UNITED STATES VIRGIN ISLANDS



Economic Development Authority

WWW.USVIEDAORG 1877 432-8784



January 31, 2014



Mrs. Cecile deJongh



Office Manager



Financial Trust Company, Inc.

6100 Red Hook Quarter B3

St. Thomas, VI 00802



Re: Financial Trust Company, Inc.



Dear Mrs. deJongh,



A compliance review has been completed on Financial Trust Company, Inc. Enclosed for your review

and commentary is the compliance report which covers the period January 1, 2009 to March 23, 2012.

The company was found out of compliance with the capital investment requirement, and Special

Condition #1 and #2.



Please provide a response to this compliance report within thirty (30) working days of receipt of this

correspondence. You may request an extension of time to file your response by submitting a formal

notice. If we do not receive a response from you by this date, we will conclude that you are in agreement



with the findings of this report.



Should you have additional questions concerning this matter, please do not hesitate to contact Stephanie

Berry, Director of Compliance at 340-773-6499.



7 Nugent-Hill



~ACEO/Chief Operating Officer



Sincerely,



cc: Percival Clouden, Chief Executive Officer

Tracy Lynch Bhola, Legal Counsel

Stephanie J. Berry, Director of Compliance

Sandra Bess, CCP Compliance Officer

Erika Kellerhals, Legal Counsel for FTC



Economic Development Commission —_Enterprise Zone Commission Government Development Bank —_—Industrial Park Development Corporation Small Business Development Agency



ST. CROIX 116 King Street, Frederiksted, USVi 00840 (340) 773-6499 FAX (340) 773-7701 ST THOMAS 8000 Nisky Shopping Center Suite 620, St. Thomas, USVI 00802 (340) 714-1700 FAX (340) 715-2753

txt

il



Economic Development Authority

WWWLUSVIEDAORG 877 432-8784



CONFIDENTIAL COMPLIANCE REPORT



FINANCIAL TRUST COMPANY, INC. (INACTIVE)

AS OF MARCH 23, 2012



SUMMARY HIGHLIGHT:



o Financial Trust Company, Inc. (“Beneficiary”) received approximately three years of a

five-year extension certificate. A combined total of twelve (12) years of tax benefits.



o Asof March 23, 2012, the Beneficiary did not meet the capital investment of US

$100,000.



o Capital Expenditures from January 1, 2009 to March 23, 2012 were $84,829 of which

81% ($68,379) was procured locally.



o Goods and Services from January 1, 2009 to March 23, 2012 were $3,589,248 of which

37% ($1,275,511) was procured locally.



o The Beneficiary met its employment requirement of 10 full-time employees.



o The Beneficiary met its residency requirement.



o The Beneficiary met the 20% management, supervisory and/or technical requirement.

o The Beneficiary met the requirements of Special Conditions six, and nine.



© The Beneficiary did not specifically meet the requirements of Special Conditions one,

and two.



o Unable to determine the Beneficiary’s compliance with the requirements of Special

Condition three, four, five, seven, and eight.



o The Beneficiary complied with the requirements of the procurement process.



© The Beneficiary did not meet the reporting requirements.



Economic Development Commission —EnterpriseZone Commission Government Gevelopment Bank —Industriat Park Development Corporation Small Business Development Agency in

ST. CROIX 116 King Street, Frederiksted, USVI 00840 (340) 773-6499 FAX (340)773-7701 ST. THOMAS 8000 Nisky Shopping Center Suite 620, St. Thomas, USVI 00802 (340) 714-1700 FAX (340) 715-2753

COMPLIANCE REPORT

Financial Trust Company, Inc.

As of March 23, 2012



Title 29, Chapter 12 VIC, §715(a) states in part “upon proper application or reapplication, public

hearing and in compliance with all other relevant provisions of this chapter pertaining to the

grant of initial benefits, as determined and required by the Commission, any recipient of

industrial development benefits (sic), may be granted an extension, modification, or renewal of

benefits...”



