Internet publication OffshoreAlert is standing behind its report that US prosecutors believe a local company may be holding $1.6 million in proceeds from an international fraud.

First Atlantic Commerce (FAC) was drawn into an international fraud investigation when Canadian fraudster Tim Babuin, and his team of accomplices, used the company's credit card payment system to process millions from sham bond sales to pensioners through Bermuda.

The company discovered Babuin's activities after six weeks and contacted the fraud squad to learn both Canadian and US authorities were investigating Babuin.

But, this month, after OffshoreAlert published a story saying the con-man had agreed to assist the United States Attorney in Los Angeles in recovering $1.6 million in proceeds of the crime from FAC, the local company issued a statement that it was considering legal action against the Internet newsletter for the report which it called "totally inaccurate".

The story was also published in a second Internet newsletter, InsideBermuda, from the same firm.

Responding to an article in Wednesday's The Royal Gazette, citing FAC's position on its report, OffshoreAlert journalist David Marchant said his article was based on a plea agreement between US prosecutors and Babuin and was "entirely accurate". "The plea agreement is exactly that and is not a deposition, as was erroneously reported in The Royal Gazette (on Wednesday)," Mr. Marchant said in a statement to The Royal Gazette.

"It was signed on behalf of US federal prosecutors by Ellyn Marcus Lindsay, assistant United States Attorney, Major Frauds Section.

"This is the document that formed the basis of the article about First Atlantic Commerce that was published in the August 31, 2003 editions of my firm's newsletters, Offshore Alert and InsideBermuda.

"As you can see, our article, the gist of which was that Timothy Babuin has agreed to assist U.S. prosecutors in attempting to recover $1.6 million that those prosecutors believe is being held by First Atlantic Commerce, is entirely accurate.

"Whether Andrea Wilson (CEO of FAC) likes it or not, this is, literally, a matter of fact."

Mr. Marchant also took issue with Ms Wilson's claim (in her statement to The Royal Gazette on the Internet articles) that FAC paid back a Bank of Bermuda loan in full.

"Further information about the financial impact that its involvement with Timothy Babuin had on FAC can be obtained from the Bank of Bermuda's 2002 annual report in which the bank states that FAC `was unable to meet' the $5.7 million in chargebacks from the fraud, prompting the bank to issue FAC with a $4 million overdraft and loans of $1.7 million," Mr. Marchant said.

"According to the bank, it converted the overdraft into an equity stake in FAC, which the bank carried on its books at zero `due to its impairment' and the bank discusses loans and allowances that were `written off'."

Mr. Marchant said Ms Wilson's claim she was given insufficient time to respond to the article was overstated as she was contacted three and a half days before publication and quoted in the story.

"Our article was both fair and accurate and I take strong objection to her baseless and erroneous comments that it was not," he continued.

"In order to help your readers determine whether our article is accurate or not, I have made copies of the plea agreement and the August 31, 2003 edition of OffshoreAlert available free of charge from our website.

"Your readers can download the plea agreement at www.offshorealert.com/babuin.pdf and the newsletter at www.offshorealert.com/OffshoreAlert.pdf."

Ms Wilson is currently off the Island and could not be reached for further comment.

While it was earlier reported that the con-man, Babuin, was sentenced to eight years in prison for his crimes, he has not yet been sentenced in these matters.