Finance Minister Paula Cox yesterday said the successful conclusion to the case demonstrated the island's readiness to tackle fraud.

Bermuda Police Service fraud unit investigators spent months working with the office of the US Attorney in Atlanta, Georgia, along with Federal Bureau of Investigation agents, to trace the cash accumulated by the Professional Liability Insurance Company Ltd. (PLIC).

The fictitious firm, which falsely claimed to be based in Bermuda and St. Vincent and the Grenadines, sold malpractice coverage to physicians across much of the US, but failed to pay out on claims. The company, which did not register here with the Registrar of Companies, appeared on the Bermuda Monetary Authority's warning list ? to alert the public that it was not a bona fide business. PLIC's address in Bermuda was 48 Par-la-Ville Road, the home of Mailboxes Unlimited. The company had no office here, only a post box.

The US Department of Justice has now confirmed that one of the principals of the scam, William Ledee, has pleaded guilty to fraud and money-laundering charges before a US district court.

Ledee, who has a former conviction involving dishonesty, also pleaded guilty to unlawfully engaging in the business of insurance.

He now faces a maximum of seven-and-a-half years in jail after making a plea agreement with authorities. He also handed over more than $10 million in cash and property he acquired as a result of the scam.

Yesterday, Ms Cox said she was pleased that the investigation had been brought to a successful conclusion ? but warned that financial authorities had to remain vigilant in order to protect Bermuda's business reputation.

"We must applaud the efforts of the offices and personnel of the Bermuda Police Service, the Bermuda Monetary Authority, the Ministry of Finance and the Attorney General's Chambers for all their work in protecting Bermuda's reputation as a leading financial jurisdiction of the highest calibre and integrity," Ms Cox said.

"Licensed entities and their service providers need to undertake a thorough analysis of the actual and potential risks to which they are exposed, and organise themselves to tackle them effectively."

Attorney General Larry Mussenden also praised local authorities, pointing out that the detection and prevention of such fraud schemes required a sophisticated degree of multi-party and global co-operation.