MasterCard, Visa, and the Card Sharks

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Rowe's Florida clients say they were impressed by the MasterCard brand Jeffery Salter/Redux

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Johnson later managed AvantGuard Bank & Trust in Grenada. In 2002, while he was running that bank, the Grenadan Finance Ministry opened an investigation into whether AvantGuard was compliant with the country's banking laws and maintaining sufficient capital. The bank voluntarily liquidated itself the same year. Before dissolving, AvantGuard had offered a MasterCard marketed as the Freedom Card. The card was licensed through a corporate affiliate of AvantGuard. Petra Charles-Joseph, a spokeswoman for Grenada's Finance Ministry, declined to provide additional details.

Asked about Johnson, MasterCard's Golinsky reiterates her employer's no-comment policy concerning specific banks or executives. "We require any [bank] customer to have its own policies and procedures in place to make sure that they have robust anti-money-laundering and compliance," she says. Johnson didn't return phone messages seeking comment. His attorney, Jonathan Schwartz, declined to comment.

David Rowe, a Fort Lauderdale attorney representing 22 investors, says that Hallmark Bank & Trust's tie to MasterCard contributed to his clients being misled. Rowe has filed five lawsuits alleging that Hallmark and an investment firm called Overseas Locket International jointly promised his clients 15% returns on currency trades. The defendants never invested the money, Rowe's clients allege, resulting in losses of $250 million.

Rowe argues that his clients were convinced of the legitimacy of the investment in part by Hallmark's association with MasterCard. In an interview, plaintiff Don Dowe says, "I figure that this is a major bank that is being endorsed by MasterCard." Promotional materials sent to investors by Overseas prominently displayed MasterCard's logo, Dowe says.

One of the five suits filed by Rowe was dismissed on Mar. 27 by a federal judge in Fort Lauderdale. The judge ruled that the case should have been filed in the Turks and Caicos, not in Florida. Rowe says he will attempt to revive the dismissed suit and continue to press the others. Hallmark has denied any impropriety. Carl W. Oberdier, a lawyer who has represented the bank in similar litigation in New York, says: "It's tragic what happened to the investors, but Hallmark's view is that Hallmark put a stop to the damages as soon as it could and vigorously worked with law enforcement in the Turks and Caicos."

MasterCard has been named as a defendant in four of the five Florida suits. In court filings, it has denied any wrongdoing. The company's Golinsky declines to comment on the litigation. She says a bank's being accused of wrongdoing could affect whether MasterCard continues to do business with it. Inquiries from law enforcement agencies "prompt a second review." Mastercard, she emphasizes, monitors its licensees vigorously.

Silver-Greenberg is a reporter for BusinessWeek.com.

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