ICIJ Investigations In the News - Panama Papers and Suspicious Activity Reports (9/22/20; 9/25/20)

I offer two related items in which the International Consortium of Investigative Journalists (“ICIJ”) is involved.  I have written on ICIJ with respect to the so-called “Panama Papers” which involved ICIJ’s investigation into offshore accounts via access to and disclosure of the Panama-based law firm Mossack Fonseca’s files helping tax evaders, including persons subject to U.S. tax.  Most readers of this blog will already be familiar generally with the Panama Papers.  

1. Yesterday, DOJ posted this release:  “U.S. Taxpayer in Panama Papers Investigation Sentenced to Prison (DOJ 9/21/20), here.  The defendant, Harald Joachim von der Goltz (also identified with several pseudonyms) pled guilty to “one count of conspiracy to commit tax evasion; one count of wire fraud; one count of money laundering conspiracy; four counts of willful failure to file Reports of Foreign Bank and Financial Accounts, FinCEN Reports 114; and two counts of false statements.”  The pattern is familiar.  Von der Goltz conspired with others to conceal assets and income (defraud / Klein conspiracy), using offshore accounts and shell companies.  He was assisted by Mossack Fonseca and others, including a Panamanian lawyer and a U.S. accountant.

2. ICIJ is at it again having gained access to a trove of FinCEN Suspicious Activity Reports that indicate some inattention by major banks and perhaps FinCEN who should be paying attention and even likely violations of money laundering, tax and related laws. The entry page for ICIJ’s revelations is here.  See also ICIJ’s the following ICIJ pages for further information:

• FAQs on “What is the FinCEN Files investigation?”, here.
• About Suspicious Activity Reports, here.
• About the FinCEN Files investigation, here.

The latter article summarizes:

The FinCEN Files investigation was able to trace banks’ roles in hiding money looted from government treasuries, scammed from pensioners, and generated through drug sales, illegal gold mining and other illegal activities.

The findings expose – from the inside – the consequences of allowing banks themselves to lead the world’s anti-money laundering defenses against kleptocracy, crime and terror, even as they earn huge profits from these same malefactors.

They also show how laundered money provides the lifeblood for corrupt authoritarian regimes and the enemies of democracy worldwide.

The Treasury Department documents reveal how major banks continued to move staggering sums of suspect cash even while on criminal probation after highly touted money-laundering crackdowns by U.S. and U.K. authorities.

ICIJ’s analysis of the FinCEN Files and U.S. authorities’ enforcement actions indicates that imposing fines and deferring prosecutions of banks and declining to prosecute bank executives hasn’t stopped banks from continuing to profit from moving suspect transactions

3.  (Added 9/25/20 11:30am).  Relating to Item 1 above, Richard Gaffey, aka Dick Gaffey, 76, the accountant / enabler for von den Goltz and other offshore tax cheats was sentenced by the same judge on 9/24/20 "to 39 months in prison for wire fraud, tax fraud, money laundering, aggravated identity theft, and other charges."  See DOJ Press Release, titled U.S. Accountant in Panama Papers Investigation Sentenced to Prison (9/24/20), here.  As described in the press release, Gaffey was a bad actor as enabler of offshore and related tax cheating.

JAT Comments:

Articles on ICIJ's Panama Papers and Ramifications (5/9/16)

Introduction:  The following Wikipedia entries may offer updated information from time to time:

• Wikipedia entry on Panama Papers, here.
• Wikipedia list of people named in Panama Papers, here.

In addition, this searchable list from the Sunday Times might be worth consulting from time to time.  Josh Boswell, Tom Wills, Andrew Rininsland, Panama papers: the names: Search our database of 37,000 names linked to Mossack Fonseca companies in the tax haven of Panama (Sunday Times 4/10/16), here.  The linked page offers at the bottom a downloadable zip file with the data, here, which includes a csv file which is apparently 102.54 MB in size (presumably this could be imported into an MS Excel file, although I have not yet done that) and a "README.TXT" file to explain certain matters about the data.  Apparently this file lists the companies and directors, shareholders, and legal agents for the companies.