HISTORY:



On November 6, 1998, Financial Trust Company, Inc. filed Articles of Incorporation with the

Office of the Lieutenant Governor. On November 30, 1998, they were issued a Certificate of

Incorporation authorizing them to conduct business in the Virgin Islands. Financial Trust

Company, Inc. was originally granted a ten-year certificate of tax benefits for period

commencing March 21, 2000 and terminating on December 31, 2009. After completing an

extension application to the EDC on January 28, 2009, tax benefits were approved by the

Governor of the Virgin Islands on February 13, 2010. An extension certificate of benefits was

executed by the Chairman of the EDC Commission on October 3, 2010. Then on December 14,

2010 an orientation was performed and certificate of benefits issued to Financial Trust Company,

Inc., (“the Beneficiary”).



Financial Trust Company, Inc. (FTC) was granted tax exemption benefits “to conduct the

operation of a Category IIA designated service business that provides financial and economic

consulting, money management, investment, investment advisory and fiduciary services for its

clients. Client may include individuals, trusts, foundations and business entities. All of its clients

are located outside the U.S. Virgin Islands.”



Benefits were granted for a period of ten (10) years commencing and terminating as follows:



PERCENTAGE COMMENCEMENT TERMINATION



Income Taxes 81% April 1, 2009 March 31, 2014

Gross Receipt Taxes 90% April 1, 2009 March 31, 2014

Excise Taxes (Raw Materials) 90% N/A N/A



Excise Taxes (Equip., Mach.) 90% January 1, 2010 December 31, 2014

Real Property Tax 90% N/A N/A



Customs Duties 1% N/A N/A



Dividend Withholdings April 1, 2009 March 31, 2014

Interest Withholdings April 1, 2009 March 31, 2014



By letter dated March 7, 2012 the Beneficiary through its legal counsel requested that the

certificate of benefits be clarified to only reflect the activities in which they are engaged as of

January 1, 2012. They specifically requested that the language of the certificate be amended to

read as follows:



2|Page —

CONFIDENTIAL fe

COMPLIANCE REPORT

Financial Trust Company, Inc.

As of March 23, 2012



“FTC will conduct the operation of a Category IIA designated service business that provides

financial and economic consulting to its clients which will include multinational business

organizations.”



Under the terms of the Dodd-Frank Act, to the extent FTC was holding itself out as an

investment advisor or engaged in providing investment advisory services they would be required

to register and report on an ongoing basis to the Securities and Exchange Commission and / or

the Virgin Islands Department of Banking and Insurance. Further stating that FTC is not

currently engaged in the provision of investment advisory services, nor does it intend to engage

in such activities going forward.



Certificate amended effective January 1, 2012 to read: “The grant of benefits hereinafter

described is for the Beneficiary or any successors approved by the Commission to conduct the

operation of a Category IIA designated service business that provides financial and economic

consulting to its clients which include multinational business organizations. All of its clients are

located outside the U.S. Virgin Islands.”



By letter dated April 4, 2012, FTC through its legal counsel Erika Kellerhals notified the EDC

that they will no longer take benefits as of March 23, 2012. Additionally, they advised the EDC

they would suspend its current extension certificate of benefits, effective March 23, 2012,

reserving the right to extend the period of suspension should they determine that the economic

climate is not sufficient to support their intended operations.



By letter dated June 27, 2012, the EDC advised FTC that on June 21, 2012 the Commission met

to consider their request to seek suspension of its EDC benefits effective March 23, 2012. The

Commission after careful consideration approved the following:



1. To grant a suspension of benefits effective March 23, 2012 to March 22, 2013.



2. To require FTC to provide proof of its compliance with severance pay within 30 days of

the Board’s decision.



3. To require FTC to provide notice to the EDC within 30 days of the expiration of the

suspension of benefits on the business intent to (1) reactivate its business operations, (2)



terminate its certificate or (3) extend its suspension of benefits.



4. To hold FTC responsible for non-compliance with the terms and conditions of its

certificate of benefits for the period commencing January 1, 2007 to May 23, 2012.



5. To require FTC to provide preference in hiring to all employees laid off during the

suspension period and provide proof to the EDC within ten (10) days upon rehiring staff.



