The Malta Independent 18 May 2021, Tuesday

Matthew Pace acted as a 'professional money launderer', police testify

Thursday, 25 March 2021, 13:07 Last update: about 3 months ago

Zenith Finance owner Matthew Pace acted as a 'professional money launderer' for clients, police testified in court today. 

Today saw Matthew Pace and Zenith Finance director Lorraine Falzon in the dock over accusations of money laundering. Two inspectors exhibited evidence to the court and testified. 

Inspector Ian Camilleri said that earlier this month, he was assigned to operation MH together with a number of other colleagues, which began after the conclusion of the Hillman inquiry. This saw an alleged €650,000 bank transfer between Keith Schembri and Adrian Hillman - the amounts were deposited in client accounts held by MFSP, now Zenith Finance, for further reinvestment. The funds were transferred to one of Schembri's American accounts, and then distributed to other accounts.

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This money was payment for three machines bought by Kasco Engineering and Progress Press. The magistrate had ordered a search of the MFSP offices, which saw copies of servers and laptops seized. According to Camilleri, Pace failed to carry out proper compliance, instead operating as a "professional money launderer".

The inquiry established that Keith Schembri's MFSP account had been opened in June 2010, with Adrian Hillman's account set up at around the same time. Kasco Group CEO Malcolm Scerri similarly opened an account in 2010, as did Vincent Buhagiar. All individuals had received funds from Keith Schembri's company.

Lawyers Edward Gatt and Mark Vassallo, appearing as defence counsel for the accused, requested bail for Matthew Pace and Lorraine Falzon - the magistrate will be giving a decree on this request tomorrow morning.

Please follow updates below


15:01 That's it for today - a date for the next hearing will be decided tomorrow.

14:58 The magistrate's decree on bail will be given tomorrow morning, at 8:30am.

14:55 Mercieca Rizzo is emphasising that there are third parties, close to the accused, subject to investigation for the same inquiry - and on that, discussions over the bail come to a close.

14:47 However, Mercieca Rizzo points out that the objection boils down to the fact that police are still investigating third parties in relation to the case. However, lawyer Edward Gatt insists on his original appeal - "This is dangerous - having ongoing investigations should not be the basis to deny bail."

14:41 Mercieca Rizzo from the Attorney General's office stands to counter-argue the bail submission. The Attorney General is objecting because the procedure is in its early stages, but the magistrate points out that this is based on a separate magisterial inquiry. Mercieca Rizzo continues to argue that these are serious crimes, and while the crime was initially carried out in 2010, it technically continued well towards 2020.

14:37 He insists that the defence strategy is to ensure that this case closes as quickly as possible, "because that's what innocent people want". He finishes his submission.

14:34 Gatt continues to argue that there are no risks of absconding, or tampering of evidence. "We have enormous difficulty understanding why these people have been in jail all week."

14:30 "Inspector Camilleri already had difficulty defending the charges, why should they be in prison?" Edward Gatt asks the court. He's questioning whether arguments of absconding are strong enough to deny the accused of bail.

14:24 Her cross-examination has ended. Lawyer Edward Gatt is requesting police bail for the accused.

14:22 Falzon had been asked to bring documentation to a police interrogation on 20 March. She was told to bring the documentation on 18 March, and since the day after was a public holiday, Falzon said that it was difficult to obtain everything in time.

14:19 She confirmed what was said earlier, that there had been a change to the risk assessment report for Keith Schembri's bank account. However, she pointed out that when he was mentioned in the Panama and Paradise Papers, there were no changes in due diligence checks.

14:12 The hearing resumes - Inspector Leanne Bonello testifies. She was present for the taking of police statements from Lorraine Falzon.

13:59 The cross-examination has been suspended - the court will be taking a 10-minute break before proceeding. 

13:57 From the Attorney General's office, Rizzo asks what had happened after Schembri was appointed chief of staff at OPM. Camilleri said that, according to documents taken from the firm, several changes were made to the risk assessment on his account, including his categorisation to 'medium-to-high risk'. The company also held meetings with Schembri, and Camilleri confirmed that no further funds were transferred to this account.

13:53 Vassallo suspends his cross-examination, and the prosecution begins theirs, as led by Elaine Mercieca Rizzo.

