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By Fili Sagapolutele

PAGO PAGO, American Samoa (November 3, 2000 - PIDP/CPIS)---The former vice president of an American Samoa company accused of holding "crime proceeds" in a bank in Samoa’s capital of Apia is in federal custody for failing to provide documents to a federal grand jury.

Robert Schwalger, 32, up until he was taken into federal custody in Seattle, was the vice president of Private International Development Banc (PIDB) of American Samoa.

A native of Samoa, Schwalger voluntarily agreed to travel from Pago Pago to Seattle Friday (October 27), escorted by U.S. Marshals. He was arrested upon arrival.

Schwalger will remain in federal custody until he appears before a Seattle grand jury on November 8th, and beyond that if he doesn’t produce subpoenaed documents.

Schwalger has already testified once before the same grand jury but he failed to produce documents, which prompted the federal contempt citation.

The arrest warrant for Schwalger was issued prior to October 13, the day the local Attorney General’s Office issued a Stop Order prohibiting Schwalger from leaving the territory. The Stop Order stated that an arrest warrant for Schwalger had been filed in Washington.

The Grand Jury is hearing evidence from subpoenaed witnesses in the FBI’s criminal investigation into allegations that three American promoters bilked U.S. investors out of between $30 - $50 million in an alleged investment scheme.

The main investors have been identified as John Wayne Zidar, John Wesley Mathews and Elizabeth Anne Phillips.

The money is allegedly deposited in offshore accounts in three countries, including Samoa.

The Samoa government in May of this year seized $14 million on behalf of the U.S. government. The FBI alleges the money, $4 million of which belongs to PIDB, is "proceeds of crime."

Besides the FBI investigation, the U.S. Securities and Exchange Commission is also probing the activities of the target suspects and has already obtained an injunction against the three promoters.

Schwalger’s father-in-law and president of PIDB, Williams Cravens, said he is outrage at the actions of the U.S. government for holding his son-in-law hostage while seeking to pressure him to turn over documents that he does not have the authority to turn over.

"Robert has a fiduciary and legal responsibility to keep bank matters confidential," Cravens was quoted by the Samoa News newspaper in a telephone interview from San Diego. "It is legally impossible for him to uphold his responsibilities and conform to the subpoena both."

Cravens said the U.S. government has not proven anything about the source of money for PIDB, which is not, he emphasized, directly part of the probe into a fraudulent financial scheme.

He confirmed that a $1 billion lawsuit will be filed against the Samoa government for seizing PIDB funds on deposit there.

Referring to published accounts that Samoa Prime Minister Tuilaepa Sailele Malielegaoi scoffed at the threat of a law suit, Cravens responded, "The PM shouldn’t be gambling with his country’s money. If we win this lawsuit it would break Samoa’s Central Bank. Samoa should step aside and not get involved in this matter."

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