CONFIDENTIAL .

COMPLIANCE REPORT

Financial Trust Company, Inc.

As of March 23, 2012



6. To require FTC to provide the name and contact information of its resident agent; name

forwarding address and telephone numbers of the principals of the company.



7. Upon reinstatement FTC must be in full compliance with requirements of its certificate,

to include ten (10) full-time employees and appropriate benefits, as of the date

suspension went into effect.



INVESTMENT:



“The Beneficiary shall invest in this business in the United States Virgin Islands not less than the

amount of One Hundred Thousand U.S. Dollars ($100,000), excluding inventory, in the

benefited business commencing in 2009 and completed three (3) years thereafter.”



FINDINGS:



For the period April 1, 2009 through March 23, 2012, the Beneficiary invested a total of

$84,829. This investment requirement was to be commenced on April 1, 2009 and completed by

March 31, 2012, which would three (3) years after commencement of business, as required by

the benefits certificate. As of March 23, 2012, the Beneficiary invested $15,171 short of the

certificate’s capital investment requirement.



CAPITAL EXPENDITURES:

YEAR aan VI NON-VI | TOTAL

SUPPLIER SUPPLIER | SUPPLIER

2009 10,455 - 10,455

2010 18,305 17,498 15,042 50,845

2011 - 13,362 - 13,362

2012! - 8,759 1,408 10,167

TOTAL $ 18,305 $ 50,074 $ 16,450 $ 84,829

FINDINGS:



From 2009 to March 23, 2012 a total of $84,829 was procured in capital expenditures. Of the

expenditures 59% ($50,074) were procured from Virgin Islands Suppliers, 22% ($18,305) from

Eligible Virgin Islands Suppliers, and the remaining 19% ($16,450) from Non-Virgin Island

suppliers. All purchases were for machinery and equipment.



' Beneficiary’s EDC Annual report reflected pro-rated (January 1, to March 23, 2012) amounts for procurement

4|Page



CONFIDENTIAL PL

COMPLIANCE REPORT

Financial Trust Company, Inc.

As of March 23, 2012



CAPITAL EXPENDITURES

2009 - 2012

@ Eligible VI

Supplier

© Vi Supplier



© Non-VI Supplier



GOODS AND SERVICES:

Eligible

vi vi Non-Vl

YEAR Supplier | Supplier Supplier TOTAL

2009 26,870 346,516 387,077 760,463

2010 61,774 335,028 700,882 | 1,097,684 |

2011 64,595 371,379 1,151,617 | 1,587,591

2012° 2,545 116,054 24,911 143,510

Cumulative

Totals 155,784 | 1,168,977 2,264,487 3,589,248

FINDINGS:



The total expended for goods and services from 2009 through March 2012 was $3,589,248.

Purchases from Non-Virgin Islands suppliers totaled $2,264,487 (63%) of which the majority

was expended on seminars, education, and legal and accounting services; $1,119,727 (33%) was

procured from Virgin Islands suppliers of with the majority was expended on charitable

contributions, rent, legal and accounting services, utilities, and supplies; the remaining $155,784

(4%) was procured from Eligible suppliers of which the majority was expended on insurance,

supplies, and repairs and maintenance.



? Beneficiary’s EDC Annual report reflected pro-rated (January 1, to March 23, 2012) amounts for procurement

5|Page

CONFIDENTIAL



?

COMPLIANCE REPORT

Financial Trust Company, Inc.

As of March 23, 2012



GOODS & SERVICES

2009-2012



@ Eligible VI Supplier



w VI Supplier



© Non-VI Supplier



LOCAL PROCUREMENT:



In accordance with Division 10 of the Economic Development Commission Rules and

Regulations, the Beneficiary must comply with procurement procedures (§708-701 to 708-713).



