The fraud fighters (Part 1)

It could be an accountant's office, perhaps a swish law firm: the discreet security cameras; the slightly faded brickwork, the solid oak door. It could even be the headquarters of one of the smaller semi-state agencies. The outside of the Georgian building on St Stephen's Green offers little evidence of its real purpose as the operations centre for a worldwide fraud investigations unit.

Four men sit around the dark, mahogany table, all but one with their shirt sleeves rolled up. This latter figure sits at the head of the group, a precisely turned out man, clasping his neatly-trimmed fingers, temple-like, in front of him. Martin Kenney is not an easy man to read, even when he is lecturing on his favourite subject: global fraud. He utters a somewhat odd, puffy laugh at the end of his sentences and peppers his conversation with Latin and legal phraseology. Yet speak with him for more than a few minutes, and it becomes quite clear that he is a driven individual. His colleagues describe him as a "straight shooter".

As one of the world's few truly global (multi-jurisdictional) lawyers, Canadian-born Kenney (39) hunts down economic criminals. To his mind, the offshore world is being abused on a massive scale by these money launderers and white-collar criminals, people who have ripped off not just banks and corporations, but millions of ordinary citizens - even countries in some cases. These fraudsters are Kenney's prey.

In 1996, there was an estimated $6 thousand billion held in offshore accounts around the world. Latest speculation puts this figure at $8 trillion now. "Why, what's it doing there?" asks Kenney. "Is the banking talent better in the Cayman Islands than London or New York? You pay a premium to go to these secret havens; you pay people to handle your money and you get less interest. So the question is: why?"

Kenney's company, Interclaim, and its small team of 18 investigators, lawyers and accountants travel where few governments can go. Tackling what they see as a multi-headed "hydra", they find and seize concealed criminal wealth on behalf of otherwise powerless victims. As such, Kenney is probably the world's first global "fraud buster".

When you read of corrupt dictators siphoning millions into Swiss bank accounts, the chances are that Kenney's men could one day be on their trail.

The company was born three years ago, following a New York dinner meeting between Kenney and Irving Cohen (36), a sharp, direct Manhattan lawyer who became the company's first investor. They decided to locate in Dublin, partly due to favourable tax breaks; location (being near the City of London and many of the offshore banking jurisdictions in Europe); and also the availability of high-quality, young lawyers such as Orla McCoy, who calls Interclaim "extremely dynamic and challenging".

Kenney comes from an old-school Canadian family. His grandfather was a renowned bandleader and his brother Jason one of the country's youngest politicians. By his early 30s, the former champion ice hockey player - now part of a consortium planning to build a new ice-hockey and sports entertainment arena in Dublin - was already a high-flying partner in an international litigation firm, and one of the world's few specialists in multi-jurisdictional law.

Yet it was the failure of traditional law enforcement agencies in tackling major economic criminals that really ate at Kenney and led to the idea for Interclaim. Only 17 per cent of institutional crime victims were taking civil proceedings to reclaim their money, according to a study by accountancy firm KPMG in 1994.

"Seventeen per cent!" Kenney repeats twice, hands planted on the desk of his spacious office. He utters his short laugh. "You know, in most normal communities, if a bank robbery takes place and someone has taken a gun and shot a teller, stolen money and run off down the street - people will help," he says. But in offshore banking, he says, it can be illegal to even ask questions about potential fraudsters, due to harsh bank secrecy laws. Also, Cohen interrupts, economic criminals "tend to flit around the world in their own private jets, living in hotel suites", making it difficult and expensive for traditional law enforcement agencies to track them down. Financial restitution to victims is not high on the list of priorities, either. Yet with up to $8 trillion - including the proceeds of economic crime and drug money - travelling through this highly secretive world every year, the problem has clearly been getting worse. "There's a huge portion of the world's legitimate economy owned by criminals," says Kenney. "And it's very hard to distinguish between the legitimate economy and that which is not, because they have blended," he says.

One of Kenney's senior investigators, a former Scotland Yard detective called Richard Marston speaks of the situation facing their team.

"The danger is in the power of the money these people are able to accumulate - and then the purpose to which they may be able to apply that. The key to this is secrecy. If you allow people to have secret assets, then you as a responsible government can never know what these people are doing with this money. They may be purchasing an atom bomb from one of the former Soviet states, who will sell them to the highest bidder. Or they may seek to destabilise your currency. You just don't know."

What Kenney decided to do, therefore, was quite different to what had gone before. Funded by a variety of private investors, Interclaim would work on a different premise to police and other agencies; it would hit the fraudsters where it hurt, in their pockets. The company begins a case by buying up "claims" - usually massive, unsolved frauds - from defrauded parties for a fraction of their real value. Or it enters a partnership with victims of economic crime, with whom it then splits the proceeds of successfully recovered funds (usually 50/50).

First, it makes extensive use of secret court orders to obtain documents or enter premises, just like a law enforcement agency. Coupled with this are months of painstaking surveillance and undercover operations, to monitor and build intelligence about the target. Specialist accountants are brought in to trace document trails and build a model of how a crime was committed. Then a variety of lawyers and other specialists, such as handwriting analysts and IT specialists, are drafted in to help the case. When the case is built, Interclaim tracks down the fraudster's wealth and then freezes his or her assets, right across the globe, at exactly the same time. This innovative use of civil law usually catches the fraudster completely off guard. They could even be forced into bankruptcy as a result. Kenney aims for a success rate of one in three cases (one successful case easily pays for the costs of the other two) in an area where the best is usually one in 10.

The model has been so successful that agents working at the FBI have referred one of North America's most complex fraud cases to the company. This latest, and perhaps largest, case is discussed at one of the company's secret meetings, held in coded language. As we file into Kenney's airy offices, with their grand view over St Stephen's Green, Cohen insists that I leave my tape recorder switched off. The mood is serious, business-like.

"We've got another victim on Blair Down," Kenney says in his high, nasal tones. Eyes look up from the table. This is a complex battle involving close to a million victims. The company has already sunk several million dollars into a series of legal clashes with the criminal, seizing some of Canada's most prominent pieces of real estate in the process (which it alleges have been purchased with victims' money). Months of painstaking surveillance and undercover work, as well as secret legal proceedings, have been invested in the case.

The target is James Blair Down, a onetime real estate agent and convicted felon, who up to 1998 ran illegal telemarketing scams into the US from Canada. He promised his victims fantastic odds and winnings if they invested in his foreign lottery resale schemes - "investing" their money into a so-called pool of foreign lotteries - only disappeared with their money instead, an estimated $240 million. This was then laundered via a complex series of offshore constructs into assets around the world, out of the reach of police and the US civil courts.

Down's staff of 500 telemarketers operated from high pressure "boiler rooms", targeting and befriending vulnerable, elderly Americans, many of whom came to regard the callers as their friends (even though the sales staff often used crude pseudonyms such as "Michael Jackson" or "George Michael").