ICIJ's searchable database released 5/8/16, here.  The searchable database has this opening disclaimer:

There are legitimate uses for offshore companies and trusts. We do not intend to suggest or imply that any persons, companies or other entities included in the ICIJ Offshore Leaks Database have broken the law or otherwise acted improperly. Many people and entities have the same or similar names. We suggest you confirm the identities of any individuals or entities located in the database based on addresses or other identifiable information. If you find an error in the database please get in touch with us.

The page has links and allows users to download the database (or subsets of it in csv format) here.  I love databases but am not familiar with the database ICIJ uses:  Neo4j, here, a graph database engine that structures data in nodes (the icons you see in the visualization) and edges (the links between nodes).  I plan to try to dig into the database later, but will probably first poke around the cvs files (viewable in Excel) to see the scope of what is there.

ICIJ releases database revealing thousands of secret offshore companies (ICIJ 5/9/16), here.

The new data that ICIJ is now making public represents a fraction of the Panama Papers, a trove of more than 11.5 million leaked files from the Panama-based law firm Mossack Fonseca, one of the world’s top creators of hard-to-trace companies, trusts and foundations. 

ICIJ is not publishing the totality of the leak, and it is not disclosing raw documents or personal information en masse. The database contains a great deal of information about company owners, proxies and intermediaries in secrecy jurisdictions, but it doesn’t disclose bank accounts, email exchanges and financial transactions contained in the documents. 

* * * * 

The Panama Papers underscore the fundamental injustices and inequalities created by the offshore system, media commentators and political leaders say. 

“When taxes are evaded, when state assets are taken and put into these havens, all of these things can have a tremendous negative effect on our mission to end poverty and boost prosperity,” Jim Yong Kim, the president of the World Bank, said as he opened the spring meetings of the World Bank and IMF in Washington soon after ICIJ and more than 100 other news organizations began revealing the results of the media collaboration’s investigation. 

President Barack Obama, meanwhile, pointed out that the biggest problem was that many of the schemes revealed by the Panama Papers were legal. “It’s not that they’re breaking the laws, it’s that the laws are so poorly designed,” he said. 

Articles on ICIJ's Panama Papers and Ramifications (5/6/16)

Introduction:  The following Wikipedia entries may offer updated information from time to time:

• Wikipedia entry on Panama Papers, here.
• Wikipedia list of people named in Panama Papers, here.

In addition, this searchable list from the Sunday Times might be worth consulting from time to time.  Josh Boswell, Tom Wills, Andrew Rininsland, Panama papers: the names: Search our database of 37,000 names linked to Mossack Fonseca companies in the tax haven of Panama (Sunday Times 4/10/16), here.  The linked page offers at the bottom a downloadable zip file with the data, here, which includes a csv file which is apparently 102.54 MB in size (presumably this could be imported into an MS Excel file, although I have not yet done that) and a "README.TXT" file to explain certain matters about the data.  Apparently this file lists the companies and directors, shareholders, and legal agents for the companies.

Scott Shane and Eric Lipton, Panama Papers Source Offers to Aid Inquiries if Exempt From Punishment (New York Times 5/6/16), here.

The anonymous source behind the huge leak of documents known as the Panama Papers has offered to aid law enforcement officials in prosecutions related to offshore money laundering and tax evasion, but only if assured of protection from punishment.
“Legitimate whistle-blowers who expose unquestionable wrongdoing, whether insiders or outsiders, deserve immunity from government retribution,” the source, who has still not revealed a name or nationality, said in a statement issued Thursday night. 

The documents, which list the true owners of thousands of companies created to hide the people behind them, expose the holdings of current and former world leaders and other prominent figures. The source, who uses the pseudonym John Doe but whose gender is not known, said that the papers could spur thousands of prosecutions, “if only law enforcement could access and evaluate the actual documents.” 

John Doe noted that journalists who have viewed the papers have said they will not turn over the full archive of 11.5 million documents. “I, however, would be willing to cooperate with law enforcement to the extent that I am able,” the source wrote.
The statement, which was issued Thursday night under the condition that it not be reported until Friday morning, gave some hints about John Doe’s political views and concerns. They include income inequality, the American campaign finance system and the “revolving door” of United States officials who take jobs at banks or other companies they once regulated.