FINDINGS:



TOTAL PROCUREMENT

2009 - 2012



100%

90%

80%

70%

60%

50%

40%

30%

20%

10%



0%



4 1 1 Gime € ak j 4 1 j



Cap Exp Goods & Svcs

®@ Non-local 16,450 2,264,487

} avi 50,074 1,168,977



@ Eligible VI

Suppliers



18,305 155,784



6|Page

CONFIDENTIAL

COMPLIANCE REPORT

Financial Trust Company, Inc.

As of March 23, 2012



From 2009 to March 2012, the Beneficiary’s total expenditures were $3,674,077. 62%

($2,280,937) of the purchases were made from Non-Virgin Islands Suppliers of which the

majority was expended on legal and accounting services, seminars and education, and machinery

and equipment, 33% ($1,219,051) of the purchases were made from Virgin Island Suppliers, of

which the majority was spent on rent, charitable contributions, legal and accounting services,

utilities, supplies, and machinery and equipment, the remaining 5% ($174,089) of purchases

were made from Eligible Virgin Islands Suppliers, of which the majority was expended on

insurance, supplies, repairs and maintenance, and machinery and equipment.



In accordance with the EDC Rules and Regulations §708-709 the Beneficiary was required to

provide proof of solicitation for quotes on a competitive basis.



For the period covered in this report, the Beneficiary did not have purchases which exceeded the

requirement of EDC Rules and Regulations §708-709 and therefore was not required to provide

proof of solicitation for competitive quotes.



EMPLOYMENT:



“The Beneficiary shall employ no less than ten (10) persons on a full-time basis in the eligible

activity of the benefited business commencing April 1, 2009 and continuing throughout the

duration of the term of benefits. During the entire period of this grant of benefits at least eighty

percent (80%) of all employees shall be “Residents of the U.S. Virgin Islands” as defined in Title

29, VI. Code, §703(e) and provided that not less than twenty percent (20%) in the area of

management, supervisory, and/or technical positions shall be filled by residents of the Virgin

Islands, pursuant to Title 29, Chapter 12, §710(a).”



EDC Rules and Regulations §708-605 defines full-time employees or employment as

“employment, on a permanent and continuous basis, for thirty-two (32) hours or more per week”.



FINDINGS:



20%



YEAR | TOTAL ae V.I. RES. * ve MGMT. VL



MGMT



2009 11 10 10 90% 5 83%



2010 10 10 10 98% 5 95%



2011 10 10 10 100% 5 100%



2012° 10 10 10 100% 5 100%



From January 1, 2009 to March 23, 2012, Financial Trust Company, Inc employed an average of

ten (10) full-time employees, meeting the certificate’s employment requirement. The Beneficiary

also met the 80% residency and 20% management, supervisory, and/or technical requirements

for the same period.



3 Total number of employees for quarter ending March 31, 2012

7|Page

CONFIDENTIAL



q>

COMPLIANCE REPORT

Financial Trust Company, Inc.

As of March 23, 2012



By letter dated April 4, 2012, the Beneficiary through its legal counsel stated that on March 12,

2012, MM] — Head of Security and GE - Messenger were advised their

positions with the company were terminated as of March 23, 2012. The letter also stated that

these employees would receive a severance package to include: payment for vacation days

accrued in 2012 and not used, three months’ severance pay, a lump sum payment of five

thousand dollars ($5,000) and life insurance premiums paid by the Beneficiary through

December 31, 2012. The Beneficiary also advised the Department of Labor by Notice of Action

of layoffs associated with the suspension of benefits.



In accordance with the EDC Rules and Regulations, Section 708-502 the Beneficiary maintained

a payroll account at First Bank Virgin Islands from which local employees are paid. First Bank

Virgin Islands is licensed and conducting business in the United States Virgin Islands.



SPECIAL CONDITIONS:

THE FOLLOWING SPECIAL CONDITIONS SHALL APPLY:

1. The Beneficiary will contribute One Hundred Thousand U.S. Dollars ($100,000) or one

percent (1%) of gross receipts tax exemption value, whichever is greater, annually to

various Virgin Islands charities, youth sports organizations and clubs; and symposiums



held in the Virgin Islands.



