Ponzi Anyone?

GIBRALTAR -- The arrest of two of the three brothers who headed up the Marrache & Co law firm here has sent shudders through the financial services and legal sectors. The Financial Services Commission has withdrawn licences it had issued to Marrache, prompting the seizure of clients’ investment funds.

Whether lawyers at what was considered one of the best firms on the Rock had any inkling of what was afoot remains to be discovered. Last week, Benjamin and Solomon Marrache, the two brothers facing multi-million pound fraud charges, were refused bail and remanded in prison by the Magistrates Court. Stipendiary Magistrate Charles Pitto said there was a high risk of the two men fleeing Gibraltar as the police probe into the affairs of Marrache & Co intensified. Attorney General Ricky Rhoda, QC, said the scale of the alleged fraud appeared to be larger than investigators first thought. If convicted, the brothers could spend up to 10 years in jail. Supposedly if more wrong doing is discovered, their future lives behind bars may be extended.

Benjamin and Solomon appeared in court last week jointly charged with falsely accounting $5.6 million Canadian dollars and 2.1 million euros belonging to Malory Holdings and Remus Enterprises. That is in addition to the charges of falsifying documents to conceal 1.8 million euros of missing money belonging to another client they already face. Prosecutors claim they falsified ledgers to show that they held the clients’ money when in fact it was missing.

Initially they had been granted bail on hefty sureties but now Mr Pitto has sent them to a cell in the Moorish Castle instead. The defence lawyers had sought to highlight the defendants' strong local ties but that argument is weakened by the absence of the other senior Marrache partner – Isaac, brother to the jailed duo. He was out of the country when his siblings were arrested and seems reluctant to return. An international arrest warrant is probably in the offing. The case is similar to that of Marbella’s former deputy mayor Carlos Fernandez, who at the time of the ‘Malaya’ town planning corruption case arrests was walking the Camino de Santiago – and has kept walking to this very day.

The company’s and clients’ affairs are now being handled by a committee made up of the four senior partners of Hassans, Isola & Isola, Triay Stagnetto Neish and Triay & Triay – the Rock’s four other major firms. The committee is overseeing the distribution of live cases to other local lawyers in order to protect the interests of Marrache clients.

What I find strange about cases such as this was the certainty that they would be found out. If you were a fraudster you could set up a fake investment account, attract gullible investors, then make off with 1.8 million euros. However the Marrache’s have allegedly misappropriated nearly ten million in Canadian dollars and euros – their misdeeds covered by a few flimsy pieces of forged letters so assuring that sooner rather than later their legal house would come tumbling down.

Also a rogue father, son, mother or daughter has in the past often brought down or shaken the very foundations of the family concern. Here it appears we have three suspect brothers who if proved guilty presumably colluded in the fraud. This is behaviour more akin to the mafia. In which case one has to ask the question – are there other people in Marrache’s who were involved?

Once this case comes to court the proverbial will hit the fan and it will be spread over Gibraltar’s legal and financial sectors. Their very integrity will undoubtedly be questioned because if you can’t trust Marrache in Gibraltar terms who can you trust? What is certain is that future students of law and human nature will study the proceedings of the Marrache case with keen interest.

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