• Broker chief says no truth to core SEC claim
• Asserts key February 2012 meeting made up
• New bid to dismiss compliance chief evidence
By NEIL HARTNELL
Tribune Business Editor
nhartnell@tribunemedia.net
A Bahamian whistleblower has this week been accused of “fabricating” evidence critical to a case brought by US federal regulators against a former Nassau-based broker/dealer.
Guy Gentile, principal of Swiss America Securities, which subsequently operated under the names SureTrader and Mintbroker International, is alleging that Philip Dorsett, its ex-chief compliance officer, simply made up a February 2012 meeting that purportedly devised a scheme to evade US securities laws and regulations.
Striking back against the Securities & Exchange Commission’s (SEC) ‘star’ witness, following testimony given by Mr Dorsett on February 27-28, he argued that the Bahamian executive’s testimony had exposed numerous flaws plus instances where he had to correct himself under examination by Mr Gentile’s attorneys.
Tuesday’s legal filings represent the latest bid by Mr Gentile to dismiss Mr Dorsett’s ‘whistleblower’ evidence, which allegedly includes some 15,000 e-mails from his time at Mintbroker, and appears vital to the US capital markets regulator’s allegations that he and Mintbroker violated US securities laws by actively soliciting American clients while failing to register as required as a broker/dealer with the SEC.
Previous attempts have been rejected by the south Florida court, but Mr Dorsett’s deposition has encouraged Mr Gentile to try again and, in so doing, seek dismissal of most of the SEC’s case against him and Mintbroker. The latter has already been placed into a Supreme Court-supervised winding-up in The Bahamas with Igal Wizman and Eleanor Fisher, the EY accountants and partners, appointed as co-liquidators.
“The SEC’s case is founded on the demonstrably false premise that, months after SureTrader commenced operations in November 2011, Gentile and his ex-wife devised a scheme to purposefully evade US regulations at a February 2012 meeting after, according to the SEC, it became clear SureTrader could not survive without US customers,” Mr Gentile and his attorneys alleged.
“The SEC’s standard-bearer is Philip Dorsett, who claimed to have attended the February 2012 meeting and served as chief compliance officer for SureTrader from late 2011 to July 2017 when he was terminated.... Dorsett’s recent deposition made clear that he fabricated the occurrence of the February 2012 meeting - a fabrication that was repeated in a declaration drafted by the SEC that Dorsett signed under penalty of perjury.....
“The allegation of the purported February 2012 meeting is fundamental to the SEC’s theory of the case that Gentile ‘hatched’ a scheme months after the company had begun operations because it was failing.... Throughout his sworn testimony, he described in detail an alleged meeting in February 2012 in The Bahamas that he claimed to have attended with Gentile and Gentile’s ex-wife.
“According to Dorsett, at the alleged February 2012 meeting, Gentile and his ex-wife were worried SureTrader was not attracting enough customers so they devised a plan to solicit US customers and drafted an Unsolicited Acknowledgement Agreement (UAA) for customers to sign in an effort to evade US regulations.... But the February 2012 meeting never happened.”
Attacking Mr Dorsett’s evidence, Mr Gentile and his legal representatives argued that it was impossible for such a meeting to have occurred. They produced an affidavit from his ex-wife, Karen, who alleged: “I was never in the Bahamas at any time period of 2012, and I was never in a meeting with Guy Gentile and Philip Dorsett on or around February 2012 (or at any time) regarding an unsolicited acknowledgement agreement or gave any suggestion or advice” on this.
The unsolicited acknowledgement agreement was purportedly a waiver issued to all US clients of the former Bahamian broker/dealer so that they could confirm it had not actively solicited their business, and therefore no American securities laws or regulations had been broken.
Under examination by Mr Gentile’s attorneys, Mr Dorsett allegedly admitted during his deposition to sending such a waiver to a US client himself in November 2011 - several months before the alleged February 2012 meeting where he, Mr Gentile and the latter’s ex-wife met to purportedly devise a scheme to evade US securities rules.
“It’s an impossibility for it to have taken place,” Mr Gentile told Tribune Business of the alleged meeting. “Within the first three to five accounts the firm opened we had a US customer. The SEC complaint says we only had 100 customers, can’t make money and we’d go out of business unless we have US customers.
“How is that possible if he himself [Mr Dorsett] is sending a UAA to an unsolicited client in November. The third client that showed up on that list was a US person. The entire basis of their complaint is false.” Mintbroker, which was once used by the FBI as ‘bait’ to catch international securities fraudsters, exited The Bahamas at end-2019 amid regulatory actions by the Securities Commission of The Bahamas.
Mr Gentile bought sufficient time to voluntarily wind-up Mintbroker himself and remove all its assets from The Bahamas. Tribune Business previously reported how Philip Davis KC, who was then-Opposition leader, acting on Mr Gentile’s behalf filed a successful Judicial Review challenge that thwarted the Securities Commission’s regulatory efforts for several months. There is no suggestion the now-prime minister did anything wrong.
Meanwhile, Mr Gentile also reiterated previous accusations that Mr Dorsett had breached Bahamian law by providing the SEC with documents even though the US regulator had not gone through the courts in either the US or this nation to obtain them via the normal legal route.
“Since March 2016, Dorsett has worked in concert with - and at the direction of - the SEC to assist it in investigating Gentile. For example, Dorsett—while employed at SureTrader— fielded requests to search for and send particular company documents involving Gentile to the SEC, including at times documents containing sensitive personal information of SureTrader customers,” Mr Gentile and his attorneys alleged.
“Dorsett also created at least one audio recording of SureTrader’s executive team, conveyed that he had done so to the SEC, and offered to make further recordings..... During his time at SureTrader, and following his termination from the company in July 2017, Dorsett retained thousands of SureTrader records (predominantly company e-mails) contrary to company policy, Bahamian law and US law.
“The SEC now claims it sought the production of those documents from Dorsett in or about April 2022, over a year after it filed this lawsuit, even though he had forwarded emails and other documents directly to the SEC starting in 2016 and had made clear that he was willing to provide the SEC with ‘all I can get my hands on’,” they added.
“The SEC sought the documents in question outside of any formal process; it did not issue a subpoena or letter rogatory that would have included written instructions for preserving documents or logging documents withheld from production.”