CERTIFICATE REQUIREMENT:



BENEFICIARY’S 1% GROSS | CONTRIBUTION

GROSS GROSS



RECEIPT | REQUIREMENT



YEAR RECEIPT RECEIPT



Reported Per | EXEMPTION maritan CEAHFICATE

Tax Return



2009 100,000

2010 100,000

20114 100,000

2012° 100,000

TOTAL CERTIFICATE REQUIREMENT $ 400,000



4 Gross Receipt tax rate: 4.5% - May 2011 to June 30, 2013

5 Beneficiary granted suspension of benefits effective March 23, 2012



8| Page

CONFIDENTIAL

COMPLIANCE REPORT



Financial Trust Company, Inc.



As of March 23, 2012



ACTUAL CONTRIBUTIONS: FINANCIAL TRUST CO., INC.



YOUTH SPORTS



YEAR | contrisutions | V! CHARITY ORAS NS | SYM POSiUMS CONTRIBUTIONS

2009 39,580 36,575 2,000 1,005

2010 104,464 81,600 22,664 200

2011 149,275 131,175 12,100 4,000 5,000

2012 62,125° 53,025 9,100 : -

TOTAL $ 355,444 $ 302,375 $ 45,864 $ 1,000 $ 6,205



The Beneficiary provided documentation for the period January 2009 to December 2012

showing total contributions of $355,444.



In 2009, a total of $39,580 was donated to a youth organization and various

charities. Of this amount, $36,575 was given to organizations such as Friends

of the St. Thomas Public Libraries, The St. Thomas Reformed Church,

Catholic Charities of the V.I., Antilles School, Ivanna Eudora Kean High

School “IEKHS”, the United Way of St. Thomas-St. John, Family Resource

Center, and Lutheran Social Services of the V.I. And $2,000 was given to

youth organization; Zero Tolerance Basketball Org. Inc.



In 2010, a total of $104,264 was donated to various charities and youth

organizations which included Virgin Islands Montessori School, the VI Police

Department, Rwanda Project USVI, Inc., Community Foundation of the V.L,

Friends of the St. Thomas Public Libraries, Beacon schools of the VI, Inc.,

Elrod Hendricks Charter, the Kingshill School, Humane Society of St.

Thomas, the Department of Education, CAHS French Club, Antilles School,

All Saints Cathedral School, V.I. Tennis Association, and the Family

Resource Center, Inc.



In 2011, a total of $149,275 was donated to a VI symposium, various

charities, and youth organizations, which included CAHS French Club,

IEKHS, Family Resource Center, Antilles School, Catholic Charities of the

V.L. Inc., V.I. Tennis Association, the Junior Statesmen Foundation, and the

Virgin Islands Department of Education.



® Contributions for the period January |, to December 21, 2012



CONFIDENTIAL



9|Page



FJ

COMPLIANCE REPORT

Financial Trust Company, Inc.

As of March 23, 2012



e For the year 2012, the Beneficiary reported total contributions of $92,125 of

which $49,250 were made prior to the suspension of benefits on March 23,

2012. Contributions were made to organizations which included Antilles

School, Kids Cope, Inc, My Brothers Workshop, Alvin McBean East Little

League, Humane Society of St. Thomas and the St. Thomas Baseball

Explorers.



During the period covered in this report, Financial Trust Company, Inc. made donations

totaling $6,205 to the St Thomas-St. John Chamber of Commerce. These donations were

not counted toward the certificates’ contribution requirement in accordance with the

Internal Revenue Service code.



Noted are contributions totaling $6,825 made in 2009 from the J. Epstein Foundation to charities

and youth organizations which included the V.I. Tennis Association, Amateur Basketball

Association, and Lutheran Church of the Reformation. These contributions may have followed

the contribution pattern of the previously expiring certificate which was modified and executed

in 2010. The J. Epstein Foundation is a tax exempt entity which was established primarily for

making charitable contributions to the Virgin Islands community. This fund was personally

funded by Mr. J. Epstein, sole owner of Financial Trust Company Inc.



For the period 2009 to 2012, Financial Trust Company, Inc. and The J. Epstein Foundation

donated a combined total of $362,269, a total shortfall of $37,731.



