Sunday Long Read: Tax Havens, Tax Cheats & Other Criminals

Looks like we’re in for a chorus of wide-eyed whoever could have imagined — turns out that people who want to hide their funds may not always have acquired such funds in full compliance with the law. Sunday’s Washington Post has a long piece on “Piercing the Secrecy… ”

A New York hedge fund manager allegedly swindles $12 million from a prominent Baltimore family. An Indiana couple is accused of bilking hundreds of customers by charging for free trials of cosmetic products. A financial manager in Texas promises 23-percent returns but absconds with $33.5 million of his investors’ money in a classic Ponzi scheme.

All three cases have one thing in common: money that ended up in offshore accounts and trusts set up in tax havens around the world.

The existence of the trusts surfaced during a joint examination of the offshore world by The Washington Post and the International Consortium of Investigative Journalists, a D.C-based nonprofit news organization. ICIJ obtained 2.5 million records of more than 120,000 companies and trusts created by two offshore companies, Commonwealth Trust Ltd. (CTL) in the British Virgin Islands and Portcullis TrustNet, which operates mostly in Asia and the Cook Islands, a South Pacific nation. The records were obtained by Gerard Ryle, ICIJ’s director, as a result of an investigation he conducted in Australia…

Today, there are between 50 and 60 offshore financial centers around the world holding untold billions of dollars at a time of historic U.S. deficits and forced budget cuts. Groups that monitor tax issues estimate that between $8 trillion and $32 trillion in private global wealth is parked offshore.

Sen. Carl M. Levin (D-Mich.) has been holding hearings and conducting investigations into the offshore world for nearly three decades. In 2010, Congress passed the Foreign Account Tax Compliance Act requiring that U.S. taxpayers report foreign assets to the government and foreign institutions alert the IRS when Americans open accounts.

In February, Levin introduced legislation that would permit the Treasury Department to penalize offshore financial institutions that “significantly” impede U.S. tax enforcement and put an end to accounting practices that enable corporations to evade billions in taxes.

The efforts by Levin and other lawmakers have been opposed by powerful lobbying interests, including the banking and accounting industries and a little-known nonprofit group called the Center for Freedom and Prosperity. CF&P was founded by Daniel J. Mitchell, a former Senate Finance Committee staffer who works as a tax expert for the Cato Institute, and Andrew Quinlan, who was a senior economic analyst for the Republican National Committee before helping start the center…

According to records reviewed by The Post and ICIJ, the organization’s fundraising pleas have been circulated to offshore entities that make millions by providing anonymity for wealthy clients, many of them U.S. citizens.

There’s been quite the response to those ICIJ documents. And good for Senator Levin; I hope he can do some serious damage to these miscreants now that he’s not worried about reelection.

38 replies
  1. 1
    Maude says:

    Obama has done well in taking away tax shelters from the wealthy. I don’t remember any president before him doing this.
    It is a hard slog to keep removing places that hide US citizens stashes of cash. A bit at a time.

    ETA, Good morning AL. WE are going to hit about 70 degrees on Tuesday.

  2. 2
    Baud says:



  3. 3
    WereBear says:

    Interesting topic. Reminds me of the way elderly people can lose their minds over money.

    In both cases, they are miserly and irrational because they do not have the confidence of knowing they can make it when they need it.

    Criminals do get tired of crime, and long for retirement… and they are perhaps the most handicapped in acquiring it in the way they were once used to doing.

  4. 4
    c u n d gulag says:


    Well, idathunkit, ‘n you mightathunkit, but apparently, not enough people who might actually have been able to do soemthing about this, thunkit.

    Now, the question is, will anything happen to those people?
    Will the money be returned to the rightful owners, or, if they can’t be found, used to pay down our “Debt Crisis?”
    Will anyone actually go to jail?

    I don’t thunk so.

  5. 5
    Maude says:

    That’s Miss Maude to you.

  6. 6
    WereBear says:

    @c u n d gulag: I think the reasons are along the lines of “learned helplessness.”

    When Reagan started assuring his followers they lived in the “best of all possible worlds” they loved to believe it. As any con artist relies upon the dreams of riches crowding out rational thought in their victims.

    They’ve had decades to build structures to favor them while the fooled fiddled and burned.

  7. 7
    c u n d gulag says:

    Yeah, but the drift of that grift started earlier, with Nixon, and his “Silent Majority.”

