|
|||||||
| Navigation |
Call Toll-Free
|
||||||||||||||||||
| Recommended Reading | ||||||||
|
||||||||
| See Also | ||||||||
| Home Archive Research_Links Suggested_Reading Subscribe |
March / April 2001 (Vol. 1 / No. 4)
SPECIAL REPORT ON LEGISLATIVE AND
REGULATORY CHANGES IN THE
BAHAMAS
In this issue:
- Welcome
- Bahamas International Business Companies Act, 2000
- Financial Transactions Reporting Act, 2000
- Financial and Corporate Service Providers Act, 2000
- Bank and Trust Companies Regulation Act, 2000
- Evidence (Proceedings in Other Jurisdictions) Act, 2000
- Proceeds of Crime Act, 2000
- Criminal Justice (International Co-operation) Act, 2000
- Financial Intelligence Unit Act, 2000
- Central Bank of the Bahamas Act, 2000
- The Riser Report Know Your Customer Documentation Checklist
- OECD Update
- Briefly Noted
- Book Review: Against the Gods: The Remarkable Story of Risk
- Thanks to Friends and Colleagues
Welcome to the March/April 2001 edition of The Riser Report. The Riser Report is a bimonthly publication covering issues and opinions related to asset protection and estate planning. The Riser Report is written by Attorney Christopher M. Riser, of Mayer & Riser, PLLC (www.mayer-riser.com) in Highlands, North Carolina and published by Axius Publishing, LLC.
The Riser Report is sent by electronic mail to subscribers of our companion publication, The Adkisson Analysis, and vice versa. If you aren't already a subscriber to The Riser Report, you can subscribe at www.riserreport.com. Subscribe to The Adkisson Analysis at www.falc.com. If you have yet to enter the age of e-mail and Web publications and are reading this issue from a friend's printed copy, you can subscribe by regular postal mail by writing to the address at the end of this issue.
In this issue, I review all of the recent offshore-related legislative and regulatory changes in The Bahamas, most of which came into law at the very end of December. These changes are important not only because The Bahamas is an important offshore jurisdiction, but also because they likely will be typical of the changes to come in most other offshore jurisdictions.
In this issue I also provide readers with a checklist of Know Your Customer documentation likely to be required when doing business offshore. Next is an update on the OECD harmful tax competition initiatives. Briefly Noted contains tidbits of information on various topics, with a concentration this time on scams. Next, I review the book, Against the Gods: The Remarkable Story of Risk, by Peter L. Bernstein. Finally, at the end of this issue is my heartfelt thanks to friends and colleagues who have supported and consoled my family during a recent personal tragedy.
Comments and suggestions are always welcome. Email them to criser@assetprotectionbook.com or use the feedback form on The Riser Report Web site at www.assetprotectionbook.com/comments.htm
Bahamas International Business Companies Act, 2000
DOWNLOAD THE IBC ACT 2000 (MS Word Format)
The new IBC Act replaces the old 1989 IBC Act. Among the principal changes:
-
Bearer shares are no longer allowed.
-
There apparently must be at least two shareholders, in that the Supreme Court of The Bahamas may cause an IBC to be wound up Section 94 of the new IBC Act at any time that there are less than two shareholders.
-
There must be at least two directors.
-
Directors and officers are a matter of public record.
-
Annual meetings are required.
-
Subject to Exchange Control approval, IBCs may have Bahamian resident shareholders and may carry on business in The Bahamas with Bahamian residents.
-
Removal of the guarantee of tax exemption for IBCs incorporated under the new IBC Act.
-
Incorporation of IBCs is restricted to licensed banks, licensed trust companies, and persons licensed under the Financial and Corporate Service Providers Act (FSCPA).
OECD issues of transparency have been addressed by the elimination of bearer shares, and the requirement for public disclosure of officers and directors. Additionally, corporate service must be licensed and must implement thorough Know Your Customer procedures with regard to IBCs.
OECD issues of ring fencing (low or no tax on certain categories of income which tax advantages are restricted to non-residents with no substantial domestic business activities) have been addressed by removing the tax exemption guarantee for new IBCs and by allowing IBCs to be owned by Bahamian residents and to conduct business in The Bahamas with Bahamian residents.
It is not entirely clear what concerns are addressed by the requirements for two shareholders, two directors and annual meetings. After all, the companies laws of the most powerful members of the OECD, the U.S. and the U.K., allow for single-shareholder companies with one director and without the requirement for annual meetings. Note that the proposed requirement that at least one director be a Bahamian resident was not implemented in the new IBC Act.