The Beneficiary did not meet the requirements of this special condition.



2. The Beneficiary will fund an academic scholarship program for students of Ivana Eudora

Kean High School, “IEKHS” and Charlotte Amalie High School, “CAHS”. The

Beneficiary will fund the program with a Twenty Thousand U.S. Dollars ($20,000)

contribution annually for a period of five (5) years. Each high school will receive Ten

Thousand U.S. Dollars ($10,000) annually to be awarded to a graduating senior who

intends to study and/or major in math or science at an accredited college or university,

and the Beneficiary will also contribute twenty-two thousand five hundred U.S. Dollars

($22,500) annually to Workforce Development Fund established by the EDC and not less

than Three Thousand U.S. Dollars ($3,000) annually to the Territorial Scholarship fund

pursuant to title 29, VIC, §708(m).



= In 2009, the Beneficiary provided no documentation to substantiate the

requirements of this special condition.



= In 2010, the Beneficiary provided documentation for two academic

scholarships totaling $20,000 to CAHS and IEKHS. The amount of $10,000

was given to one student from each school. The Beneficiary also provided

documentation substantiating contributions of $22,500 to the Workforce

Development Fund and $3,000 to the Territorial Scholarship Fund.



10|Page

CONFIDENTIAL



x

COMPLIANCE REPORT

Financial Trust Company, Inc.

As of March 23, 2012



In 2011, the Beneficiary provided documentation for academic scholarships

totaling $20,000: $10,000 was given to and $10,000 to

GE. (The scholarship provided to Ms. J was paid in 2012

upon the student’s written request). There is no documentation provided to

identify the schools these students attended. Additionally, the Beneficiary

provided documentation substantiating a contribution of $22,500 to the

Workforce Development Fund and $3,000 to the Territorial Scholarship Fund.



In 2012, the Beneficiary provided documentation for academic scholarships

totaling $30,000 given directly to Embry-Riddle Aeronautical University, The

University of Tampa and Wesleyan college after suspension of benefits. No

documentation was provided for contributions made to the Workforce

Development or the Territorial Scholarship Fund.



For the period 2009 up to March 23, 2012, the Beneficiary’s contribution requirement

was $182,000. They provided documentation for contributions totaling $91,000, a

shortfall of $61.000.



CERTIFICATE REQUIREMENT

EDUCATIONAL | WORKFORCE | TERRITORIAL Beneecicny —

YEAR | SCHOLARSHIPS | DEVELOPMENT | SCHOLARSHIP | ConsniputiON | /SHORT

(CAHS & IEKHS) FUND FUND

|

2009 20,000 22,500 3,000 -o- | (45,500)

2010 20,000 22,500 3,000 45,500 s

2011 20,000 22,500 3,000 45,500 -

2012 20,000 22,500 3,000 30,000” (15,500) |

| TOTALS $80,000; $90,000} $12,000 ___$ 121,000 | ($61,000) |



The Beneficiary did not meet requirements of the special condition.



3. The Beneficiary will continue to provide its employees with one hundred percent (100%)

employer paid health and dental insurance and will continue to permit employees to



’ Beneficiary granted suspension of benefits March 23, 2012.



CONFIDENTIAL



11 | Page

COMPLIANCE REPORT

Financial Trust Company, Inc.

As of March 23, 2012



purchase dependent coverage through the same provider with the employer paying one

hundred percent (100%) of the cost.



= For the year 2009, the Beneficiary provided documentation showing medical

and dental coverage offered to ten full-time employees and their dependents

through United Healthcare Insurance Company. Also provided was

documentation to show that the Beneficiary paid one hundred percent of the

coverage cost.



United Healthcare Insurance Company is a registered with the Virgin Islands Lieutenant

Governor’s Office, Division of Banking and Insurance.



An attempt to gather information to additional information to substantiate compliance

with this special condition was made by letter dated June 18, 2013. To date, the

Beneficiary provided no additional evidence.



Unable to substantiate the Beneficiary met the requirements of this special

condition.



