Illegal pyramid schemes have had their day in Bermuda, it seems, but an alleged $300 million scheme being run from the Cayman Islands has landed Florida businessman Michael Gause in jail.

The indictment from the US Attorney's office in New York against Mr. Gause alleges that he laundered some $24.5 million through the Cayman companies he controlled, using his Bank account at the Bank of Bermuda in the Cayman Islands.

Barry Shailer, senior vice president, corporate administration, at the Bank of Bermuda said yesterday: "As we announced on 25 October 1999, Bank of Bermuda undertook an internal investigation immediately that we were informed of the charges against one of the Bank's clients. This investigation continues. We continue to co-operate fully with the applicable regulatory and investigative authorities in the US and Cayman and are sharing the results of our investigation with them. There is no suggestion of any wrong doing on the part of the Bank.'' The Cayman Islands government has taken control of two companies suspected of being involved in the alleged scheme.

The C.I. government announced that it had appointed James Cleaver of accountants Ernst & Young to take control of Everest Management Ltd. and Zephyr International Ltd. The two firms manage offshore companies and accounts for overseas investors in the Cayman Islands.

Mr. Cleaver stressed that the companies will continue to operate on a daily basis and have not been placed into receivership. He added that his brief from government is to run the companies and also prepare a report on their involvement, if any, with the "Cash for Title'' pyramid scheme allegedly run by Mr. Gause in 17 states in the United States.

Cayman Islands crown counsel Stephen Hall-Jones said Cayman officials are cooperating fully with the US investigation into Mr. Gause and his overseas companies. He said Zephyr and Everest managed some companies involved in the "Cash For Title'' matter. Everest and Zephyr registered several companies Mr.

Gause allegedly controlled in the Cayman Islands and run. Mr. Gause was arrested on October 15 last year in Fort Lauderdale, Florida and originally claimed he was a Caymanian citizen. He is currently being held without bond in a New York jail awaiting trial on securities fraud, money laundering and conspiracy in connection with the scheme, which allegedly brought in more than $300 million from investors.

Mr. Gause promised high rates of return to investors in a plan to make high-interest loans on car titles. However, authorities have charged that Mr.

Gause diverted the money to two companies and ultimately channeled it back to himself.

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