By C. E. HUGGINS, Business Editor

huggins@nasguard.com

A media story coming out of Australia states that Derek Turner began his investment scheme as early as 1997, three years before he showed in The Bahamas from Australia where the Australian Securities Commission had challenged his investment practices and placed restrictions on his activities.

Indeed one of the reasons Mr. Turner gave at the time for choosing The Bahamas to continue his investment scheme for which he was recently sentenced in a US district court to 20 years, was because similar restrictions did not pertain in The Bahamas. What Mr. Turner is finding out, to his chagrin is that the rule of law maintains in The Bahamas.

A prominent Bahamian merchant family who invested nearly $5 million with Mr. Turner promptly applied to the Supreme Court for and received control of all his Bahamian assets which he was using as a bargaining chip with US authorities when he was arrested and charged in April, 2005. At the time he claimed that his Bahamian assets were valued at approximately $15 million and would be more than enough to meet the $16 million of which he had allegedly defrauded his clients. The Guardian has been reliably informed that all of Mr. Turner's known assets in both The Bahamas and Australia "is valued at about US$10 million".

Subsequent investigation revealed that his net was considerably wider than first realised. By the time he was sentenced in February 2006, the amount was estimated at over US$50 million. Now the Australian media is indicating that one friend "celebrity medic James Wright" sank over Aus$90 million (US$66 million) "into an investment scheme in The Bahamas that promised 40 percent returns".

According to Australian media reports Dr Wright, whose real name is John Knight, "lost all but Aus$32 million (US$23 million)". It is not entirely certain whether the $43 million which Dr. Wright lost was included in the $50 million that was alleged missing by US authorities. Dr. Wright invested approximately Aus$7 million or US$5 million of his personal funds in what the Australian media referred to as "the fake hedge fund run by his former friend and suburban Sydney neighbour Derek Turner". The two men first met in 1991 according to reports from Australia.

The remainder of the invested funds, approximately US$60 million came from Dr Wright's "tax-free charitable trust Medi-Aid Centre Foundation". It was the flow of "substantial offshore dividends" to the trust's accounts that tipped off Australia's tax office that all was not quite right.

Both US and Australian authorities have been questioning Dr Wright, whose real name is Jim Knight, to find out the nature of the investments between himself and Derek Turner and Medi-Aid and Derek Turner. Interestingly enough Joseph Conway, Turner's lawyer is seeking to get his client's sentence reduced on the grounds that Dr Wright was not a "victim of the scheme" an Australian media report.

Mr Conway is reported to have stated that "Common sense dictates that (Wright's) inaction's regarding the failure to receive his monies was due to the strong possibility that it left him open to serious tax questions in his homeland."

The US media had reported that Mr. Turner had sought to blame an associate for the failed scheme and naming the person as "co-conspirator" in the fraud. The Australian media report stated that an FBI agent Matt Galioto had gone to Australia to investigate that allegation and to determine whether Dr Wright's Medi Aid was been used to facilitate the fraud. The investigation found the allegations to be false.

Mr Galioto told the Australian media that "All we needed to do was verify that Medi-Aid was legitimate and we were advised (by the Australian Securities and Investments Commission) that it was a charitable company in good standing."

Dr Wright who began investing in the scheme in 1999, which cost 67 investors a total of Aus$74 million or US$54 million, topped the list of those investors in terms of amount of money lost.

According to the media report Turner used "false banking records and faked dividend returns" to pretend he was investing the money in a hedge fund.