4. The Beneficiary will continue to provide its employees with employer-paid life insurance

in an amount equal to two times (2x) each employee’s current base salary.



An attempt to gather information to substantiate compliance with this special

condition was made by letter dated June 18, 2013. To date, the Beneficiary provided

no evidence.



Unable to substantiate the Beneficiary met the requirements of this special

condition.



5. The Beneficiary will continue to provide its full-time employees with a Simple IRA plan

or similar retirement plan with employer matching one hundred percent (100%) of

employee’s elective deferral up to a limit of three percent (3%) of annual compensation.



The Beneficiary provided documentation for a SEP/IRA Plan established in 2001

with Merrill Lynch and provided to all full-time employees. They also provided

documentation for “SIMPLE” an American Funds Savings Incentive Match Plan for

Employees. It was incorporated with an Individual Retirement Agreement (IRA). The

Simple IRA is offered to all employees receiving at least $5,000 in compensation.



The Beneficiary made a matching contribution equal to 100% of elective deferrals up

to a limit of 3% per calendar year.



12|Page

CONFIDENTIAL



a

COMPLIANCE REPORT

Financial Trust Company, Inc.

As of March 23, 2012



For! ‘he'year 2009, the Beneficiary provided documentation showing nine full-

time employees who participated in the Simple IRA Plan.



An attempt to gather information to additional information to substantiate

compliance with this special condition was made by letter dated June 18, 2013.

To date, the Beneficiary provided no additional evidence.



Unable to substantiate that the Beneficiary fully complied with the

requirements of this special condition.



6. The Beneficiary will continue to provide its employees with two (2) weeks of paid

vacation during the first calendar year of employment for employees that are hired prior

to July and one (1) week paid vacation during the first calendar year of employment for

employees hired after July 1, 2009, three (3) weeks paid vacation annually during the

second (2") through the fifth ou ) years of employment and four (4) weeks paid vacation

annually after five (5) years of employment. Employees will also receive two (2) paid

personal days annually; along with holiday pay; five (5) personal emergency days

annually; bereavement leave; jury duty; voting; and medical leave.



The Beneficiary provided the Employee Office Manual which states that:



Employees hired prior to July 1* during the first calendar year of employinent

are eligible for two weeks of vacation, employees hired after July 1°

eligible for one week of vacation, after the first calendar year cmployees ar are

eligible for three weeks vacation and four weeks’ vacation after five years of

service.



Employees “are eligible for two (2) paid personal days each calendar year”;

employees receive holiday pay for holidays that occur on their “regularly

scheduled workdays when the office closes because of the holiday”;

employees receive up to five (5) personal emergency days annually;

bereavement leave of one workweek is provided in the event of the death of

an immediate family member; employees are provided with time off for jury

duty or subpoenaed testimony; employees are provided with time off for

voting if the polls are not open at least four hours before or four hours after

regularly scheduled work hours; employees are provided with full pay for up

to 26 weeks under the Beneficiary’s medical leave policy.



The Beneficiary met this requirement of this special condition.



CONFIDENTIAL



13|Page

COMPLIANCE REPORT

Financial Trust Company, Inc.

As of March 23, 2012



7. The Beneficiary will comply with the management training program as approved by the

Economic Development Commission.



The Beneficiary’s extension application included a management training program

which stated its policy is to fill all staffing needs and provide an environment

geared to the development of staff at all levels. This program will encompass the

utilization of in-house training and seminars, continuing education courses,

reimbursement for higher education degree and cross-training geared to the

professional and personal development of staff.



* For 2009, the Beneficiary provided documentation to substantiate continuing

accounting education offered to employees through SkillPath Seminars,

Virgin Islands Society of CPA’s, CPE Meeting Inc, Rockhurst University

Continuing and National Tax Institute Conference.



An attempt to gather information to substantiate compliance with this special

condition was made by letter dated June 18, 2013. To date, the Beneficiary provided

no evidence.



Unable to substantiate that the Beneficiary fully complied with the requirements

of this special condition.



8. “The Beneficiary will offer tuition reimbursement for short and long-term coursework in

subject areas directly related to an employee’s current work.”