Tonya Somander, President Obama's Efforts on Financial Transparency and Anti-Corruption: What You Need to Know (White House Blog 5/6/16), here

What do today’s actions do to help address this kind of financial abuse?  

Today, the Treasury Department took several steps to increase transparency and disclosure requirements. 

First, the Treasury Department finalized its “customer due diligence” rule, which requires financial institutions – such as banks , mutual funds, and other financial institutions – to find out and verify who actually owns and profits from the companies that make use of their services, i.e, the “beneficial owner.” Under this rule, if an entity (like a shell company) opens an account at a financial institution, that institution will be required to identify and verify the real people actually behind that entity. And law enforcement can then seek out that information from those institutions. 

By requiring disclosure of beneficial ownership information, we will increase financial transparency and give financial institutions and law enforcement the ability to identify the assets and accounts of criminals and national security threats. 

Now, while the beneficial owners of shell companies often exploit weak rules in offshore tax havens, gaps also exist in U.S. tax rules that foreigners can currently exploit to set up and hide their assets or financial activity in an anonymous shell company in the United States.

So the second step Treasury took today is to propose a rule that would plug this gap by requiring certain foreign-owned companies to obtain a tax identification number from the IRS, thereby requiring these entities to report ownership and transaction information to the IRS. 

Taken together, these steps go a long way in helping to combat money laundering and tax evasion, but additional tools are needed to promote transparency and strengthen law enforcement. And only Congress can help on that front.  

Video from Offshore Alert Conference 2016 (5/4/16)

Video on Panama Papers from the Offshore Alert Conference at the Ritz-Carlton, South Beach, 2016.  The video is here.  The conference details are here.  The speakers are here.

I have not had time to review the video, but I am told that the video includes a statement by ICIJ Director (Gerard Ryle) that there are a lot of US names yet to be revealed, including many non-US citizens residing in the USA (and using non-US passports to set up their offshore vehicles and accounts via Mossack Fonseca).

The speakers in the video are:

• GERARD RYLE, Director, International Consortium of Investigative Journalists (Washington, D.C.)
• ARTHUR VANDESANDE, Founder, Concorde Associates & Retired Senior Special Agent, IRS Criminal Investigation, Offshore Coordinator (Miami).

Articles on ICIJ's Panama Papers and Ramifications (5/1/16)

Introduction:  The following Wikipedia entries may offer updated information from time to time:

• Wikipedia entry on Panama Papers, here.
• Wikipedia list of people named in Panama Papers, here.

In addition, this searchable list from the Sunday Times might be worth consulting from time to time.  Josh Boswell, Tom Wills, Andrew Rininsland, Panama papers: the names: Search our database of 37,000 names linked to Mossack Fonseca companies in the tax haven of Panama (Sunday Times 4/10/16), here.  The linked page offers at the bottom a downloadable zip file with the data, here, which includes a csv file which is apparently 102.54 MB in size (presumably this could be imported into an MS Excel file, although I have not yet done that) and a "README.TXT" file to explain certain matters about the data.  Apparently this file lists the companies and directors, shareholders, and legal agents for the companies.

Frederik Obermaier, Bastian Obermayer, Vanessa Wormer and Wolfgang Jaschensky, About the Panama Papers (Süddeutsche Zeitung), here.  A great report (with links) from the newspaper and reporters that originally obtained the data.

Coming Soon: ICIJ to Release Panama Papers Offshore Companies Data (ICIJ 4/26/16), here.

The International Consortium of Investigative Journalists will release on May 9 a searchable database with information on more than 200,000 offshore entities that are part of the Panama Papers investigation. 

The database will likely be the largest ever release of secret offshore companies and the people behind them. 

* * * * 

While the database opens up a world that has never been revealed on such a massive scale, the application will not be a “data dump” of the original documents – it will be a careful release of basic corporate information . 

ICIJ won’t release personal data en masse; the database will not include records of bank accounts and financial transactions, emails and other correspondence, passports and telephone numbers. The selected and limited information is being published in the public interest. 

