The St. Kitts and Nevis government has revoked the passports granted to two people who secured citizenship under the Citizenship by Investment (CBI) programme, after it was alleged that the money they used to obtain the documents came from misappropriation of investor funds.
In a statement issued yesterday, the government said the revocation of the citizenship given to attorney and investor David Kaplan and his wife, Lisa, “reiterated its commitment to the highest level of due diligence and transparency” in the CBI programme.
The US Securities and Exchange Commission (SEC) has filed fraud charges and obtained an asset freeze against Kaplan and three entities that he controls, based on an allegedly fraudulent scheme that raised US$15.8 million from 26 investors in eight states.
According to the SEC complaint which was unsealed last week, Kaplan repeatedly lied to prospective investors by stating that their funds would be invested in a low-risk, private off-shore trading program that would be provide estimated monthly profits of 10 percent. The complaint alleges that Kaplan did not use investor funds as promised but instead used at least US$2.3 million for his personal benefit, including US$79,394 which he wired to a St. Kitts law firm to obtain St. Kitts and Nevis citizenship for him and his wife.
“Based on the filing by the U.S. Security Exchange Commission…the Government of St. Kitts and Nevis has decided to revoke the passports with immediate effect,” the Timothy Harris administration said in its statement.
It added that the Kaplans’ application was processed after appropriate due diligence checks by a highly reputable, internationally renowned due diligence service provider found no evidence of impropriety or illegal activity.
The SEC complaint also revealed that Kaplan sent US$1.1 million to his wife, Lisa Kaplan, a purported charitable foundation, and a corporation that Kaplan controlled; invested at least US$360,000 in an investment programmed offered by WMA Enterprises LLC, an allegedly fraudulent scheme at the center of a federal criminal indictment in the US state of Ohio; and made approximately US$1.8 million in Ponzi-like payments to other investors.
In addition to the freeze order against Kaplan, the court issued an asset freeze against his wife, the Water-Walking Foundation Inc., and Manna Investments LLC, which are alleged to have received investor funds to which the SEC said they have no legitimate claim.