    Reagan decided that a heaping helping of not-at-all silent “Moral Majority” Jesus-freaks was what was needed to help him propel the Conservative propaganda.

    The final iteration, was W, and the claim that he was an examle of a “Compassionate Conservative.”

    Now, there’s plenty of Conservatism, but little to no compassion.
    Though, I believe that Conservatives will finally display some of that compassion – for the poor, put-up rich folks, caught up in the vice-grip of that KenyanSocialistFascistCommunistAtheistMuslim Usurper, and his loyal foot-soldiers in the Liberal Lamestream Media.

  8. 8
    Punchy says:

    I once had sexytime in the ocean. Hows that for an offshore account?

  9. 9
    WereBear says:

    @c u n d gulag: Very true… we can follow it easily to the 1920’s, and the Ponzi scheming.

    What drive me crazy is that it can be fixed; can build better lives for everyone… if people would get off their duffs.


  10. 10
    Baud says:

    @Miss Maude:

    Yes, ma’am.

  11. 11
    arguingwithsignposts says:

    I really don’t think this is good Sunday morning reading. But then, I stopped watching the Sunday morning village circle-jerks a long time ago. Bad for the blood pressure.

    And, oh, Sen. Levin is holding hearings! Oh, joy! Next they’ll have a Blue Ribbon Commission, maybe some sternly worded letters.

    I’m going to try to do something more productive like change cat litter and do laundry and put this seething anger to the back of mind.

  12. 12
    Lurking Canadian says:

    Politics of envy! Protect the job creators! Why do you hate success! Argle blargle!

  13. 13
    LanceThruster says:

    Discussion of how to deal with these miscreants…

    Biker #2: [the whole gang holds Pee-wee hostage] I say we kill him!

    Biker Gang: [shout] Yeah!

    Biker #3: I say we hang him, *then* we kill him!

    Biker Gang: [shout] Yeah!

    Biker #4: I say we stomp him!

    Biker Gang: [shout] Yeah!

    Biker #4: Then we tattoo him!

    Biker Gang: [shout] Yeah!

    Biker #4: Then we hang him…!

    Biker Gang: [shout] YEAH!’!

    Biker #4: And then we kill him!

    Biker Gang: [shout] YEAH!’!’!

    Pee-wee: [tries to throw voice without moving lips] I say we let him go.

    Biker Gang: [shout] NO!’!’!

  14. 14
    Mike in NC says:

    Is this good news for Mitt Rmoney?

  15. 15
    RaflW says:

    It’s almost like these rich tax-dodgers are takers, not makers.

  16. 16
    the Conster says:

    Here’s a massively satisfying story about mother nature kicking of one of these too rich for his own good “makers” right in the nuts.

  17. 17
    maya says:

    Cook Island tax havens? They’re all Fletcher Christians now.

  18. 18
    Patricia Kayden says:

    “Groups that monitor tax issues estimate that between $8 trillion and $32 trillion in private global wealth is parked offshore.”

    But thank goodness that the Repubs are there to protect the oppressed rich from the mean people who want them to pay their fair share of taxes. Thank God for that!

  19. 19
    Roger Moore says:

    I’ll say it again: if we’re going to follow the Neocons’ advice and throw some pipsqueak country against the wall once a decade to prove we mean business, can we pick an offshore tax haven next time? They’re actually hurting our country, and they’re likely to put up a lot less resistance than the oil-rich dictatorships we have been targeting.

  20. 20
    bourbaki says:

    @Maude: Example please.

  21. 21
    Villago Delenda Est says:

    @Roger Moore:

    We only do that to the offshore tax haven country AFTER we’ve had a platoon of rangers throw the pipsqueak neocons against a wall to show them we mean business.

  22. 22
    Omnes Omnibus says:

    @bourbaki: The Foreign Account Tax Compliance Act mentioned in the original post would be an example.

  23. 23
    Maude says:

    Luxembourg is considering open banking which will bring transparency to bank accounts. If this happens, the wealthy will have to get their money out of there because Luxembourg will “tell on them”.

  24. 24
    bourbaki says:

    @Omnes Omnibus: I’m not really sure what a act of congress has to do with the presidency. Was Bush “doing more than any previous president in cracking down on corporate accounting fraud” by signing Sarbanes-Oxley?

    Has the DOJ and IRS been more aggressive in pursuing Tax Fraud and Tax Evasion?

  25. 25
    Howard Beale IV says:

    Center for Freedom Fleecing and ProsperityPonzis.


