SCANDALS: One of the Largest Frauds

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2) Having got rid of Cornfeld,* Vesco and associates zeroed in on the securities held by four IOS-managed mutual funds: Venture Fund, Fund of Funds, International Investment Trust (IIT) and Transglobal Growth Fund. Between April and October of this year, the SEC says, Vesco and friends sold out of the funds' holdings nearly a quarter of a billion dollars worth of stocks, including Chase Manhattan, General Motors, Mobil Oil, A T & T and IBM, and used the cash to further "their personal interests and pursuits."

Some $99 million of the money has simply vanished. The other $125 million, says the SEC, was mostly "spirited" away to Luxembourg and Bahamian banks controlled by Vesco's group and then placed in a series of dummy corporations also serving as fronts for Vesco.

Some $15 million went to Gulf Stream (Bahamas) Ltd., a Vesco company that is trying to buy the Paradise Island gambling complex in the Bahamas from Resorts International. Vesco's IIT fund also lent $2,150,000 to Sociedad Agricola y Industrial San Cristobal, a company that was founded and is still partly owned by Costa Rican President Figueres. Meanwhile Fund of Funds put $60 million into Inter-american Capital, a shell company allegedly controlled by Vesco and formally headed by Alberto Inocente Alvarez, an adviser to Figueres.

According to the SEC, Vesco has chosen Costa Rica as a "haven" and Alvarez is helping him relocate there. President Figueres says that Vesco is still welcome to Costa Rica. At IOS's complex of buildings at Ferney-Voltaire in France, just across the border from Geneva, functionaries are preparing for relocation. They are selling everything movable, including bosses' rosewood desks and even toilet seats. Rumors are that the move will be either to Madrid or—no surprise—Costa Rica.

3) All the time that the stock sales were going on, Vesco sought to conceal his part in them by pretending that he was out of IOS. He resigned as chairman in September 1971 and later had International Controls sell its IOS stock. But, says the SEC, the stock was sold to Kilmorey Investments, yet another dummy company set up by Vesco in the Bahamas.

Whether Vesco is out even yet is unclear. Kilmorey on Oct. 30 sold control of IOS to a group of Spanish and Latin American businessmen headed by Prince Gonzalo Borbón y Dampierre and including Rafael Díaz-Balart, a former brother-in-law of Cuba's Fidel Castro, but the group now is reportedly trying to back out of the deal. In any case, the group has ties to Vesco; one of its members is Alberto Alvarez, the head of the Costa Rican company that got $60 million from Fund of Funds.