KING OF TONGA'S JESTER SUED OVER BAD INVESTMENTS

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SAN FRANCISCO, California (June 7, 2002 – New Zealand Herald/ Reuters)---The King of Tonga's royal jester is now preparing for a United States court date.

The kingdom has launched a U.S. suit accusing the court jester -- a former U.S. bank employee who doubled as a royal investment adviser -- with defrauding the government out of US$ 26 million.

Despite the comic overtones, nobody is laughing.

Defendant Jesse Bogdonoff, who said he was simply trying to help his friend the King by channeling Tonga's money into better investments, now believes that he is the victim of political intrigue among vying wings of the island's royal family.

"I've had people in Tonga calling for me to be thrown underground and cooked like a pig," Bogdonoff said yesterday after hearing about the lawsuit.

"The message they are putting out is that I'm a crook - and it's not true."

Tonga's legal advisers say Bogdonoff cooked up an elaborate scheme to defraud the government that ultimately cost more than US$ 26 million, or more than half Tonga's annual government revenues.

"I hope we can get some of that money back," Bruce Ericson, Tonga's lead lawyer in the suit, said yesterday.

Tonga's run-in with its royal jester has been big news in the tiny Pacific island kingdom.

According to Tongan officials, Bogdonoff, who was then working at the Bank of America, struck up a close relationship with Tonga's King Taufa'ahau Tupou IV after noticing that the kingdom had millions of dollars sitting in a low-interest check account.

Bogdonoff -- who later asked for and received the appointment as Tonga's court jester -- persuaded the government to put him in charge of the US$ 26.5 million Tongan Trust Fund, which was established largely with money earned through the sales of Tongan passports to foreigners.

In 1999, Bogdonoff and his company, Wellness Technologies, recommended that the fund invest US$ 24.5 million in three companies: a Nevada-based purchaser of life insurance policies, an energy start-up company and a web business.

It soon became clear the investments were not performing.

The Nevada company, Millennium Asset Management, was almost out of business, the energy company Trinity Flywheel Power is struggling and FilmAxis.com is in Chapter 11 bankruptcy - its name up for auction at a starting price of US$ 1.

"As a proximate result of Bogdonoff's negligence, the Tonga Trust Fund has been damaged in an amount ... that, at minimum, exceeds US$ 24.5 million," the kingdom said in its lawsuit, filed in a U.S. District Court in San Francisco this week.

The suit further charges that Bogdonoff, who calls himself a musician, poet, and American Buddhist, colluded with executives in the U.S. companies to squeeze the Tongans dry.

"Defendants paid themselves and their friends and business associates millions of dollars in charges, commission and fees which they did not disclose" to the fund, the suit said.

Altogether, the Tongan fund seeks restitution of at least US$ 26.5 million plus possible punitive damages.

Bogdonoff, reached yesterday at his northern California home, said he was determined to fight the charges and might counter sue Tonga for character assassination.

He conceded that the initial investment in Millennium Asset Management had gone south.

But he said he traveled back to Tonga in October to present a plan to recover the money over five years through a revised investment portfolio guaranteed by Lloyds of London.

Bogdonoff said he walked into a royal power struggle - his allies on the losing side.

"They basically said we don't regard you as an ally and are coming for you," Bogdonoff said.

Two Tongan government ministers who acted as fund trustees -- Deputy Prime Minister Tevita Tupou and Education Minister Tutoatasi Fakafanua -- resigned after the government began investigating.

For additional reports from The New Zealand Herald, go to PACIFIC ISLANDS REPORT News/Information Links: Newspapers/ New Zealand Herald.

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