KYC News, December 31, 2004

A British firm previously exposed by OffshoreAlert for fraudulently seeking to profit from the 9/11 terrorist attacks is now involved in a controversy involving the United States Department of Homeland Security.

Global Objectives Ltd., doing business as World-Check, launched a public relations campaign in December claiming that U. S. Immigration and Customs Enforcement, which is Homeland Security's largest investigative arm, is actively using its know your customer database to ferret out financial criminals.

Not so, according to ICE, which issued a statement on December 28 denying the claim. "ICE has never used this product in any criminal or civil investigation," nor has it any plans to, stated the release. In a separate interview with New York-based freelance journalist Lucy Komisar, ICE spokesman Dean Boyd stated: "We have not entered into a contract nor are we using World-Check," adding: "It has not been installed on any computer here."

Claims that ICE was using World-Check first appeared in a New York Times article on December 12, followed by a World-Check press release the next day and, a day later, a story in American Banker magazine.

After interviewing World-Check's principal, David Leppan, The Times reported that ICE had "begun experimenting" with the database, while American Banker went so far as to claim that ICE had "hired" and "contracted" with the firm. World-Check itself claimed in a press release headlined "World-Check Provides Assistance to Department of Homeland Security in Fight Against Terrorist Financing, Money Laundering" that ICE "is using the World-Check system on a trial basis to help sort existing federal banking and immigration-related data to detect potential terrorist and criminal activities" its system and created the impression that it was being "fully implemented" by the agency. "DHS's World-Check screening process is running through the advanced name-filtering technology of a World-Check integrated software partner, Safe Banking Systems," stated the release.

So much interest was generated by World-Check's claims that ICE considered it necessary to issue a statement. "ICE routinely tests products that are provided to it on a trial basis" and, in this regard, "ICE conducted a one-time test of World-Check in August, 2004", stated the agency. However, "ICE has not used this World-Check product in any capacity since the test demonstration".

ICE spokesman Dean Boyd went into further detail in an interview with journalist Lucy Komisar about the New York Times article. Boyd denied that the agency was actively "experimenting" with World-Check, as The Times article suggested, adding: "I'm shocked and very upset with the New York Times. … I felt the story grossly misrepresented our position."

World-Check, however, was not backing down when contacted by OffshoreAlert. In an email, a representative of the firm who did not identify himself/herself stated: "World-Check stands by its press release, which is accurate and was approved by DHS. We are unaware of the DHS spokesman's comments that you claim, but will contact him to discuss any discrepancies. World-Check neither lies nor misleads journalists, its clients or the public.

"World-Check has nothing to lie about and nothing to conceal no matter how much you attempt, in your publication, to disparage our good name in hopes of financially benefiting." In the past, Leppan has claimed that OffshoreAlert is only exposing his firm because the newsletter's publisher, David Marchant, is also a director and shareholder of a competitor, Florida-registered World Compliance Inc.

Leppan, a 31-year-old, South African national, incorporated World-Check as Global Objectives Ltd. in England and Wales on October 30, 2000 after leaving financial products firm Thomson, for whom he sold bank compliance products.

World-Check offers clients profiles of what it claims are "known heightened-risk individuals and businesses" to help them screen existing and prospective clients. The firm claims to provide services to "more than 800 institutions, including many regulatory and government agencies in over 110 countries" and OffshoreAlert believes its clients include ING, Deutsche Bank, Credit Suisse, Royal Bank of Canada, and HSBC.

World-Check was unprofitable before 9/11, reporting a loss of £89,376 on gross revenue of £199,407 for the 17 months ended March 31, 2002, but its business took off afterwards, helped by the passage of the USA PATRIOT Act, reporting a profit of £245,189 (US$473,000) on total revenue of £1,974,221 (US$3.8 million) for the 12 months ended March 31, 2004.

World-Check's growth was partly fueled by widespread media coverage in 2002 of a fantastic claim that it had profiles of 15 of the 19 9/11 hijackers in its database BEFORE the attacks, which some journalists then used to ridicule the U. S. Government. In reality, however, World-Check had simply entered the names of the hijackers into its database AFTER they were publicly-released by the FBI on September 14, 2001 and only pretended to have them first as part of a fraudulent marketing scheme.