Meanwhile ICIJ, the German newspaper Süddeutsche Zeitung which received the leak, and other global media partners, including several new outlets in countries where ICIJ has not been able to report, will continue to investigate and publish stories in the weeks and months to come.

Meta S. Brown, Why Panama Papers Journalists Use Graph Databases (Forbes 4/30/16), here.

Articles on ICIJ's Panama Papers and Ramifications (4/25/16)

Introduction:  The following Wikipedia entries may offer updated information from time to time:

• Wikipedia entry on Panama Papers, here.
• Wikipedia list of people named in Panama Papers, here.

In addition, this searchable list from the Sunday Times might be worth consulting from time to time.  Josh Boswell, Tom Wills, Andrew Rininsland, Panama papers: the names: Search our database of 37,000 names linked to Mossack Fonseca companies in the tax haven of Panama (Sunday Times 4/10/16), here.  The linked page offers at the bottom a downloadable zip file with the data, here, which includes a csv file which is apparently 102.54 MB in size (presumably this could be imported into an MS Excel file, although I have not yet done that) and a "README.TXT" file to explain certain matters about the data.  Apparently this file lists the companies and directors, shareholders, and legal agents for the companies.

Panama Papers: Mossack Fonseca raids seize 'large amount of evidence' (ABC News 4/22/16), here.

Panamanian investigators have raided a property used by Mossack Fonseca, the law firm at the centre of a massive leak of offshore financial data, removing bags full of shredded documents as evidence, a local prosecutor said. 

"We have secured a large amount of evidence found in the location," said organised crime investigator Javier Caraballo. 

He said they also found many shredded papers, which they removed as evidence.
In a statement, Mossack Fonseca said it had digitised all its documents and that the shredded papers taken from its premises were bound for recycling. 

The law firm added that as a result of a previous search, prosecutors already had copies of all the documents they removed on Friday (local time).

Charles (Chuck) Rettig, US Launches Criminal Inquiry Into 200 US Citizens Named In The Panama Papers (Forbes 4/23/16), here.

The Panama Papers. A massive law firm data breach of otherwise secretive financial information identifying numerous high-ranking government and public officials around the world was recently disclosed online by the International Consortium of Investigative Journalists. (ICIJ). Almost forty years of confidential information from 1977 to December 2015 was somehow obtained by an anonymous source from the internal database of Panama-based law firm Mossack Fonseca & Co. and apparently includes approximately 11.46 million files comprising approximately 2.6 terabytes (the equivalent of approximately 600 DVDs) of otherwise confidential financial data. 

US Launches Criminal Inquiry into Several of the 200 US Citizens Named in the Panama Papers. The ICIJ has now confirmed that it received an email (published by the Guardian) from U.S. Attorney Preet Bharara for the Southern SO +0.00% District of New York indicating that his office had “opened a criminal investigation regarding matters to which the Panama Papers are relevant.” Further, his office would greatly appreciate the opportunity to speak as soon as possible with any ICIJ employee or representative involved in the Panama Papers Project in order to discuss this matter further.” 

* * * * 

Articles on ICIJ's Panama Papers and Ramifications (4/22/16)

Introduction:  The following Wikipedia entries may offer updated information from time to time:

• Wikipedia entry on Panama Papers, here.
• Wikipedia list of people named in Panama Papers, here.

In addition, this searchable list from the Sunday Times might be worth consulting from time to time.  Josh Boswell, Tom Wills, Aendrew Rininsland, Panama papers: the names: Search our database of 37,000 names linked to Mossack Fonseca companies in the tax haven of Panama (Sunday Times 4/10/16), here.  The linked page offers at the bottom a downloadable zip file with the data, here, which includes a csv file which is apparently 102.54 MB in size (presumably this could be imported into an MS Excel file, although I have not yet done that) and a "README.TXT" file to explain certain matters about the data.  Apparently this file lists the companies and directors, shareholders, and legal agents for the companies.

Julia Harte, Journalists will not share Panama Papers with Justice Department (Reuters 4/21/16), here.

The media group that coordinated the Panama Papers investigation into offshore companies said on Thursday it would not participate in a criminal probe by the U.S. Department of Justice. 

