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Wallace Groves
Wallace Groves (20 March 1900 – 30 January 1988) was an American financier and fraudster. After release from federal prison in 1944, he moved to the Bahamas where he founded and operated a free trade zone, resort, and casino development at what would become Freeport, Grand Bahama. He is credited with the development of the modern Bahamian economy of offshore banking. He was suspected to have links with the Meyer Lansky syndicate operating offshore casinos from Miami Beach.[citation needed]
Wallace Groves was born in Norfolk, Virginia on 20 March 1900. He attended Ursinus College and Georgetown University and was admitted to the Maryland Bar in 1925.
He moved to New York from Baltimore, where he was a bond salesman. Groves made an early career in financial transactions on Wall Street. He was "a young, flashy, and successful investor, he was involved in several businesses and had controlling interests in several others, including the United Cigar Store and the Whelan Drug Store chain."
In 1931, Groves began to assemble a collection of investment trusts and other companies through complex transactions, which came to follow a certain pattern. At the time, he was reported to have a net worth of $19 million.
In 1931, Groves obtained control of Chain and General Equities by underwriting an offering to the stockholders of additional stock and then caused the election of officers of his choice to the board of directors, according to the SEC. Groves then sold to the company "642,517 shares of common stock of Interstate Equities Corp. for appr. $1,325,000 with a gross profit of $369,000 to said Wallace Groves." The stock had "little or no asset value."
Two other companies, Interstate Equities of New York and Yosemite Holding of Detroit, also came under the control of Groves's Equity Corporation, by December 1932, netting Groves the market value of these companies "with the expenditure of very small amount of money." Stockholders filed suit against Groves and his associates. In 1933, Groves sold his control of Equity Corp to David M. Milton and Ellery Huntington Jr. His transactions caught the attention of the Securities and Exchange Commission (SEC), and from 1933 until his imprisonment in 1941, he was frequently in the news for legal or regulatory matters. Numerous other suspect transactions of similar nature were revealed to the public by the SEC.
In 1936, Groves was president of the Phoenix Securities Corp., with Philip de Ronde, chairman, and Walter S. Mack, Jr., vice-president. This company acquired control of, among others, the South Coast Co., the Celotex Co., and Allied Products. Corp. Groves acquired Phoenix through a hostile take-over in 1931. Phoenix then obtained control of Autocar, United Cigar, Certain-Teed Products, Whelan Drug Stores and other companies. By 1936, Groves revealed that he, as sole owner of offshore Company Montana of Panama, could carry out transactions through it without incurring taxes. This and other uses of foreign tax havens caused the Treasury Department to report Groves, de Ronde and others to the Congressional Joint Committee to Investigate Income Tax Avoidance and Evasion, alleging "financial legerdemain". Groves then also owned Nassau Securities, Ltd, a Bahamian shell company; de Ronde owned a similar shell. The Bahamian companies served as depositories for funds drained from U.S. companies in the orbit of Groves.
On 1 December 1938, the United States indicted Wallace Groves, his brother George S. Groves, Ernest B. Warriner (fugitive in Canada) and de Ronde (fugitive in France) on fifteen counts of mail fraud and conspiracy to defraud.
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Wallace Groves
Wallace Groves (20 March 1900 – 30 January 1988) was an American financier and fraudster. After release from federal prison in 1944, he moved to the Bahamas where he founded and operated a free trade zone, resort, and casino development at what would become Freeport, Grand Bahama. He is credited with the development of the modern Bahamian economy of offshore banking. He was suspected to have links with the Meyer Lansky syndicate operating offshore casinos from Miami Beach.[citation needed]
Wallace Groves was born in Norfolk, Virginia on 20 March 1900. He attended Ursinus College and Georgetown University and was admitted to the Maryland Bar in 1925.
He moved to New York from Baltimore, where he was a bond salesman. Groves made an early career in financial transactions on Wall Street. He was "a young, flashy, and successful investor, he was involved in several businesses and had controlling interests in several others, including the United Cigar Store and the Whelan Drug Store chain."
In 1931, Groves began to assemble a collection of investment trusts and other companies through complex transactions, which came to follow a certain pattern. At the time, he was reported to have a net worth of $19 million.
In 1931, Groves obtained control of Chain and General Equities by underwriting an offering to the stockholders of additional stock and then caused the election of officers of his choice to the board of directors, according to the SEC. Groves then sold to the company "642,517 shares of common stock of Interstate Equities Corp. for appr. $1,325,000 with a gross profit of $369,000 to said Wallace Groves." The stock had "little or no asset value."
Two other companies, Interstate Equities of New York and Yosemite Holding of Detroit, also came under the control of Groves's Equity Corporation, by December 1932, netting Groves the market value of these companies "with the expenditure of very small amount of money." Stockholders filed suit against Groves and his associates. In 1933, Groves sold his control of Equity Corp to David M. Milton and Ellery Huntington Jr. His transactions caught the attention of the Securities and Exchange Commission (SEC), and from 1933 until his imprisonment in 1941, he was frequently in the news for legal or regulatory matters. Numerous other suspect transactions of similar nature were revealed to the public by the SEC.
In 1936, Groves was president of the Phoenix Securities Corp., with Philip de Ronde, chairman, and Walter S. Mack, Jr., vice-president. This company acquired control of, among others, the South Coast Co., the Celotex Co., and Allied Products. Corp. Groves acquired Phoenix through a hostile take-over in 1931. Phoenix then obtained control of Autocar, United Cigar, Certain-Teed Products, Whelan Drug Stores and other companies. By 1936, Groves revealed that he, as sole owner of offshore Company Montana of Panama, could carry out transactions through it without incurring taxes. This and other uses of foreign tax havens caused the Treasury Department to report Groves, de Ronde and others to the Congressional Joint Committee to Investigate Income Tax Avoidance and Evasion, alleging "financial legerdemain". Groves then also owned Nassau Securities, Ltd, a Bahamian shell company; de Ronde owned a similar shell. The Bahamian companies served as depositories for funds drained from U.S. companies in the orbit of Groves.
On 1 December 1938, the United States indicted Wallace Groves, his brother George S. Groves, Ernest B. Warriner (fugitive in Canada) and de Ronde (fugitive in France) on fifteen counts of mail fraud and conspiracy to defraud.