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Trillion-Dollar Hideaway/Walking Trusts...(Where Wealthy Now Hide Money) "Mother Jones" Mag

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KoKo Donating Member (1000+ posts) Send PM | Profile | Ignore Sat Jan-24-09 07:31 PM
Original message
Trillion-Dollar Hideaway/Walking Trusts...(Where Wealthy Now Hide Money) "Mother Jones" Mag
Edited on Sat Jan-24-09 07:32 PM by KoKo01
Offshore accounts. IBCs. Walking trusts. Financial institutions have plenty of names for the places where the wealthy now hide their money from the IRS. They just don't call it cheating. "
Trillion Dollar Hideaway
by Ken Silverstein /November 01

"You've done just the right thing," Colin Honess, a garrulous, pleasant man with a big white beard and matching hair, tells me. "If you're going to put your money away, you want to make sure it's in good hands. And this is a very good, safe place to put your money."

It's a steamy mid-July morning and we're sitting in Honess' office at Jerome E. Pyfrom & Co., a law firm in Nassau, capital of the Bahamas, one of the world's premier "offshore" financial havens. Pyfrom & Co. specializes in setting up secret bank accounts that allow people to hide their funds -- from tax collectors, law enforcement authorities, creditors, or anyone else who might have a claim on their cash. Some experts estimate that more than $5 trillion is now hidden in offshore accounts. I've come to the Bahamas to investigate what kind of financial services are available to wealthy Americans eager to bury their riches abroad. Since my own resources are modest, I tell Honess I've grown rich as a NASDAQ trader and am sick and tired of being "taxed to death" by the U.S. government. How can Pyfrom & Co. be of assistance? I ask.

I'd initially contacted the firm via email and learned there was no need to actually visit the Bahamas to open my clandestine account; I could submit a few pages of paperwork by mail, and Honess would handle the rest. But now, sitting across from him in his office, I explain to Honess that I felt it prudent to take a firsthand look.

He hands me a packet of information, including a detailed report that lays out the advantages of stashing one's money in the Bahamas. "Imagine a company which is not required to file any public notice of who its officers and directors are," it begins. "No need to reveal the identity of its shareholders; no need to file any financial statements or keep any accounts. Imagine that such a company can be incorporated in an economically and politically stable country which is a member of the British Commonwealth and which imposes no income, capital gains, or inheritance tax. 'Pinch me! I'm dreaming!' you may be saying if you have never been introduced to the Bahamian International Business Company."

For the would-be tax evader or money launderer, International Business Companies, or IBCs as they are generally known, are indeed a dream come true. These shell companies often conduct no real business -- they are simply used as front operations by people trying to hide their wealth. A 1998 United Nations report says that IBCs "have few commercial or financial justifications, except to conceal the origin and destination of goods in international commerce ... and to evade taxes by moving profits and assets out of the reach of the tax collector."

Not surprisingly, business is booming at Pyfrom & Co. The firm's clients come mostly from the United States and Europe, but just that morning Honess had fielded a call from Singapore. Setting up an IBC with the company, he explains, is fast and cheap. All that's required of me is filling out a one-page form and providing a photocopy of my passport and driver's license. The entire incorporation process -- which costs $1,000 plus annual renewable fees of $750 -- can be completed within 48 hours. I can then open a bank account in the name of my IBC. To help me avoid placing my money in the local offices of a U.S. bank, Honess suggests a branch of Ansbacher, a South African financial firm that is "a little easier to work with."

The beauty of the whole arrangement, Honess emphasizes, is that Bahamian bank secrecy laws make it virtually impossible to determine who owns an IBC. Incorporation papers filed at the Registrar General's office, conveniently located just half a block away, disclose only an IBC's local office -- Honess suggests that his home address could serve that purpose -- and its agent, who could be another employee of Pyfrom & Co. or another Nassau lawyer or accountant. My paperwork and identification papers, as well as the names of my IBC's directors and officers, would be securely guarded at his firm's office. Local law makes it a crime to reveal account information without the owner's permission, unless under order from Bahamian courts, and Honess can recall the latter happening only a handful of times during the past decade -- and only in cases involving notorious drug dealers or other high-profile criminals.

Now we come to a delicate matter. Setting up an offshore account is perfectly legal, but it's a crime for an account holder not to disclose that information when filing a U.S. tax return. Honess calls the obligation to report hidden wealth a "fine line" and a "question of conscience." If I fail to do so, he predicts, there will be no negative consequences. "The IRS would need to spend a huge amount of money to pursue the matter and it's unlikely that they'd succeed," he says. "You're no big-time criminal, so it would hardly be worth it. Your NASDAQ investments were probably far riskier than this."

With that, our conversation comes to a close. In less than an hour, I've done everything necessary to set up a secret bank account, short of filling out the one-page application and turning over the $1,000 fee to Jerome E. Pyfrom & Co.

During the early part of this century, American mobsters began buying up legitimate businesses in order to explain the origins of their ill-gotten loot. Laundries and car washes were among the most popular choices; hence, the birth of the term money laundering. At roughly the same time, the Bolshevik Revolution and political instability across Europe caused the continent's elite to seek a safe haven for their assets. Much of their money poured into Switzerland, which emerged as the first capital of "private banking." The industry provides specialized financial services to wealthy clients -- serving, in many instances, as the legal cousin of money laundering.