Existing IBCs have until the end of June to bring themselves into compliance with the new IBC Act. The changes that the typical IBC will have to make to bring itself into compliance will be to amend the Articles and Memorandum of Association to (1) prohibit bearer shares; (2) require at least two shareholders; (3) require at least two directors; and (4) require at least one general meeting per year. IBCs with bearer shares must call them in and exchange them for registered shares by the end of June 2001, after which time the bearer shares are void. Additionally, many IBCs may find themselves with unlicensed registered agents. Such IBCs will need to engage a new registered agent who is licensed under the FSCPA.
Alternatively, many IBCs formed under the old IBC Act may choose to redomicile, under the "continuation" provisions of Part VIII of the Act, to an offshore jurisdiction with less restrictive requirements. The old IBC Act and the new IBC Act allow Bahamas IBCs to redomicile to another jurisdiction, as long as such redomiciliation is allowed in the new jurisdiction. Potential jurisdictions for domicile transfer include, among others, Anguilla, St. Vincent, Nevis, and the British Virgin Islands.
Other jurisdictions, however, should be expected to make similar changes to their companies acts. Redomiciliation merely may postpone the inevitable with regard to issues such as bearer shares and public disclosure of directors and officers. However, it should be expected that some, if not most, offshore jurisdictions will continue to allow single-shareholder companies with one director.
Financial Transactions Reporting Act, 2000
DOWNLOAD THE FTRA 2000 (MS Word Format)
DOWNLOAD THE FTR REGULATIONS 2000 (MS Word Format)
The Financial Transactions Reporting Act, 2000 consolidates and expands Bahamian law regarding customer identification, suspicious transaction reporting, retention of records and search warrants with regard to financial transactions information that was formerly covered under the Money Laundering (Proceeds of Crime) Act and Regulations, 1996.
The FTRA requires financial institutions and professional intermediaries, where applicable, to verify the identity of account holders, including beneficial owners of bank accounts, securities accounts, life insurance policies, superannuation schemes, safe custody services, and trust settlements (i.e., the requirements apply to vested trust beneficiaries). The identification requirements apply to new and existing account holders. Existing account holders are required to be properly identified by December 28, 2001.
The FTRA expands Bahamian law with regard to suspicious transactions reporting, with reporting now required to the Financial Intelligence Unit (FIU). There is immunity from civil and criminal liability as a result of suspicious transactions reporting. Failure to report suspicious transactions and knowingly making false or misleading statements in a suspicious transactions report are criminalized.
The FTRA requires a financial institution to retain such records as are reasonably necessary to enable transactions to be readily reconstructed by the FIU, with a specific requirement that records be kept for at period of 5 years after a person ceases to be an account holder.
The Financial Transactions Reporting Regulations, 2000 (FTRR) spells out the specific requirements for verifying identity. Account holders can expect to provide the information specified in the Riser Report Know Your Customer Documentation Checklist which appears later in this issue of The Riser Report.
Financial and Corporate Service Providers Act, 2000
DOWNLOAD THE FCSPA 2000 (MS Word Format)
The Financial and Corporate Service Providers Act, 2000 (FCSPA) regulates the provision of financial and corporate services (other than services provided by licensed banks and trust companies), including online financial services, registration and administration of IBCs, registered agent and/or registered office services, and the provision of nominee shareholders, directors, officers and partners.
All providers of such services are required to be licensed. Licensed providers are required to verify the identity of its clients in accordance with the FTRA and FTRR, maintain a register of beneficial ownership of IBCs and exempted limited partnerships.
All current financial and corporate service providers are required to be licensed by the end of March, 2001. An application form for licensure has been promulgated, but the application fee is apparently still not set.
Bank and Trust Companies Regulation Act, 2000
DOWNLOAD THE BTCRA 2000 (MS Word Format)
The Bank and Trust Companies Regulation Act, 2000 (BTCRA) expands the criteria for licensing banks, provides for enhanced supervisory powers for the Inspector of Banks and Trust Companies, provides for cross-border supervision by foreign regulators, and increases the exceptions to bank secrecy.
Additional criteria for extending a bank license now require consideration of the general fitness of the applicant; the nature and sufficiency of the applicant's financial resources; the soundness and feasibility of the business plan; the business record and experience of the applicant; the character, competence and experience of the proposed operators of the bank; and the best interest of the financial system in The Bahamas.
