Three years after one of the biggest ever white-collar crime busts, the riddle of why a high-profile sting operation took its code-name from Bermuda may have been solved.

Top US Federal government prosecutor in the ?Bermuda Short? operation, Marcos Daniel Jimenez, this week said a favourite pastime for federal agents is to sit around after-hours and come up with clever tags for the undercover assignments they are working on.

?They figured this one was going to (involve) the offshore world,? Mr. Jimenez said at a due diligence conference held in Miami this week, and attended by

?Bermuda Short? seemed a clever fit since a fictitious offshore mutual fund fund ? complete with co-operating defendants posing as the fund?s principals ? was employed in the operation to lure suspected con-artists into an FBI trap parading as an illegal profit-making scam.

Three of the individuals targeted in the massive North American sting ? largely against US and Canadian nationals ? were directors or principals of a now defunct Bermuda firm, who controlled a number of penny stocks.

But the operation?s code name was likely hatched long before the men with Bermuda ties were indicted. ?Bermuda Short? ran for two years before charges were made, Mr. Jimenez said.

Mr. Jimenez, who was the US Attorney for the Southern District of Florida until June and is now in private practice, said the investigation was carefully orchestrated to catch those guilty of trying to either cheat investors or launder drug money.

The US Federal Bureau of Investigation and the Royal Canadian Mounted Police jointly led Operation ?Bermuda Short?.

While no actual investor loss ever occurred as part of the sting operation, the fraudulently attempted securities sales exposed by ?Bermuda Short? totalled more than $200 million.

Mr. Jimenez said US investor watchdog, the Securities and Exchange Commission, was on board for the exercise helping to ensure investors were protected.

The operation resulted in indictments against 58 individuals ? 49 of whom either pleaded or were found guilty of various criminal offences.

Under the false scheme, two co-operating defendants pretended to have control over $800 million in investor funds parked offshore, with which they agreed to buy millions of dollars worth of ?microcap? stock in exchange for illegal kickback payments.

Microcap stocks ? securities in companies with low market capitalisations ? are often traded on the over-the-counter bulletin board.

Investors trading on the OTC can be susceptible to scam artists because the OTC is lightly regulated compared to the broad disclosure requirements put on larger companies listed on major stock markets like the New York Stock Exchange and Nasdaq.

Paul Lemmon, the sole Bermuda-based individual indicted under ?Bermuda Short?, served a reduced prison term in Florida after a plea agreement was hatched with US Department of Justice officials.

A second Bermuda director, Toronto-based former maverick trader Mark Valentine, was put under home detention in Canada for nine months.

Both Lemmon and Valentine are Canadians. Lemmon, who was sentenced to five months in prison, was based on the Island when the indictments were handed down in 2002.

He had worked for Butterfield Asset Management during the 1990s. He is now believed to live in his home province of New Brunswick.

A third Bermuda director involved, California-based Andrew Proctor, also pleaded guilty to some charges but was not required to serve a prison sentence.

Valentine, Lemmon and Proctor were all involved with the Voyager Group of companies, a Bermuda investment firm subsequently wound up by Government officials within the Registrar of Companies office.

The three Bermuda directors stood to make a tidy sum from the illegal stock sale agreements they made under ?Bermuda Short?.

The potential stock sales would have been valued at more than $43 million, in exchange for $12.8 million in undisclosed kickback payments.

While selling stock to a fund isn?t illegal, paying the fund managers an undisclosed ?kickback? for buying the stock is.

?This was a way to get con artists off the street and into prison without a loss to the investing public,? Mr. Jimenez said. And he said agents worked around the clock, and faced certain dangersous situations to bring 80 percent of those indicted to justice.

?In this sting they snared an awful lot of people,? he said.

Operation ?Bermuda Short? ended in home arrest or prison sentences ? jail terms ranged from a few months up to 27 years ? for most of the 58 individuals indicted. Only seven were found not guilty after jury trials. Two remain fugitives of the law.

Mr. Jimenez was the final presenter at the fourth OffshoreAlert Due Diligence Conference held this week in Miami.

The conference is organised by David Marchant, an investigative reporter and publisher of Offshore Alert, which includes Web-based newsletter InsideBermuda.