"ICIJ, and its parent organization the Center for Public Integrity, are media organizations shielded by the First Amendment and other legal protections from becoming an arm of law enforcement," said Gerard Ryle, director of the consortium, in a press release on the group's website.

Martha M. Hamilton and Hamish Boland-Rudder, Banks Ordered to Provide Info on Panama Dealings to NY Regulator, here.

More than a dozen banks will have to turn over details of their dealings with Panama law firm Mossack Fonseca to New York’s banking regulator, as authorities continue to respond to revelations from the Panama Papers investigation.

The order came from the New York Department of Financial Services and was sent to 13 foreign banks identified in articles published by ICIJ and its media partners, including Deutsche Bank AG, Credit Suisse Group AG, Commerzbank AG and ABN Amro Group NV, Bloomberg reported. 

The banks have been given 10 days to respond, and were asked to provide communications, phone logs and records of transactions between their New York branches and employees or agents of Mossack Fonseca, as well as any subsequent communication with shell companies formed as part of these transactions. According to Bloomberg, the regulator has also asked banks to identify any New York-based personnel who may have held positions at the shell companies. 

The regulator is reportedly searching for potential violations of rules or regulations related to the law firm. The banks have not been accused of wrongdoing.

Panama Papers: About 80 serious Australian criminals named in leaked documents, ATO says (ABC News 4/21/16), here.

Articles on ICIJ's Panama Papers and Ramifications (4/20/16)

Introduction:  The following Wikipedia entries may offer updated information from time to time:

• Wikipedia entry on Panama Papers, here.
• Wikipedia list of people named in Panama Papers, here.

In addition, this searchable list from the Sunday Times might be worth consulting from time to time.  Josh Boswell, Tom Wills, Aendrew Rininsland, Panama papers: the names: Search our database of 37,000 names linked to Mossack Fonseca companies in the tax haven of Panama (Sunday Times 4/10/16), here.  The linked page offers at the bottom a downloadable zip file with the data, here, which includes a csv file which is apparently 102.54 MB in size (presumably this could be imported into an MS Excel file, although I have not yet done that) and a "README.TXT" file to explain certain matters about the data.  Apparently this file lists the companies and directors, shareholders, and legal agents for the companies.

Josh Meyer, Panama Papers: Federal Prosecutor Looking for Crimes By U.S. Citizens (NBCNews 4/10/16), here.

The Justice Department has opened a formal criminal investigation into potentially widespread illegalities exposed by the Panama Papers, the massive leak of financial details about secret offshore accounts, federal law enforcement officials told NBC News Wednesday -- and its first priority will be finding wrongdoing by U.S. firms and individuals. 

The U.S. Attorney for the Southern District of New York, Preet Bharara, confirmed the investigation in a letter written to the International Consortium of Investigative Journalists (ICIJ), which has led a worldwide effort to report on suspected money laundering, tax evasion and other criminal activity exposed in the documents.
Many financial transactions related to global money laundering, drug trafficking and other illegal activity involve New York-based banks. A senior federal law enforcement official said the initial focus will be identifying illicit activity by American citizens and corporations. 

Bharara's efforts are the first evidence that criminal prosecutors from the Justice Department have become involved in the Panama Papers and will be looking for wrongdoing by U.S. companies and citizens. NBC News reported Sunday that IRS and U.S. Treasury officials have met with their counterparts from around the world in an effort to analyze and use the data about more than 214,000 offshore companies listed by Panamanian law firm Mossack Fonseca. 

In his brief letter, Bharara simply said that his office -- which has jurisdiction over many of the world's largest banks and financial firms -- has "opened a criminal investigation regarding matters to which the Panama Papers are relevant." 

* * * * 

Articles on ICIJ's Panama Papers and Ramifications (4/17/16)

Introduction:  The following Wikipedia entries may offer updated information from time to time:

• Wikipedia entry on Panama Papers, here.
• Wikipedia list of people named in Panama Papers, here.