Under the BTCRA, the Inspector of Banks and Trust Companies is now empowered to conduct on-site examinations and off-site supervision and to call for the assistance of bank and trust company auditors.
The BTCRA also provides that a foreign supervisory authority may, solely for the purpose of consolidated supervision, conduct an inspection of the books and accounts of any branch or subsidiary of a bank or trust company in The Bahamas for which it has responsibility for regulating. There are provisions for approval of requests for such inspections by the Inspector of Banks and Trust Companies, as well as provisions for confidentiality and for limiting the scope of the inspection and the disclosure of any information obtained.
Bank secrecy is now referred to in the Act as 'confidentiality.' The new Act expands the number of express exceptions to the statutory duty of confidentiality, including:
-
to enable or assist the Governor of the Central Bank in functions conferred on him by law;
-
for or for the institution of criminal proceedings or disciplinary proceedings relative to a lawyer, auditor, accountant, valuer or actuary or public officer or employee of the Central Bank.
Evidence (Proceedings in Other Jurisdictions) Act, 2000
As stated in the 1990 case of Nissan Motor Corporation v. Adesco Inc., "the attitude of the Bahamian court towards a request for judicial assistance originating from a foreign court has been to begin by looking favorably on it on the grounds of international comity." The Evidence (Proceedings in Other Jurisdictions Act, 2000 (EPOJA) is based upon the 1975 U.K. act of the same title, which itself is based on the 1970 Hague Convention on the Taking of Evidence Abroad in Civil or Commercial Matters.
Under the EPOJA, an application by a foreign court to obtain evidence in The Bahamas for use in a foreign civil proceeding must be sent to the Supreme Court which forwards the request to the Attorney General, who then makes application on behalf of the foreign court. The Supreme Court may make appropriate provisions for obtaining the requested evidence in The Bahamas where it is satisfied that the request is issued by or on behalf of a court or tribunal and for purposes "of civil proceedings which either have been instituted before the court or whose institution is contemplated and for which investigations have commenced."
In order to prevent evidentiary fishing expeditions, the EPOJA provides that the steps requested must be the same as could be required to be taken in court proceedings in The Bahamas. The EPOJA also provides that an order under the Act shall not require a person to disclose what documents relevant to the foreign proceedings are in his possession, custody or power nor shall an order under the Act require a person to produce documents other than particular documents specified in the order as being documents appearing to the Court to be, or likely to be, in his possession, custody or power.
The Proceeds of Crime Act, 2000 (PCA) empowers the Bahamian police, customs and courts with expanded authority and procedures to deal with money laundering. Specifically addressed are issues of money laundering offenses, information gathering, and confiscation and seizure, with respect to both domestic and foreign orders. The PCA consolidates and expands the former Money Laundering and Proceeds of Crime Act and the Tracing and Forfeiture of the Proceeds of Drug Trafficking Act. The PCA:
-
empowers the court to void contracts for the disposition of property seized under the PCA unless the disposition is to a bona fide purchaser for value without notice.
-
provides the police with expanded information gathering powers, including the ability to obtain a court order requiring a bank or trust company to monitor a specific account and to provide specific information to the police for a period of not more than 3 months. Information gathering orders may be made in respect of an investigation into proceeds of criminal conduct in relation to a foreign offense only if relevant Bahamian law dealing with obtaining Bahamian evidence for foreign use is complied with.
-
empowers the police to seize and detain for up to 4 days cash reasonably suspected of being proceeds of criminal conduct or intended to be used for criminal conduct
-
more clearly defines the offense of money laundering, and expands the range of predicate offenses whose proceeds fall under Bahamian anti-money laundering law. Former law dealt with the proceeds of drug offenses and other offenses punishable by 5 or more years imprisonment, including foreign offenses which if committed in The Bahamas would be a drug offense, or would be punishable by 5 or more years imprisonment. The new law deals with the proceeds of drug, bribery, or money laundering offenses, and any other offense that is triable in the Supreme Court, including foreign offenses which if committed in The Bahamas would be triable in the Supreme Court.
-
imposes a duty to disclose to the police, the Attorney General, or the relevant supervisory authority knowledge or suspicion of money laundering and provides for immunity from breach of any statute or any civil liability as a consequence of disclosure. It does not eliminate the lawyer-client privilege, but neither does it prevent an attorney from disclosing the name and address of a client.
