Fraud Feared as Antigua Net Bank Fails

[Alan Olsen <root@nwdtc.com>]

http://nytsyn.com/live/Latest/218_080697_110027_578.html

Fraud Feared as Antigua Net Bank Fails 

By EMILE VALERE 
c.1997 Bloomberg News 

T. JOHN'S, Antigua - The Antigua and Barbuda government issued a fraud
alert Tuesday after the collapse of European Union Bank and the
disappearance of
its cofounders. 

The locally-chartered bank, which fired all its employees last Thursday,
had
marketed itself as the first off-shore bank on the Internet. 

The Antiguan government hired the accounting firm Coopers and Lybrand
LLP to
examine the records of the three-year-old company. 

Callers to the bank heard a recorded message that gave only a hint that
something
was amiss. 

``Welcome. You have reached the European Union Bank,`` said a
reassuring-sounding male voice. ``Due to technical reasons, some of our
services
involving the security mode are temporarily unavailable.'' 

The bank's Internet site, http://www.eubank.ag , was also unavailable. 
Meanwhile, the government is on the look-out for the bank's founders,
Serbveo
Ushakov, allegedly of Bronxville, New York, and Vietalui Papsouev of
Richmond
Hill, Ontario, according to the Caribbean News Agency. The government
says the
two are Russian nationals. 

The Idaho Department of Finance on May 30 ordered European Union to stop
soliciting deposits from Idaho residents over the Internet. 

``I can't say I'm surprised'' at the news of the bank's collapse, said
Gavin Gee,
director of the department. 

Idaho alleged the bank, without a state or federal charter, was
operating illegally.
Gee said he hopes other U.S. regulators will take similar actions
against off-shore
banks soliciting over the Internet. 

``If nobody's going to take action against fraud on the Internet, we've
got a serious
problem,'' said Gee. 

Antigua has more than 50 off-shore banks. Prime Minister Lester Bird
last
February targeted three of them to be shut down because of their alleged
involvement with Russian crime rings. 

The Associated Press reported last week that the Bank of England warned
investors last fall about depositing funds in European Union Bank. 

(The Bloomberg web site is at http://www.bloomberg.com )< 

(Disbributed by The N.Y. Times News Service)< 

NYT-08-06-97 1054EDT<