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Cayman sanction against Bermuda businessman

A Bermudian businessman who was accused in the United States of a $135 million fraud in 2018 has now been told by authorities in the Cayman Islands that he, and two other directors of his failed company, Alpha Re, are “not fit and proper” to hold any directorship positions of Cayman-licensed companies.

The Cayman Compass reported that the enforcement notice was issued on October 20 by the Cayman Islands Monetary Authority, naming Bermudian Gregory Tolaram, John Drake and Edward Lynch.

The three, as well as Mark Graham and Donald Solow, are also considered not fit and proper to have control or ownership of a licensed entity in Cayman.

Miami-based OffshoreAlert reports that the five businessmen are from Bermuda, the Bahamas, Canada and United States.

CIMA has told liquidators of the insolvent Alpha Re that its insurance licence has been revoked for continued breaches of the Insurance Act.

The breaches were said to include non-payment of licensing fees in 2018 and 2019, failing to maintain solvency margins, not having effective risk-management and governance systems, failing to file annual returns and audited financial statements for 2016 and 2018, and not notifying CIMA of any shareholder or ownership changes.

The Royal Gazette reported three years ago that Utah-based Great Western Insurance Company launched allegations against seven insurers and investment funds in Manhattan federal court.

Mr Tolaram was among those listed as damages were sought “stemming from systematic breaches of fiduciary duty, fraud and other misconduct resulting in losses to Great Western that are in excess of $135 million”.

Alpha Re was formed in Cayman in February 2011 but went into liquidation in January 2018 several weeks after it found itself unable to pay the $127-million arbitration awarded in favour of Great Western.

The defendants were accused of providing false accounting statements to hide “misconduct, breaches of fiduciary duty and fraudulent activity”.

Great Western demanded arbitration against Alpha Re because the reinsurer allegedly failed to pay monthly account bills under a co-insurance agreement.

Mr Tolaram, whom The Royal Gazette reported in 2018 as a 54-year-old father-of-one from Paget, was the managing director of Mercury Group Ltd, Hamilton, providing specialised management and administrative support to its family office and corporate clientele.

Gregory Tolaram