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Tonga says US jester lost millions of dollars

AUKLAND Jan 01 2002 00:00

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Tonga's Royal Government admitted on Monday that it had lost 50 million pa'anga ($20-million) through schemes promoted by the king's American court jester.

In a statement the government said its Tonga Trust Fund had begun legal proceedings to recover the money.

"During the last 10 months there has been considerable controversy and public debate over the question on whether the money has been lost or not," the statement said.

But audit investigations in the United States had revealed that the "funds ... were confirmed to be lost" and added "legal action has been commenced in the US against three persons and six companies".

It did not name the defendants.

"Some of the grounds set out in the court action relate to failure to pay or default in payment on a promissory note, fraud, conspiracy, aiding and abetting fraud, negligent misrepresentation, material misrepresentation and omissions in sale of security and fraudulent conversion."

Until now Tonga, one of the world's poorest states and suffering a deteriorating economy, has only said the money could not be traced. The 50-million pa'anga represents 40% of the government's annual revenue.

The fund was set up in the early 1990s by the royal family to keep the proceeds of the sale of Tongan citizenships off-shore and out of control of the government.

Eventually it made around $26,5-million and included, as new citizens, exiled Filipino president Ferdinand Marcos and his wife Imelda.

CONTINUES BELOW

The money was in an ordinary Bank of America cheque account when a bank employee, Jesse Bogdonoff, convinced the king he had a better investment strategy. This included putting the money into the questionable viatical industry which bets on the early deaths of terminally ill patients.

Most of the money went into a Nevada company, Millennium Asset Management that was engaged in viaticals and promised a 30% annual fixed return. Smaller amounts went into Trinity Flywheel Power which Bogdonoff owned and a small dotcom company.

For his troubles Bogdonoff convinced the king to officially decree him as court jester. Bogdonoff, who also acts for Japan's right-wing political Soka Gakkai Buddhist group, reciprocated with awards to the king. The government statement on Monday's said the Attorney General and Justice Minister 'Aisea Taumoepeau will go to the United States to liaise with the law firm handling the court action in San Francisco.

"The visit by the Attorney General underlines the trustees concern that a proper understanding and assessment of the trustees position with regards to these claims are well founded," the statement said.

Two cabinet ministers were forced out of office over the scandal.

Last week Bogdonoff (47) told the local Mercury News newspaper in San Francisco that he had been cooperating with the kingdom over the money.

"The fact is I had no intention to defraud or conspire with anybody to defraud anyone," he told the newspaper. "I chose the wrong company but learned that after the fact. I gave the best advice I had, but in hindsight, which is always 20-20, I regret picking the company I did."

The newspaper quoted the suit as saying the "defendants paid themselves and their friends and business associates millions of dollars in charges, commissions and fees, which they did not disclose to the (Trust Fund)." - Sapa-AFP

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Tonga says US jester lost millions of dollars

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