Kiwi's brazen bank scam

Shaun Morgan, sentenced to five years. Photo / Supplied

A Kiwi posing as an international banker has been jailed for a multi-million dollar fraud in the United States after being exposed as a conman.

Shaun Gregory Morgan was called an "economic danger to the community" by a judge in Utah before he pleaded guilty in a deal with the Federal Bureau of Investigation.

Morgan was sent to prison for five years after admitting running a fake bank over the internet. He offered large loans to needy businesses - on condition they first sent him money as security.

Among the charges was an allegation Morgan used counterfeit cheques to buy about 40 houses and other rental properties.

He was alleged to have transferred the title on the properties before the cheques bounced - and to have gone on and collected rent.

It is not the first time Morgan has been implicated in a banking scam, although it is the first time he has been publicly convicted. His scams are considered so prolific in Switzerland that banking authorities have banned him from using "bank" in connection with his businesses.

They are similar to one that earned Morgan, 32, the attention of regulators in New Zealand, when he claimed to be running two banks in Auckland.

Pakistani media later claimed those banks - and Morgan - were linked to the disappearance of $20 million of a Turkish investor's money.

This latest case saw the FBI ask New Zealand police to investigate Morgan's links to an Auckland law firm at which he had eight companies registered - including some carrying the names of the fake banks he has posed as representing.

In the scam, Morgan claimed he was an officer for London-based bank First Mutual and had millions of dollars of credit available.

Last week he told US district judge Dee Benson the bank was a fictional financial institution that existed only on a website he created.

Morgan struck a deal to have a string of charges dropped in exchange for pleading guilty to one count of bank fraud. He also admitted attempting to cover his tracks with counterfeit cheques.

Documents before the court said the fraud began when Morgan created the First Mutual Bank in November 2007.

The internet domain registration obtained by the Herald on Sunday showed the "First Mutual" site was reserved by Morgan in May 2007.

Morgan claimed the company had offices in London, New York City, Las Vegas, Los Angeles, Utah and Delaware.

In the guilty plea, Morgan said he offered an investment company $18.3m but it had to deposit $3.5m in Treasury bills and bonds with the company as collateral.

He contacted the company to say he had to close the account for "compliance reasons" then offered it a cheque for $2.8m to cover its risk.

The cheque turned out to be counterfeit, as did another offered by Morgan.

The case has again drawn criticism to New Zealand's system for setting up companies.

This month, a Kiwi company was linked to an international gun-running investigation after it was used to help organise the transport of 35 tonnes of weapons.

Howick lawyer Brian Ellis told the Herald on Sunday he recently discovered Morgan - a former client - had continued to use the Auckland address of his firm Ellis Law.

"I was horrified when I discovered he was using my address for purposes I imagined were nefarious. One of the problems in New Zealand is it is too soft and too easy to form companies here."

Ellis said he set up a number of companies for Morgan, who had been based in Switzerland. He had since met him in Auckland.

"We form many hundreds of companies a year for people from all over the world."

The discovery was swiftly followed by a visit from police at the request of the FBI. He had no information to help - other than showing proof he had told Morgan to stop using the address in his scams.

Internet registration data shows Morgan used the firm's offices to register the First Mutual Credit Corporation website - one of the main fake banks he was running. Prosecutors said Morgan's other victims included banks, credit unions, casinos and at least one real estate investor.

He was freed on bail but suspected of continued offending. He was brought back into court, where his wife Maree Morgan was ordered to surrender his passports.

In 2004, Morgan was identified by the Reserve Bank of New Zealand as claiming to run two banks from Auckland.

The Reserve Bank issued demands to Morgan ordering him to stop using the word "bank" in the title of Bank International Limited and SDC Bank International Limited. Both companies are registered through Ellis Law.

The Reserve Bank made the orders because laws here prohibit any organisation not registered as a bank from carrying on business as if it were.

* Do you know Shaun and Maree Morgan? Call David Fisher on (09) 373 9351, 021 347154 or email david.fisher@hos.co.nz

- HERALD ON SUNDAY