Criminal Justice (International Co-operation) Act, 2000
DOWNLOAD THE CJICA 2000 (MS Word Format)
The Criminal Justice (International Co-operation) Act, 2000 (CJICA) addresses the issues of Bahamian evidence in foreign courts and foreign evidence in Bahamian courts in foreign and domestic criminal proceedings. The provisions of the CJICA are similar to those of the EPOJA, except that the CJICA provides a restriction with regard to foreign fiscal crimes. Where a request for Bahamian evidence is made with respect to a foreign crime which is exclusively of a fiscal nature for which foreign proceedings have not been commenced, the Attorney General will not honor such a request unless the request is made pursuant to a treaty.
Financial Intelligence Unit Act, 2000
DOWNLOAD THE FIUA ACT 2000 (MS Word Format)
The Financial Intelligence Unit Act, 2000 (FIUA) establishes a Bahamian Financial Intelligence Unit which is responsible for receiving, analyzing and disseminating to the proper authorities disclosures of financial information in order to counter money laundering. Similar agencies and special units exist in dozens of other countries, including the British Virgin Islands, Bermuda, the Channel Islands, and Switzerland.
The FIU has the administrative power to place a freezing order on a transaction for up to 3 days upon receipt of a suspicious transaction report, or upon request from a foreign FIU. Additionally, the FIU may freeze a bank account for up to 5 days upon the request of the police or a foreign FIU, if the request relates to an offense under the PCA. The FIU also has the power to require the production of such information as the FIU considers necessary for its functions. Persons connected with the FIU are required to keep information obtained confidential.
Central Bank of The Bahamas Act, 2000
DOWNLOAD THE CBA 2000 (MS Word Format)
The principal effect of the Central Bank of The Bahamas Act, 2000 (CBA) is to provide the Central Bank with extensive information gathering powers for its own purposes and for purposes of assisting an overseas regulatory authority and to provide additional exceptions to the duty of confidentiality.
The CBA allows the Central Bank to require the production of specified information or documents or assistance in connection with a request of an overseas regulatory authority. Such requests may be made of persons, partnerships or companies regulated under the Banks Act or under the BTCRA.
As with the BTCRA, the CBA changes references from 'secrecy' to 'confidentiality.' The CBA expands the number of express exceptions to the statutory duty of confidentiality, including:
-
where there is a Bahamian court order
-
to enable or assist the Central Bank in its functions;
-
where there is consent of a bank or trust company (respecting the affairs of the bank or trust company, that is)
-
where the information is otherwise publicly accessible
-
where the information does not include identifying particulars
-
for criminal or certain disciplinary proceedings
-
for legal proceedings for the winding up or receivership of a bank or trust company
With respect to requests of an overseas regulatory authority, the Central Bank has several factors to consider in determining whether or not to disclose the requested information, including whether the overseas regulatory authority's inquiry relates to the breach of a law or regulation which has no close equivalent in The Bahamas or involves the assertion of jurisdiction not recognized by The Bahamas as well as the seriousness of the matter and the importance of the inquiry.
Furthermore, the Central Bank may not disclose information to an overseas regulatory authority unless:
-
The Central Bank is satisfied as to the confidentiality of the disclosed information
-
The Central Bank has received a guarantee that the disclosed information will not be further disclosed without the Central Bank's consent
-
The Central Bank is satisfied that the disclosure is required by the overseas regulatory authority for its civil regulatory functions; and
-
The Central Bank is satisfied that the information provided will not be used for criminal proceedings against the person providing the information.
The Riser Report Know Your
Customer
Documentation Checklist
Requests for Know Your Customer documentation can often bog down offshore planning at various stages. In order that the process be as streamlined as possible, clients (whether in their individual capacity or as beneficial owners of entities or trust property) and their advisors seeking to do business in the offshore world should be prepared to provide the following documents to offshore service providers, investment advisors, and financial institutions:
-
A statement containing the client's full name, permanent address, telephone and fax number, date and place of birth, nationality, and occupation and name of employer. If the account is an individual account, the statement should indicate the purpose for the account or entity, the source of the assets to be transferred to the account or entity. Finally, the statement should contain written authority to obtain independent verification of the client's information.
-
Certified copies of the first four pages of the client's passport (or if the client has no passport, the client's driving license).
-
Certified copies of a recent utility bill (telephone, power, gas, etc.) showing the client's name and street address.