In addition, this searchable list from the Sunday Times might be worth consulting from time to time.  Josh Boswell, Tom Wills, Aendrew Rininsland, Panama papers: the names: Search our database of 37,000 names linked to Mossack Fonseca companies in the tax haven of Panama (Sunday Times 4/10/16), here.  The linked page offers at the bottom a downloadable zip file with the data, here, which includes a csv file which is apparently 102.54 MB in size (presumably this could be imported into an MS Excel file, although I have not yet done that) and a "README.TXT" file to explain certain matters about the data.  Apparently this file lists the companies and directors, shareholders, and legal agents for the companies.

Nicholas Shaxson, Five myths about tax havens (WAPO 4/15/17), here. I think the author uses the term myth to be falsehoods (or not truthoods).  The first myth is:

1. Tax havens protect vulnerable people against despotic governments, unjust laws and political turmoil.

The author addressed this myth:

One benefit of tax havens, to listen to economists such as Cato Institute senior fellow Daniel Mitchell, is that they help shield oppressed groups from greedy and corrupt regimes. The “financial privacy laws” that govern tax havens make them especially “attractive to people who live in nations plagued by incompetent and/or venal governments,” Mitchell argued in a 2008 Cato-produced video titled “The Moral Case for Tax Havens.” The most famous version of this myth was first peddled in 1966 by the Schweizerische Kreditanstalt (today’s Credit Suisse), suggesting that Swiss bank secrecy was set up to protect Jewish money from the Nazis. 

In reality, Switzerland’s famous banking secrecy law of 1934 was triggered by a French tax-evasion scandal involving several wealthy elites, and Swiss secrecy wound up protecting a ton of Nazi loot. Tax havens shield the money of rich people, not vulnerable ones. Indeed, the Panama Papers revealed offshore accounts associated with several dictators and members of oppressive regimes from around the globe, and few linked to ordinary citizens. When tax havens assist kleptocratic elites in hiding their cash with impunity, they don’t guard against corruption and despotism — they help perpetuate them. Tax havens provide an escape route from laws that is available only to a rich minority that can afford to use it, thus removing from the equation the constituency with the greatest power to push for reform.

There are four more.  Enjoy!

David Lawder, U.S. Treasury readies new tax rules as G20 vows to fight evasion (Reuters 4/16/16), here.

The U.S. Treasury Department is finalizing new tax rules aimed at combating the use of shell companies to evade taxes, U.S. Treasury Secretary Jack Lew said on Saturday amid increased pledges by global finance leaders to cooperate on tax issues. 

In a statement to the International Monetary Fund's steering committee, Lew said the Treasury was finalizing a rule that would require banks to identify the beneficial owners of new customers that are companies. 

"In addition, we are about to propose a regulation that would require the beneficial owners of single-member limited liability companies to identify themselves to the Internal Revenue Service, thus closing a loophole that some have been able to exploit," Lew said. 

In the wake of controversy stirred by the so-called Panama Papers, which revealed widespread use of tax havens and shell companies by wealthy global elites, officials from the Group of 20 major economies on Friday threatened to penalize tax haven countries that do not comply with new information-sharing efforts and moves to reduce tax mismatches between countries. 

They called for criteria by July to identify non-cooperative jurisdictions. 

"Defensive measures will be considered by G20 members against non-cooperative jurisdictions" if progress toward tax goals is not made, the group said in its statement.
Lew said the United States fully supports calls for all countries to automatically exchange financial account information.

Articles on ICIJ's Panama Papers and Ramifications (4/16/16)

Introduction:  The following Wikipedia entries may offer updated information from time to time:

• Wikipedia entry on Panama Papers, here.
• Wikipedia list of people named in Panama Papers, here.

In addition, this searchable list from the Sunday Times might be worth consulting from time to time.  Josh Boswell, Tom Wills, Aendrew Rininsland, Panama papers: the names: Search our database of 37,000 names linked to Mossack Fonseca companies in the tax haven of Panama (Sunday Times 4/10/16), here.  The linked page offers at the bottom a downloadable zip file with the data, here, which includes a csv file which is apparently 102.54 MB in size (presumably this could be imported into an MS Excel file, although I have not yet done that) and a "README.TXT" file to explain certain matters about the data.  Apparently this file lists the companies and directors, shareholders, and legal agents for the companies.

