Jan. 12, 2006 — Shawn Scott, managing partner of St. Croix-based Bridge Capital, has announced that the firm plans to open a financial services operation on Saipan, in the Commonwealth of the Northern Mariana Islands, a U.S. territory just north of Guam.
The text of the article in the local daily newspaper, Marianas Variety, quotes Scott as saying "the company's relocation could serve as the nucleus of a new international financial services industry here [in the CNMI]".
What the publication did not report, however, was Scott's recent, unsuccessful efforts to bring slot machine-like gambling to Washington, D.C. — an effort that was rebuffed and criticized by local officials and covered in great detail by the Washington Post.
The effort to bring in the slots was made through an attempt to pass a referendum in the district that would have permitted the introduction of the machines. Passage would have led to a gaming regulation system without a vote from either the D.C. City Council or the Congress which would have freed the gambling operation from any effective regulation, or at least that was the characterization of the proposal's critics.
The referendum attempt failed when the D.C. Board of Elections and Ethics, chaired by native St. Thomian Wilma Lewis rejected the petitions calling for the referendum, saying that an insufficient number of legitimate signatures had been obtained. The board's decision was later ratified by the local courts. (See D.C. Courts Rule Against V.I. Firm on Slots Initiative.)
Subsequently, several of the gambling promoters, but not Scott, were fined $622,880 for various infractions, marking the first fine levied by the board in its history.
In its coverage of the proposal, the Washington Post characterized Scott as a "Las Vegas entrepreneur who has been denied or failed to obtain gambling licenses in five states where regulators found evidence of financial mismanagement, irregular accounting practices and hidden partnerships."
The Northern Mariana Islands' principal economic activities in recent years have revolved around garment sweatshops, established because of various loopholes in federal immigration, labor, and tariff laws, and the tourist business with an accent on people flying south from Tokyo.
The islands have hit hard times, however, because booming garment exports to the U.S. from China have shrunk the size of the local garment industry and because a major Japanese airline has eliminated its flights to Saipan, the main island in the CNMI.
Given these trends, there have been numerous reports of the CNMI government looking for alternative sources of economic activity.
The proposed business of Bridge Capital, according to the CNMI newspaper, is "arranging high-yield, short-term, real-estate-secured loans in excess of $1 million for customers who cannot borrow from traditional lending sources due to time constraints, risks, or other complex arrangements (i.e. high-interest, presumably second or third mortgages.)"
The paper's description of the firm continued: "Founded in 1995, Bridge Capital is now headquartered in the U.S. Virgin Islands. It has an initial asset portfolio of $10 million in loans and more than 40 years of experience in finance, asset management and real estate development."
It further quoted Scott as saying that once the firm qualifies for local tax breaks, "we will move our business here right away."
According to Scott's V.I. office, he is in the United States. The Source's phone call to him earlier in the week was not returned, so we had no opportunity to seek comments from him about the Marianas Variety article, nor to ask what would happen to the jobs of the 15 Bridge Capital staff members who now work for the firm on St. Croix. According to the paper, Bridge Capital announced that it would hire 10 CNMI residents when it opened its doors in that territory.
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