An attempt to gather information to substantiate compliance with this special

condition was made by letter dated June 18, 2013. To date, the Beneficiary provided

no evidence.



Unable to substantiate that the Beneficiary fully complied with the requirements

of this special condition.



9. “In accordance with and subject to Virgin Islands law, Title 29 Virgin Islands Code

Chapter 12, §708(h) and applicable rules and regulations of the EDC, with regard to the

Eligible Supplier Program, the Beneficiary will purchase all goods and services from

U.S. Virgin Islands entities duly licensed and in good standing under the laws of the

Virgin Islands, whenever available, to the greatest extent possible.”



14|Page

CONFIDENTIAL 2p ;

COMPLIANCE REPORT

Financial Trust Company, Inc.

As of March 23, 2012



« For the period 2009 to March 23, 2012, the Beneficiary made total purchases

of $3,674,077, of which 38% was procured locally while 62% procured from

non local suppliers. Based on the information provided by the Beneficiary,

goods and services were purchased from US Virgin Islands entities whenever

available to the greatest extent possible.



The Beneficiary therefore met the requirements of this special condition.



REPORTING REQUIREMENTS:



IDC Annual Report: Current

Income Tax Return /

Audited Financial Statements Current

Lt. Governor’s Annual Report: Not Current

VIESA Report: Current

Affidavit of EDC Beneficiary: Current

Publication Notices . Current



FINDINGS:



In accordance with the EDC Rules and Regulations Section 716-6, the Beneficiary did not file

the 2011 and 2012 Virgin Lieutenant Governor’s Annual Reports with the Virgin Islands

Economic Development Commission and therefore did not meet the reporting requirements.



FINANCIAL ANALYSIS REVIEW:



Financial Trust Company, Inc operated with an average loss of $M for the period 2009

to 2012.



15 age



t—



CONFIDENTIAL

COMPLIANCE REPORT

Financial Trust Company, Inc.

As of March 23, 2012



Years Annual Net Aggregate % Change |



2009 | (i)

2010 | | (31.791%)

2011 i , (56.749%)

2012 )° | QM) | (83.261%)

Avg.



come | i) |



The Beneficiary’s Cost Benefit Analysis for 2009 to 2012 reflects a ratio of 1:29.22. For every

$100,000 in tax revenues forgone by the government during this time, the territory received

approximately $2,920,000 in economic output across the local economy.



For every $100,000 in tax revenues foregone by the territory, $1,340,000 in total output was

added to the Gross Territorial Product (GTP).



The Virgin Islands Economic Development Commission granted tax exemptions to the

Beneficiary totaling ft during 2009 to 2012. This analysis does not include the value of

tax exemptions on the personal income of Mr. Jeffrey Epstein, the sole owner of Financial Trust

Company, Inc.



OTHER FINDINGS:

On September 21, 2007, Mr. Jeffrey Epstein relinquished the title of Financial Trust's

Director/President to Mr. Darren Indyke. Mr. Epstein then assumed the title of the company’s



Director/President, on January 1, 2010.



Financial Trust Company, Inc. is solely owned by Mr. Jeffrey Epstein.



8 Reflects loss for year ended December 31, 2012.



CONFIDENTIAL

COMPLIANCE REPORT



Financial Trust Company, Inc.



As of March 23, 2012



CONCLUSION



l



Received three years of a five year extension certificate.



Did not meet the investment requirement as of March 23, 2012.



Met the full-time employment requirement.



Met the residency and management requirement.



Complied with Special Condition six, and nine.



Did not comply with Special Condition one and two.



Unable to determine the Beneficiary’s compliance with Special Conditions three, four,



five, seven, and eight.



Complied with the requirements of the procurement process.



Did not comply with the reporting requirements of the EDC.



Completed by: Sandra Bess, Compliance Officer



Reviewed by: Stephayy



. Berry, Compliance Director



January 31, 2014



Je



er Nugent-Hill



ACEO/Chie



perating Officer



17|Page



CONFIDENTIAL