[5] In 1931, Groves obtained control of Chain and General Equities by underwriting an offering to the stockholders of additional stock and then caused the election of officers of his choice to the board of directors, according to the SEC.
[8] In 1933, Groves sold his control of Equity Corp. His transactions caught the attention of the Securities and Exchange Commission (SEC), and from 1933 until his imprisonment in 1941, he was frequently in the news for legal or regulatory matters.
Phoenix then obtained control of Autocar, United Cigar, Certain-Teed Products, Whelan Drug Stores and other companies.
By 1936, Groves revealed that he, as sole owner of offshore Company Montana of Panama, could carry out transactions through it without incurring taxes.
[16] From 1946, Bahamian finance minister and Member of Parliament Stafford Sands served as Wallace Groves's lawyer and helped pave the way for his business interests.
In 1955, Groves secured the seminal Hawksbill Creek Agreement with the colonial government, ceding to him 211 square miles of Grand Bahama Island upon which to develop a free-trade industrial and resort zone.
In 1963, after internal self-government was granted to the Bahamas, Groves further secured the right to operate gambling establishments at Freeport, using the services of Stafford Sands.
At the same time, Sands and other high government officials received payments exceeding $1,000,000 from the Grand Bahamas Port Authority.
The complex system of continuing payoffs to the "Bay Street Boys" - the white elite who controlled the Bahamas government - was detailed by the Royal Commission of Inquiry of 1967.
[17] The payments from the three casinos (a third was built near Nassau) continued until the United Bahamian Party (UBP) lost power in the 1967 elections.
[17] According to Life, the Groves domains were merely the most lucrative component of a complex network of state-sanctioned criminal activities centered on off-shore companies, including money laundering and insurance fraud.
The American public came to know first of the situation in the Bahamas on 5 October 1966, when the Wall Street Journal published a detailed exposé of the trades involving Groves, Sands, Lansky and others.
[18] The Journal also wrote that an unpublished tell-all book, The Ugly Bahamian, written by Alan Witver, a former employee of Groves, had been bought up and repressed by Sands.
[19] Wallace Groves was associated with numerous companies, most significantly the well-known Mary Carter Paint Co., which became Resorts International before beginning to operate Atlantic City, New Jersey casinos in 1978.
Among objections to this move were listed that "the M.C.P.C….engaged in the purchase of Bahamian real estate with individuals of unsuitable character and nature, specifically Wallace Groves, a convicted swindler, and Louis Chesler, an associate of criminals….The M.C.P.C.
"[20] Numerous mob-affiliated gambling experts, including Dino Cellini and many of his family members, worked for Groves in the Bahamas.
"[17] Chesler's surreptitious funneling of $11 million to the Lucayan project caused the collapse of Atlantic Acceptance Corporation of Canada in a major scandal, 15 June 1965.
[2] Groves lived in grand style in Freeport in a large, blue-green tiled home, and spent his leisure on his private island, Little Whale Cay 33 miles off Nassau.