-
A letter of reference from a bank with whom the client has had a banking relationship for at least two years. The letter should be on the bank's letterhead and should indicate that the client has been a customer in good standing for a stated period of time.
-
A letter of reference from a professional (attorney, CPA, etc.) with whom the client has had a professional relationship for at least two years. The letter should be on the professional's letterhead and should indicate that the client has been an upstanding client for a stated period of time.
With respect to entities or partnerships, all of the above information should be supplied for each beneficial owner. In addition, the following documentation should be provided:
-
Certified copies of the certificate of incorporation or certificate of formation.
-
Certified copies of the Memorandum and Articles of Association, Operating Agreement or Partnership Agreement
-
The identity of the registered agent and the address of the registered office.
-
A resolution of the directors, managers or partners authorizing the opening of the account and conferring authority on the person who will operate the account.
-
A certificate of good standing confirming that the entity or partnership is in existence and not in the process of being wound up
-
Names and addresses of all officers and directors.
-
A statement containing:
-
the date of commencement of business, the products or services provided by the entity or partnership, and the location of the principal office
-
the purpose of the account, the anticipated size and transaction volume of the account.
-
confirmation that all credits to the account will be beneficially owned by the entity or partnership
-
authority to obtain independent verification of any information provided
-
Certified copies can be certified by a notary public or an attorney and need not be certified copies provided by an official government agency.
The best course of action is to create a stock of a half dozen or so packets of these documents at the beginning of an engagement so that they are ready when needed.
The OECD and the members of the British Commonwealth coalition of offshore financial jurisdictions held talks in Paris on March 1st and 2nd, but failed to reach agreement on any of the issues of tax competition and fiscal transparency that sharply divide the two groups.
The Commonwealth jurisdictions presented a proposal to the OECD during the talks. Among issues proposed were:
-
An extension of the July 31 deadline for the signing of cooperation agreements to the end of the year;
-
Creation of a most-favored nation approach under which the best terms offered to any single targeted offshore jurisdiction would be offered to all such jurisdictions;
-
Allowing targeted offshore jurisdictions to opt out of cooperation in the event that any OECD member country failed to comply with the terms of the harmful tax competition initiative;
-
Guaranteeing full membership to all cooperative targeted offshore jurisdictions in a global tax forum to be created later this year;
-
Allowing officials from targeted offshore jurisdictions to participate in monitoring and evaluating implementation of and compliance with anti-harmful tax competition measures; and
-
Maintaining a collective approach to ongoing negotiations rather than a contentious bilateral approach.
The OECD refused to comment on the Commonwealth proposals. It appears that the two sides are headed for a showdown in the spring and early summer.
The targeted offshore financial jurisdictions appear to be gaining support among influential conservative U.S. lawmakers, including Representatives Dick Armey (R-TX), Sam Johnson (R-TX), and Major Owens (D-NY), and Senators Don Nickles (R-OK), Jesse Helms (R-NC) and Senator Judd Gregg (R-NH), the latter two of which recently wrote to U.S. Treasury Secretary Paul O'Neill questioning the propriety of the OECD initiatives against offshore financial centers, specifically doubting the economic and moral bases for the initiatives.
Nine jurisdictions - Bermuda, the Cayman Islands, Cyprus, the Isle of Man, Malta, Mauritius, the Netherlands Antilles, San Marino, and the Seychelles - previously signed a Memorandum of Understanding committing them to cooperation in transparency, nondiscriminatory tax regimes, and information exchange.
That Memorandum of Understanding was officially rejected by the remaining targeted offshore jurisdictions during the recent talks, indicating that a document written unilaterally by the world's richest nations will not be forced on them. The targeted jurisdictions expressed concern with a double standard, one for OECD member states Switzerland and Luxembourg giving them until 2003 to comply, and another for the remaining jurisdictions, which, as of now, have until July 31 to comply or face sanctions.
Other concerns of the targeted jurisdictions include uncertainty about information exchange requirements, particularly the differences between information exchange as applied to civil matters versus criminal matters, uncertainty about transparency requirements with regard to individuals versus companies, and uncertainty about what sorts of sanctions that the OECD may impose against "uncooperative" jurisdictions, in light of corresponding obligations under international treaties, including those among the members of the World Trade Organization.
The targeted jurisdictions have established the International Tax and Investment Association to present a united front in responding to the OECD initiatives.
