lawyers.
The lawsuit isn’t really about them, though, judging by the amount of text it devotes to the alleged frauds against the resorts’ developers. This strikes me as odd, since the developers aren’t suing. They have merely assigned their claims to the suing class.
The lawsuit would have us believe that these hapless resort developers were lulled into assigning to Credit Suisse the obviously conflicting roles of both lender and financial adviser. Once this happened, they were practically forced at gunpoint to take out loans and put the money directly into their own pockets.
At Las Vegas Lakes, for instance, developer Ron Boeddeker along with backers that included the fabulous Bass family cashed out much of their equity, the lawsuit states.
“The development owners were advised, encouraged, requested and instructed by Credit Suisse to take out personally very significant sums of money,” the lawsuit reads, “leaving their developments burdened with excessive and unsustainable debt.”
Sounds like a sob story I once heard about some greedy little homeowners who took out second mortgages to buy new SUVs and flat-screen TVs.
If I were writing a spy novel, this story would have to end in blinding flashes. Nuclear suitcase bombs at posh resorts–all Gucci, of course, so as not to be suspected.
Ultimately they would be traced to Iran, but, ironically, the financing would have come from some of the very people who lost their lives in those flashes.
There would have to be some trite moral lesson to it, like, greed kills. Or, the idolatry of money is the root of all evil. Or maybe just, what the heck is the matter with you all you posh-resort people? Can’t you just stay at a Holiday Inn Express?
This, however, is not a novel. It is a column about things that truly happen. So I’ll just end on a relatively happier note by pointing out that none of these resorts will require a Gucci bomb to turn them into disasters.