After OffshoreAlert asked him to prove the claim, Leppan first said he had been misquoted by an Associated Press journalist, then did a U-turn and declared in an email that the statement was true, before reverting back to the 'misquote' excuse, notwithstanding the fact that World-Check repeated the claim in promotional material. Leppan claimed the journalist was confused because World-Check had profiles of 15 of the 22 people on the U. S. Government's list of 'Most Wanted' terrorists, which he said was launched with 19 names on it—the same number as the hijackers—with three more added later. However, the U. S. Government has confirmed that its list of 'Most Wanted' terrorists has only ever contained 22 names – for people wanted for terrorist attacks that occurred before 9/11 – and research showed that World-Check did not even have profiles of 15 of those before September 11, as it claimed, even though they had been criminally indicted months and, in some cases, years before.

Meanwhile, Leppan blamed another misquote for a false claim in an article in Finance Asia magazine on February 6, 2002 that World-Check had a minimum of 100 profiles for each of the 236 countries that it covered, even though research by OffshoreAlert showed its database had fewer than 100 profiles for 51 per cent of its covered countries.

The company was at it again in July, 2003 when a prospective client, Anguilla's Financial Services Department, asked it about an OffshoreAlert exposé of World-Check that was published on November 30, 2002. Daniel Komer, one of World-Check's Texas-based salesmen, falsely claimed in an email to the prospective client that OffshoreAlert had "modified" its story after World-Check had "addressed" the issues.

Research by OffshoreAlert also showed that several World-Check profiles—such as members of the Cayman Islands Chamber of Commerce— did not appear to constitute "high risk", as the firm describes those in its database, and found inaccuracies in its data. Interestingly, the sole World-Check profile highlighted in the New York Times article contained a mistake. World-Check's "high-risk list includes both Viktor Bout, a well-known international arms trafficker, and his older brother, Serge," reported The Times. "But the United States Office of Foreign Assets Control, which administers financial sanctions against banned foreign individuals and entities, does not include Serge Bout on its list." However, Viktor Bout does not have a brother called Serge, although he does have one named Serguei.

Despite a history of making false claims to boost business, World-Check has found no shortage of business partners among companies claiming to be experts in detecting such activity, even in cities that were the targets of the 9/11 attacks. For example, Marsh & McLennan-owned Kroll Inc., which has a mutual referral relationship with World-Check, is headquartered in New York, while PR firm DBC Public Relations Experts is located in Washington D. C.

Kroll charges clients hundreds of dollars per hour to help them detect fraud and, in an article published by The Miami Herald on April 21, 2003, Kroll claimed it was so adept at protecting clients from financial crime that "banks in Latin America now talk of the need to ''Krollicize'' themselves". However, Kroll was apparently unable to complete the simple task of detecting World-Check's marketing fraud when sent links to documentary evidence by OffshoreAlert or simply did not care enough to do anything about it.

"The Kroll employees with whom I spoke are aware of your previous stories and related efforts to publicize your concerns about World-Check's product within Kroll, in the AML compliance community and through speaking engagements," stated Kroll's Media Relations Manager Jodie Rosenbloom. "We will say that these concerns have never been raised by the private sector and government FIU [Financial Intelligence Unit] World-Check users that we have been in contact with, and in our experience, they tend to be satisfied with the quality of World-Check's product. We are also active users of their product. We would not have entered into a channel partner agreement with them otherwise."

Another World-Check business partner, Minnesota-based Bankers Systems Inc., which purports to be a leader in risk management, showed little interest in reducing its own risk when contacted by OffshoreAlert and did not even want to receive our evidence against World-Check.

"The selection of World-Check as the BSI provider of global information concerning high-risk individuals was made after conducting considerable research and evaluation of competitive offerings," stated Bankers Systems. "Since the formation of our product agreement, World-Check has proven to be a valuable partner providing a quality solution to our bank customers. As with any product or service, Bankers Systems is extremely concerned with the accuracy and functionality of World-Check. To date, our customer feedback regarding World-Check has been decidedly positive. We will continue to monitor the performance of the World-Check product for its effectiveness using our own internal mechanisms as well as the evaluations we receive from current and future customers."

Bankers Systems did, however, remove promotional material from its web-site after OffshoreAlert pointed out that it was inaccurate. The firm had been falsely claiming that, through its distribution of World-Check, "Bankers Systems is the sole provider of this, or any, integrated service in the U.S. that screens potential and existing customers of financial institutions against a global list of high-risk individuals and organizations".

Meanwhile, a warning about doing business with the wrong compliance software provider was sent to bank CEOs and Chief Information Officers on November 16, 2004 by the Federal Deposit Insurance Corporation, which is an independent agency of the U. S. federal government.

