A local company - which helped bring an international fraudster to justice - has accused an Internet publication of misleadingly suggesting that the company is holding profits from the very crime it helped to halt.

The company is now considering legal action against the publication, Offshore Alert, in relation to the articles.

First Atlantic Commerce (FAC) Ltd. worked for almost two years with US and Canadian authorities to bring con artist Tim Babuin to justice when the company discovered Babuin and associates were using its credit card payment system to process monies from fraudulent bonds sold to unsuspecting seniors.

Almost $22 million was processed though Bermuda from the sales of sham British National Savings Premium Bonds to US pensioners while the scam was operational.

The fraudsters would operate for two months in one location, and then slip out of sight but in Bermuda, FAC cottoned on to the scam in six weeks and contacted the fraud squad, only to learn that both the FBI and authorities in Canada were hot on the trail of the conmen led by 28-year-old Canadian Babuin.

The company then worked with overseas authorities to gather evidence which helped lead to the arrest of Babuin.

But the September edition of Offshore Alert suggested FAC was still holding $1.6 million from the fraud and that Babuin was helping US authorities to recover the monies from Bermuda as part of a plea bargain agreement.

"FAC takes issue with Offshore Alert's story insofar that it insinuates FAC is currently holding onto the illicit proceeds of Babuin's fraudulent scheme and that we are being pursued by US attorneys in relation to these victim funds with the help of a fraudster FAC helped put behind bars," FAC CEO Andrea Wilson said in a statement issued to The Royal Gazette.

In June, Babuin was sentenced to eight years in prison in the United States but had, in a plea bargain attempt to reduce his sentence, given a deposition in the United States claiming that FAC is holding $1.6 million of the $2.6 million outstanding from the scam.

A California electronic payment processing firm in California, EPS, was said to be holding the remaining $1 million.

Babuin's claims in that deposition found their way into Offshore Alert's article but the company said the article was inaccurate and it was given insufficient time to address the claims properly by the publication.

The company hotly denies Babuin's claims and said any monies it held from the crime were used to pay back those defrauded.

In her statement to The Royal Gazette, Ms Wilson said the story was "totally inaccurate".

"FAC vigorously pursued Babuin in order to recover losses FAC sustained as a result of having to fund the enormous amount of chargebacks incurred by Babuin's fraudulent activities. FAC commenced proceedings in the court of Nevis in April 2000 (prior to providing any evidence or assistance to US federal authorities) and successfully recovered $1.6 million dollars from Babuin's companies through Nevis Supreme Court judgments awarded in April 2002.

"We would point out that the court action spanned a period of over two years and it was adjudged by a competent court that FAC was legally entitled to claim on these funds.

"There was no appeal from that decision by Babuin or any of his related entities or the US government.

"Thus FAC legally obtained recovery of those funds through the courts - funds to replace those that FAC had paid out to cardholder victims of Babuin's fraud two years prior."

The statement continued: "FAC not only provided evidence over a period of two years to the US government in relation to this case but was also compelled to refund every consumer victim (of Babuin and his accomplices) who presented a chargeback to the Bank of Bermuda for refund.

"Our total pay-out for consumer chargeback redress through to December 2001 was approximately $5.7 million.

"Initially it was FAC that was left holding the financial responsibility in respect to Babuin's (and accomplices) fraudulent e-commerce activities and we pursued recovery through the courts."

Ms Wilson said the FAC was forced into a debt situation paying back defrauded consumers and had to approach Bank of Bermuda for a line of credit and a debt to equity conversion (which the bank still holds).

"The funds recovered from Babuin in mid 2002 were utilised to pay off the full outstanding debt to the bank," Ms Wilson said.

"Marchant's claim (David Marchant, the Offshore Alert writer) that the Bank of Bermuda had a net loss of $3.2 million as a result of FAC being unable to meet its financial obligations is not misleading.

"The Bank of Bermuda still remains a shareholder in FAC and the line of credit was repaid in full in 2002.

"This was disclosed in the bank's 2002 Annual Report issued earlier this year."

Ms Wilson went on to say that the Offshore Alert story erroneously linked the Bank of Bermuda's debt-to-equity deal with the company to its acquisition by Capital G in December 2002.

She said the Bank of Bermuda remained a shareholder in FAC but the debt to the bank was repaid in full and the later sale to Capital G was a separate matter which occurred two years later.

Ms Wilson concluded: "We do not believe that Offshore Alert's story fully explored the issues or facts which we would have thought it incumbent to do prior to reporting what we consider to be an article damaging to FAC's interests and reputation.

"FAC reiterates that it has done no wrong and has acted professionally and appropriately throughout this long ordeal.

"FAC has instructed its lawyers to review the articles reported by Offshore Alert and Inside Bermuda and consider the contents of the article to determine what redress FAC has against Offshore Alert in relation to the publication of these features."

Mr. Marchant could not be reached for comment last night.