allegedly duping accountants into thinking his business had more than $50 million.

Tony Habib, head of Financial Services Insurance, has been charged with fraud by a grand jury in Manhattan, and could face 35 years in jail.

Habib's firm, although registered in Bermuda, had a New York mailing address.

It is claimed he falsified his financial position to obtain audited statements from Bermuda accountants Coopers & Lybrand.

Prosecutors allege Habib used the fraudulent information to underwrite risks and gain money through deception.

He offered coverage, among other things, for commercial automobile liability and restaurant and bar liability.

The US Government seized the company's assets on April 1 this year, along with those of New York-based International Investments Financial Services Ltd, another business operated by Habib.

According to the indictment, Habib allegedly used this company as well to obtain money through deception.

It is claimed Habib and the companies received more than $10 million in this way.

Mr. Roger S. Hayes, US Attorney for the Southern District of New York, claimed Habib and others through a "series of fraudulent misrepresentations'' were able to dupe Financial Services Insurance's auditors.

Insurance brokers, policyholders, and state insurance regulators in California and Illinois were also taken in, alleged Mr. Hayes.

They were convinced the company had a portfolio of more than $50 million in US treasury notes and bonds to support insurance claims.

In fact the firm had no such securities, said Mr. Hayes.

Last night Mr. David Lines, a partner with Coopers & Lybrand, declined to comment.

Mr. Peter Strong, the owner of Independent Management Group Ltd, which manages Financial Services Insurance and is its principal representative, yesterday said he was aware of the indictment.

He said his company had sent a report on Financial Services Insurance to the Registrar of Companies.

As a result, Financial Services Insurance was no longer able to operate without the approval of Finance Minister the Hon. David Saul.