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Cayman Islands Court of Appeal upholds Restraint Order granted at the request of the US Department of Justice

In Kelvin Leach & Ors v DPP, the Cayman Islands Court of Appeal dismissed an appeal against the decision of Justice Quin not to discharge an ex parte restraint order, freezing accounts connected to alleged US securities fraud. The restraint order was made following a request for mutual assistance by the USDOJ. 

The appellants were indicted in New York for conspiracy to commit securities fraud, to defraud the US, and to launder the financial proceeds of their crime.  It was alleged that accounts of Pinnacle, a financial services firm registered in the Cayman Islands, had been used to break up the transfer of illegal funds. 

The Cayman Islands FCU obtained a domestic restraint order over bank accounts in October 2014.  Four days before the restraint order expired, the USDOJ requested assistance and accordingly the Cayman Islands investigation did not continue. The Crown instead applied for an ex parte restraint order pursuant to the external request, relying on the content of the US indictment and affidavit of the Assistant District Attorney.

The appellants argued the statutory conditions were not satisfied because (i) there was no extant investigation at the time the ex parte restraint order was made, and (ii) the content of the US indictment and affidavit were inadmissible as hearsay – there were no statements from underlying officers, and no disclosure of underlying records.  The Court of Appeal rejected both arguments noting:

(a) Where an investigation has taken place in the Cayman Islands with a view to obtaining a domestic restraint order, there is no reason to deprive that investigation of effect once it has achieved what is regarded as necessary on a domestic basis. That investigation may be deployed for the purposes of the external request for mutual assistance.

(b) The legislation provided that statements in a document duly authenticated, setting out evidence given in proceedings in a foreign court, are admissible as evidence of the facts therein.

The appellants also argued there had been material non-disclosure by the Crown. The letter of request was only shown to the appellants during the initial hearing, and two relevant decisions were not drawn to the attention of the Judge. The Court of Appeal agreed that the failures were serious but not so significant as to mean the order should be discharged.

Cayman Islands Court of Appeal upholds Restraint Order granted at the request of the US Department of Justice

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