Urging banks to conduct "proper due diligence when selecting computer software or a service provider", the agency added: "The FDIC has determined that certain software products used by financial institutions do not comply with applicable laws and regulations, including the Bank Secrecy Act, which includes the USA PATRIOT Act. Management is responsible for ensuring that commercial off-the-shelf (COTS) software packages and vendor-supplied in-house computer system solutions comply with all applicable laws and regulations." It did not identify any vendors whose products it considered to be deficient.

Below are questions that OffshoreAlert recently sent to World-Check principal David Leppan and answers that were emailed by someone at the firm who did identify himself/herself. Before OffshoreAlert exposed World-Check in November, 2002, Leppan wrote in an email that its publisher had a "fine reputation". As you can read below, his opinion has changed since then.

OA: On December 13, 2004, World-Check issued a press release stating, inter alia, that "the Department of Homeland Security (DHS) is using the World-Check system on a trial basis to help sort existing federal banking and immigration-related data to detect potential terrorist and criminal activities". Similar claims were made in recently-published articles, based on interviews with you, that were published by the New York Times and American Banker. However, Homeland Security spokesman Dean Boyd stated that the NY Times article "grossly misrepresented" the facts and Homeland Security issued a press release on December 28, 2004 denying that it was using World-Check. What are your comments on this discrepancy? Is this another example of World-Check lying or misleading journalists and/or the public, as it has done in the past, most notably with false claims about having profiles of 15 of the 19 September 11 terrorists in its database before the attacks, and also that it had 15 of the 22 U. S. 'Most Wanted' terrorists in its database before September 11?

WC: World-Check stands by its press release, which is accurate and was approved by DHS. We are unaware of the DHS spokesman's comments that you claim, but will contact him to discuss any discrepancies. World-Check neither lies nor misleads journalists, its clients or the public. World-Check has nothing to lie about and nothing to conceal no matter how much you attempt, in your publication to disparage our good name in hopes of financially benefiting.

OA: Homeland Security stated that "ICE has never used this product in any criminal or civil investigation". In the New York Times article, however, it was stated that "David Leppan, chief executive of World-Check, the British company that has provided the database to American officials, said the recent test runs had produced a number of promising hits on people with suspected criminal ties overseas who had entered the United States with more than $10,000 in cash or made other financial transactions in this country that were reported to the government". How do you explain this contradiction?

WC: You already have the answer to your question, Mr. Marchant, if you review the press release and the articles with care. Mr Leppan's statement clearly indicated the use was in a test run environment. DHS reiterated this point by stressing it had never been used in a 'criminal or civil investigation'. There is no contradiction. Mr. Leppan's statement, I am afraid, Mr. Marchant, cannot be construed in any other way – no matter how disappointing this may be to you. Your motivations and tactics are deplorable. Do your readers know your true financial interests and motivations in this baseless attack on our good name?

OA: Did World-Check and/or any representative, including yourself, knowingly mislead journalists and the public about its relationship with Homeland Security?

WC: Mr. Marchant you appear to be running out of questions on this subject. You have already asked this question and an answer has been provided above.

OA: Did World-Check and/or a representative directly or indirectly compensate, financially or otherwise, New York Times journalist Eric Lichtblau for writing his recent article which Homeland Security described as misleading?

WC: You may not be aware of this Mr. Marchant, but serious, reputable journalists do not accept 'compensation'.  No one within this company has ever given or offered to give any form of compensation to any journalist. We do not operate like this nor do we have any reason or requirement to. However your suggestion reflects your moral character and motives.

OA: The commonly-accepted definition of fraud is lying or misleading in order to obtain a pecuniary advantage over another party. Do you consider yourself a fraudster?

WC: Fraud is defined as 'something intended to deceive; deliberate trickery intended to gain an advantage'.

Your attempt to fabricate baseless stories against Mr. Leppan and this company over several years in an attempt to generate any interest in your competitive product has not only been ineffective, but is shameful and unethical. Eventually, every one of your readers will come to know you for what you are. To go to the length of calling Mr. Leppan a fraudster and a conman only continues to prove to the financial community what most already know too well about you and your publication. We, including the financial industry, see right through your tactics and despicable intent. Our team will continue to do their jobs professionally and honestly, no matter how much longer or how you attempt to blacken our good name and reputation.

Once again, an appeal, to you as a self-proclaimed 'journalist' to publish ALL of your questions and ALL of my answers as they very accurately depict your true motivations and the lack of a story. However, you always neglect to do so—so it can be safely assumed this time will be no different.