17 Grenada Bank Licenses Revoked
Offshore Alert (http://www.offshorebusiness.com) reports that the Grenada International Financial Services Authority has revoked the licenses of the following 17 offshore banks: Electra Finance Bank Ltd., Sattva Investment Bank Ltd., Network International Bank Ltd., Trafalgar Atlantic Bank Ltd., 21st Century Banking Corp Ltd., New London Investment Bank Ltd., Bank of Atlantic Ltd., Carib Bank International Ltd., Dominion Bank Corp., First Mercantile Bank Ltd., Pacific Crown Bank Ltd., Worldwide Bank Ltd., Southwind International Bank Ltd., Union Caribbean Bank Ltd., Commercial Bank & Trust International, Euro Credit Bank & Trust Ltd. and First International Bank of Grenada Ltd.
This scam story is typical of dozens of frauds perpetrated on U.S. investors each year. It is only notable because the case happened in my own backyard, in the U.S. District Court for the Western District of North Carolina. However, because it is typical, it makes a valuable study for readers uninitiated in the world of offshore scams.
In Litigation Release 16896 (http://www.sec.gov/litigation/litreleases/lr16896.htm), the Securities and Exchange Commission reports that on January 31st it obtained default judgments against TAC International Ltd., its former president and owner, Douglas R. Walker, and its current president and owner, Craig Southwood, in a civil action involving the sale of fraudulent "prime bank" securities which duped investors out of millions of dollars. Chief U.S. District Judge Graham C. Mullen ordered the defendants to disgorge approximately $10.9 million and imposed civil monetary penalties against them totaling $770,000.
The SEC's Complaint alleged that from the summer of 1996 until August of 1997, TAC, a Bahamas corporation, and its senior officers, represented that by buying a Bahamian International Business Corporation ("IBC"), investors could participate in certain securities trading programs not available in the United States. These trading programs supposedly enabled investors to obtain phenomenal returns, at no risk to principal, by participating in purported trading in high yield debentures between and among banks. The Complaint alleged that the defendants did not engage in any trading, but instead used the money they procured from investors to pay for their lifestyles and personal expenses.
According to the Complaint, the defendants defrauded thousands of United States residents, who each entrusted the defendants with investments of at least $1,500 each. The Complaint alleged that Walker, TAC's original owner, developed the fraudulent IBC trading program that TAC sold to investors. Under the IBC program, investors paid a minimum of $1,500 each to get access to purported debenture trading between and among banks. The Complaint alleged that TAC represented that at the end of one year, the IBC trading program could generate as much as $20,000 from the original $1,500 investment -- an annual return of over 1,300%.
According to the Complaint, Southwood, TAC's present owner, supervised TAC's operations at its headquarters in the Bahamas and created a second fraudulent investment scheme, which he named the "Southwood Program." Under the Southwood Program, the Complaint alleged, investors were required to wire a minimum of $50,000 to TAC. According to the Complaint, TAC promised a return of 600% within thirty days of the initial investment.
Federal tax agents raided the U.S. offices of Anderson's Ark & Associates on February 28th and arrested four leaders of what the Justice Department described as a money laundering and tax-evasion operation whose clients ranged from small-business owners to drug dealers. The main offices of Anderson's Ark are in Santa Ana, California, Hoodsport, Washington and Costa Rica.
Arrested in the raid were Keith Anderson, 59, of Santa Ana; his brother Wayne Anderson, 55, of Squaw Valley, California; Karolyn Grossnickle, 58, of Hoodsport, and Richard Marks, 57, of Los Osos, California. Richard Castellini, 55, of Bridgeton, New Jersey, and Michael Gonet, 49, of Stow, Massachusetts fled and are still being sought.
According to marketing agent Richard Hays, Anderson's Ark "helps people reduce taxes and build wealth." Mr. Hays told the New York Times that the organization operated in ways that "are not subject to U.S. taxes."
The Anderson's Ark Web site (http://www.andersonark.com) claims that the organization can legally reduce income taxes by 50 percent to 100 percent and can turn a $5,000 retirement account investment in its "Foreign Loan Opportunity Programs" into $1,000,000 in 15 years.
According to the New York Times, both Keith Anderson and Richard Marks told undercover I.R.S. agents that they had helped drug dealers hide funds, according to a 48-page affidavit released by federal prosecutors in Boston. It was reported that undercover agents taped various Anderson's Ark officials agreeing to launder the proceeds of mail fraud and bankruptcy swindles, but that higher fees would be charged for laundering illicit money than would be charged for evading taxes on legitimate earnings.