  26. 26
    Mnemosyne (iPhone) says:


    Has the DOJ and IRS been more aggressive in pursuing Tax Fraud and Tax Evasion?

    Before or after Congress slashed their budgets? It’s hard for the IRS to do enforcements when Congress decrees their employees can only work 4 days a week.

    If you’re going to give Congress all of the credit for the legislation they pass, you also have to give them their share of the blame when that legislation ties the hands of the IRS and DOJ.

  27. 27
    bourbaki says:

    @Mnemosyne (iPhone): That’s a good point. FATCA is not going to do any good if there is no-one to audit what gets reported.

  28. 28
    Yutsano says:

    @Mnemosyne (iPhone):

    Before or after Congress slashed their budgets and keeps slashing them even more?

    Adjusted for truth. But hey why invest in the agency that gets 8 dollars for every dollar spent on it? STARVE TEH BEAST OR GROVER WILL CRY!!

  29. 29
    Omnes Omnibus says:

    @bourbaki: Given that the FATCA was a part of the HIRE Act and was proposed by the administration, I think it counts.

  30. 30
    burnspbesq says:


    Has the DOJ and IRS been more aggressive in pursuing Tax Fraud and Tax Evasion?

    Yes, they have. Very much so. The information services I use in my practice are subscription-only so I can’t post links, and I can’t talk about specific matters that I am handling or have handled because of the attorney-client privilege, but both agencies are kicking a lot of ass.

  31. 31
    burnspbesq says:

    Small point: FATCA did not introduce the requirement that Americans with offshore accounts notify the IRS. That requirement has existed under the Bank Secrecy Act since the 1970s

    The Bank Secrecy Act filing, commonly known as an “FBAR,” goes to a separate IRS function, and historically there was little cross-checking against tax returns.

    The FATCA filing, Form 8938, is an attachment to Form 1040, which facilitates cross-checking.

    The other thing that is happening under FACTA is that the United States is using the threat of increased withholding tax on interest and dividends paid from the US to foreign payees to bludgeon foreign countries into providing reporting on interest and dividends paid to US taxpayers. There is a huge amount of resentment in a lot of places, and a respectable body of opinion among Canadian lawyers that compliance with FATCA by the Canadian government would violate the Charter of Rights.

    And the United States is being hypocritical about this, refusing to make FATCA-like disclosures related to the gazillions of dollars of Latin American flight capital sitting in banks in Miami and San Diego.

  32. 32
    PeakVT says:

    In filings with the IRS, the center says it has “met with more than 175 Capitol Hill offices on benefits of tax competition.” The center argues that unfettered access to offshore havens leads to lower taxes and more prosperity.

    Benefits. What a riot.

  33. 33
    Higgs Boson's Mate says:


    Thank you for weighing in on this. Am I correct in understanding that the increased withholding doesn’t start until 2014 and that it doesn’t come fully into effect until 2015? If so, that seems to leave Congress a lot of time to amend the law.

  34. 34
    Xenos says:

    @burnspbesq: Complying with FATCA is a major preoccupation in Luxembourg at the moment. People were hoping that a President Romney would make it go away, and I was quite concerned about the slow pace at which the regs were being promulgated.

    It turns out that Obama had the shit under control, won the election, and was delaying publishing the regs just long enough to work out the tax agreements needed to give FATCA real teeth.

    Private banking is over in Luxembourg, at least as far as US nationals are concerned.

  35. 35
    burnspbesq says:

    @Higgs Boson’s Mate:

    Thank you for weighing in on this. Am I correct in understanding that the increased withholding doesn’t start until 2014 and that it doesn’t come fully into effect until 2015? If so, that seems to leave Congress a lot of time to amend the law.

    Would have to check to be certain, but I think that’s right.


    Inter-governmental agreements are the key to making FATCA work. If the EU and Switzerland had the balls to tell us to go fuck ourselves, we would indeed be fucked. For better or worse, they didn’t nut up.

  36. 36
    Another Halocene Human says:


  37. 37
    Another Halocene Human says:

    I pretty much assumed off-shore tax havens were for embezzlers and gangsters anyway. If your money is legit (even wall street ‘legit’) it’s harder to make it go bye-bye. I suppose there are ways.

  38. 38
    JustRuss says:

    @Another Halocene Human: Really? Have you ever heard of Mitt Romney? Google Apple while you’re at it, most of their profits are off-shored.

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