13:49 Vassallo is again questioning why Falzon is also charged in this case. Camilleri explains that she facilitated a particular transaction within the company. With regard to Matthew Pace, he said that it was suspicious that a client relationship manager was speaking to the auditor of a client.

13:43 All this documentation has been passed on as evidence to the court, Camilleri says. Vassallo moves on to ask about Brian Tonna's declaration to police. Camilleri says that Brian Tonna was the auditor for Keith Schembri and MFSP, but Vassallo says this is false.

13:40 Magistrate Frendo Dimech asks Camilleri to clarify whether or not there are appendices in the evidence that reveal the inefficiencies of MFSP's due diligence processes. He confirms this, and Vassallo continues to ask for this information.

13:39 Camilleri explains that Falzon is being charged because of her dual-role as director and MLRO. "From what you saw, what deficiencies did you see to lead you to prosecute?" Vassallo asks him. Camilleri replies that, by this stage, they had access to certain emails and documentation, but no client profiles. Vassallo questions this, arguing that client profiles should be an integral part of this investigation.

13:36 Gatt makes a quick observation, saying that the witness must respond to questions not in terms of what he thinks but what the evidence provided. 

13:35 Vassallo is being particularly prickly over technical aspects relating to risk assessments and due diligence. It turns out that MFSP were carrying out risk assessments and had compliance procedures in place, but police still say that it wasn't carried out well. The magistrate points out that Falzon wasn't accused with money laundering directly.

13:27 Camilleri exhibited all the data necessary, and cross-examination begins. Lawyer Mark Vassallo is asking about the opening of the bank accounts so as to create a clear timeline. 

13:25 Among her responsibilities in the company was to assess due diligence in terms of low, medium and high risk categories. Hillman and Schembri were ruled to be “low to medium risk”, as Schembri was not in the public eye at the time, and had always provided financial statements to provide his financial position. When media reports started to emerge over the clients and company, they agreed not to release any media statements.

13:22 On March 18, police questioned Lorraine Falzon after issuing an arrest warrant. She joined MFSP in 2001, and held the role of money laundering reporting officer (MLRO) - the only person in the company that did this work. Falzon told investigators that she saw no conflict of interest in being both director of the company and MLRO.

13:15 Lawyer Edward Gatt immediately chimed in after this, objecting that the inspector was testifying about matters that may have not happened.

13:14 During one interrogation, Pace was shown an invoice between Schembri and Hillman. He was questioned over it, but chose not to answer. “Since he was close to those clients and accounts, it was possible that Matthew Pace had created the invoice,” he said.

13:11 On 7 March 2021, the first police statement from Matthew Pace was taken. He was asked about his financial standing and several documents presented to him, containing emails and documents sent by Pace to Brian Tonna. According to Camilleri, the documents show Matthew Pace outlining the payments to be made to various parties. 

13:03 The inquiry established that Keith Schembri’s MFSP account had been opened in June 2010, with Adrian Hillman’s account set up at around the same time. Kasco Group CEO Malcolm Scerri similarly opened an account in 2010, as did Vincent Buhagiar. All individuals had received funds from Keith Schembri’s company. 

13:00 This money was payment for three machines bought by Kasco Engineering and Progress Press. The magistrate had ordered a search of the MFSP offices, which saw copies of servers and laptops seized. According to Camilleri, Pace failed to carry out proper compliance, instead operating as a “professional money launderer”. 

12:58 Camilleri said that earlier this month, he was assigned to operation MH together with a number of other colleagues, which began after the conclusion of the Hillman inquiry. This saw an alleged €650,000 bank transfer between Keith Schembri and Adrian Hillman - the amounts were deposited in client accounts held by MFSP for further reinvestment. The funds were transferred to one of Schembri’s American accounts, and then distributed to other accounts. 

12:56 Lawyers Mark Vassallo and Edward Gatt are defence counsel for Pace and Falzon. Inspector Ian Camilleri has taken the stand. 

12:53 Good afternoon. We are back again in Hall 22 covering the court hearing against Zenith Finance's owners Matthew Pace and Lorraine Falzon. 

 

 

 

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