Also targeted by Justice Department raids in recent weeks, but with no arrests resulting yet, were the U.S. offices of Institute of Global Prosperity (http://www.igp.cc) and the California office of Canadian offshore bank promoter and author Jerome Schneider (http://www.offshorewealth.com) and his attorney, Eric Witmeyer, of Beverly Hills.
A California couple, Dorothy and George Henderson of Roseville, California, were sentenced to long prison terms on February 22nd, after being convicted of tax fraud for helping their clients evade over $13 million in federal income taxes.
The Hendersons sold trust packages to their clients claiming that the trusts exempted their clients from income taxes. As a fee, the Hendersons kept 5% of the funds transferred to the trusts.
Mrs. Henderson was sentenced to more than 11 years in prison and Mr. Henderson was sentenced to six and a half years by Judge Garland E. Burrell Jr. of United States District Court in Sacramento. At the sentencing hearing, the Hendersons told Judge Burrell that the I.R.S. had no authority over them and that they would pursue claims against the government. They also said they were exempt from tax under Section 861 of the Internal Revenue Code, contending that the statute excludes most Americans, as sovereign citizens of their respective states, from federal income taxes.
Those proclamations resulted in the judge giving Mrs. Henderson an extra five months in prison and Mr. Henderson an extra eight months.
Book Review: Against the Gods: The Remarkable Story of Risk
|
|
Against the Gods: The Remarkable Story of Risk By Peter L. Bernstein Paperback, 400 pages John Wiley & Sons ISBN 0471295639 Publishers List Price $14.95 |
The reason that society has advanced more in the last few hundred years than in all of the thousands of years prior lies in our ability to comprehend and manage risk. That is the theme of Peter Bernstein's remarkably entertaining and enlightening book, Against the Gods: The Remarkable Story of Risk.
Against the Gods is a layman's history of our efforts to understand risk and probability, beginning with gamblers in ancient Greece, continuing through the 17th-century French mathematicians Pascal and Fermat and up to modern chaos theory.
Bernstein, the president of a consulting firm which advises institutional investors, describes the journey of man along the path to understanding risk and to the realization that the only way humans can hope to manage risk is to use the past to analyze the future using statistics. However, as a number of events, such as the Long Term Capital Management fiasco of 1998 (not discussed in the book, which was first published in 1998, just as the LTCM problem was unfolding), painfully remind us, the target is constantly moving, and we don't always act rationally. Still, we have come far, and statistics and risk management are largely responsible.
Order Against the Gods from The Riser Report online bookstore at http://www.riserreport.com/store.
Thanks to Friends and Colleagues
I'd like to take a little space here to express heartfelt thanks from me, my wife, Betsy, and our families for the support and sympathy of friends and colleagues in recent weeks during which we've been trying to begin to recover from a personal tragedy. On February 22nd, our beautiful, healthy son, Harlan James Riser, was born. On February 26th, the morning after bringing him home from the hospital, he died suddenly, the preliminary diagnosis being Sudden Infant Death Syndrome (SIDS).
I'm sure I don't have to tell you that this has been the most difficult time of our lives. The only thing that can sustain us in times like these is the support of others. The support we have received from family, friends, colleagues, and even complete strangers, has been remarkable. Thank you to everyone.
A number of people have asked about memorial contributions. We would be happy to have our son's memory honored in such a way and ask that anyone wishing to make a contribution in memory of Harlan consider donating to one of the following organizations:
Our Precious Angels (helps bereaved parents pay for their baby's funeral expenses)
2009 Los Rios
Plano, TX 75074CJ Foundation for SIDS (a national SIDS research foundation)
Hackensack University Medical Center
30 Prospect Avenue
Hackensack, NJ 07601
888-8CJ-SIDS
© 2001 Axius Publishing, LLC. All rights reserved. Limited permission is granted to readers to reproduce and forward this newsletter in electronic form for noncommercial purposes to individuals whom the reader reasonably believes have an interest in the content hereof.
View or download The Riser Report March/April 2001 issue in Adobe Acrobat Format
Author/Editor:
Christopher M. Riser, M.A., J.D., LL.M.
Mayer & Riser, PLLC
Attorneys at Law
511 Smallwood Avenue
Post Office Box 750
Highlands, NC 28741 USA
Tel. (828) 526-3731
Fax (828) 526-3734
criser@mayer-riser.com
www.mayer-riser.com