Today, the practice of hiding wealth has reached epidemic proportions. Much of the money shipped abroad has its origins in arms dealing and drug trafficking. Another major source is loot plundered by corrupt government leaders, such as former Indonesian president Suharto. A growing portion of offshore money, however, is legal in origin, moved abroad by the super-rich -- often through major U.S. banks -- in order to evade taxes.

more at.........
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dixiegrrrrl Donating Member (1000+ posts) Send PM | Profile | Ignore Sat Jan-24-09 08:14 PM
Response to Original message
1. Very good read. Now I know where all the USA money is.
and why we will no tax base to speak of to finance any economic plans.
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BrklynLiberal Donating Member (1000+ posts) Send PM | Profile | Ignore Sat Jan-24-09 08:47 PM
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2. Guess that is where Madoff's money is...
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druidity33 Donating Member (1000+ posts) Send PM | Profile | Ignore Sat Jan-24-09 09:44 PM
Response to Original message
3. ack, kick and R... nt
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Demeter Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Jan-25-09 02:40 AM
Response to Original message
4. k N r!
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yurbud Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Jan-25-09 05:14 AM
Response to Original message
5. can Obama invade some of these countries that are true economic terrorists?
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yurbud Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Jan-25-09 05:17 AM
Response to Original message
6. in all seriousness, use new White House contact page to bug Obama about this:
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elleng Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Jan-25-09 05:36 AM
Response to Reply #6
7. The Feds pursue individuals
who have acquired their $ illegally and hide it; they/WE spend quite a lot doing so (or DID, anyway, before the bushies.)
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yurbud Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Jan-25-09 08:37 PM
Response to Reply #7
15. that is different from going after the havens. A better case could be made for bombing them
back to the stone age than Iraq.
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elleng Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Jan-25-09 08:41 PM
Response to Reply #15
16. Sure, bomb our neighbors
because we don't like their tax laws; sounds like a GREAT solution.
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yurbud Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Jan-26-09 02:08 AM
Response to Reply #16
17. in relative terms, they've done us more damage than Afghanistan. Obviously there are ...
other ways to deal with bad behavior than dropping bombs. I was using it as an expression of the magnitude of the damage.

That said, the problem is a little more serious than a quibble about taxes--they are intentionally helping the wealthy live above the law.

I think that deserves a bit more serious attention than a parking ticket.
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Joanne98 Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Jan-25-09 05:41 AM
Response to Original message
8. This is a must read. Thanks for posting it. K&R
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leveymg Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Jan-25-09 06:21 AM
Response to Original message
9. FBI/Treasury should set up 30 sting operations in the Bahamas - that would put an end to this.
Edited on Sun Jan-25-09 06:29 AM by leveymg
Open off-shore tax dodge boutiques in high-end locations, do viral marketing, lure in a bunch of wealthy tax cheats, and then dragnet them.

Prosecute them and seize their assets. Treat them like the major menace to society they really are.

Actually, there has been a big int'l crackdown on tax evaders and tax havens in recent years. Bahamas aren't what they once were -- that article is eight years old -- but, tax evasion schemes have simply gotten more sophisticated, and are now tied in with big bank and corporate collapses where billions of dollars are simply made to disappear at once.
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formercia Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Jan-25-09 08:36 AM
Response to Original message
10. This would be a good use for the Intelligence networks that Bush Gang
set up to spy on us. Turn it on the criminals and crooked politicians, and while we're at it, Bush Gang.
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NobleCynic Donating Member (991 posts) Send PM | Profile | Ignore Sun Jan-25-09 12:52 PM
Response to Original message
11. I thought money laundering had a different origin
When making counterfeit bills, you throw them in a tumbler (a dryer being a common instrument) to give the illusion of wear on the bills.

Maybe I was wrong though, interesting either way.
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acmavm Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Jan-25-09 01:29 PM
Response to Original message
12. What is it called when you intentionally undermine the US government?
Edited on Sun Jan-25-09 01:29 PM by acmavm
I mean, generally it's called treason. These guys aren't giving aid and comfort to an 'enemy' as we traditionally use the word though. They ARE the enemy.
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Mrs. Ted Nancy Donating Member (303 posts) Send PM | Profile | Ignore Sun Jan-25-09 02:28 PM
Response to Original message
13. UBS closing secret accounts
From the New York Times.

Pressured by I.R.S., UBS Is Closing Secret Accounts

Published: January 8, 2009

Under pressure from federal authorities, the Swiss bank UBS is closing the hidden offshore accounts of its well-heeled American clients, potentially allowing their secrets to spill into the open.

In a step that would have once been unthinkable in the rarefied world of Swiss banking, UBS will shut about 19,000 accounts that prosecutors suspect have gone undeclared to the Internal Revenue Service.

UBS will transfer the assets to other banks or other divisions within UBS, or will mail checks directly to the account holders, creating paper trails for federal prosecutors who are examining whether UBS clients used such accounts to evade taxes.

The clients now face stark choices: they can cash their checks, and thereby alert the authorities to any potential wrongdoing, or not cash them, effectively losing their money.

Or they can transfer the money to new banks, a procedure which, in the case of foreign banks, requires depositors of more than $10,000 to report the new account to the Treasury Department...
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southerncrone Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Jan-25-09 04:30 PM
Response to Original message
14. This is one reason our economy is going belly-up. Not to mention
the average working person is loosing their nest-eggs & homes.

I have to wonder how much of this money in IBC's should be in our stock market, or was part of the "$750B hand-out" last month.

I hope the Obama administration sets up stiff penalties for countries who hold the elite's wealth in these types of accounts. We should require FULL DISCLOSURE of any American Citizen who has invested in these & the amount; otherwise, we should set sanctions just like with poor foreign countries who act inappropriately toward their own citizens.

These countries are acting inappropriately toward US citizens, namely us who actually pay the taxes to fund the wealthy's wars, capital ventures & bailouts.

Any US Citizen engaging in such practice should be charged w/treason.
Or the tax code should be abolished.
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