Leonid Bershidsky, Were the Panama Papers Planted? Who Cares (Bloomberg View 4/15/16), here.

The opening salvo

Last week, a respected Russia scholar in the U.S. speculated that the Kremlin might be behind the so-called Panama Papers, the big dump of data about offshore accounts that has implicated several countries' officials in shady dealings. And on Thursday, President Vladimir Putin of Russia blamed the U.S. for the leak.

And the closing:

But I would argue that, in the end, that the provenance isn't important -- only the accuracy of the data is. 

Putin has confirmed that the Russian part is accurate. The information is, of course, more damaging than Putin is willing to admit: It exposes the inner workings of Russia's crony capitalism. he material also has proved accurate regarding accounts of people from Iceland, Spain, the U.K. and elsewhere. So why get hung up on its source? It makes much more sense to applaud the work of the investigative journalists who checked and developed the leak. It's an extraordinary collective performance by a much-maligned professional community that has proved convincingly that it has an important social role to play. 

Andrew Mayeda and Mark Deen, G-20 Threatens Penalties on Tax Havens After Panama Papers (Bloomberg 4/15/16). here.

Group of 20 economies threatened to penalize havens that don’t share information on their banking clients after the leak of the Panama Papers provoked a global uproar over tax evasion. 

The G-20 will consider “defensive measures” against financial centers and jurisdictions that don’t commit to an international standard requiring the exchange of information about account holders, the group’s finance ministers and central bankers said Friday in a statement after meeting in Washington. 

The group said it would work with the OECD to come up with criteria for identifying “non-cooperative jurisdictions” by July, adding that improving the transparency on who controls legal tax entities is vital to the international financial system. 

* * * * 

Global Standard 

The statement refers to a global standard developed by the OECD and endorsed by the G-20. The standard calls on tax jurisdictions to share information on an annual basis about their banking systems, including the names and tax identification numbers of account holders. 

The language on tax and financial transparency amounts to a victory for major European nations including the U.K., France and Germany, who a day earlier agreed to automatically share information on the ultimate owners of companies and trusts.
China put up the most resistance to the tax-related part of the G-20 statement, and the U.S. was also reluctant, according to two G-20 officials familiar with the talks; one person said China was the main reason why the statement didn’t single out Panama. The officials asked not to be identified because the meetings were private. 

* * * * 

Bright, Dark

Articles on ICIJ's Panama Papers and Ramifications (4/14/16)

Introduction:  The following Wikipedia entries may offer updated information from time to time:

• Wikipedia entry on Panama Papers, here.
• Wikipedia list of people named in Panama Papers, here.

In addition, this searchable list from the Sunday Times might be worth consulting from time to time.  Josh Boswell, Tom Wills, Aendrew Rininsland, Panama papers: the names: Search our database of 37,000 names linked to Mossack Fonseca companies in the tax haven of Panama (Sunday Times 4/10/16), here.  The linked page offers at the bottom a downloadable zip file with the data, here, which includes a csv file which is apparently 102.54 MB in size (presumably this could be imported into an MS Excel file, although I have not yet done that) and a "README.TXT" file to explain certain matters about the data.  Apparently this file lists the companies and directors, shareholders, and legal agents for the companies.  

Max Ehrenfreund, What the Panama Papers don’t say about global finance is just as troubling (WAPO 4/14/16), here.  Another view of the unintended consequences of the developed world's crackdown on offshore financial activity.

Banks' disparate treatment of suspect financial activity suggests that new regulations in the United States and other developed countries, intended to prevent illicit activity, could be detrimental for charities and some less wealthy economies. 

"What the Panama Papers scandal makes really clear is if you’ve got a lot of money, you can get a bank to break more or less any law you want," said Scott Paul, a senior adviser at Oxfam America. "If you don’t have a lot of money, banks will close the door in your face just because of the risk of illegality." 

* * * * 

Yet since the financial crisis made banking less profitable, some banks have decided that vetting their less affluent, less lucrative customers isn't worth the expense, experts say. In part because of the risk of scrutiny from regulators and the press, firms such as Bank of America and Barclays are now reluctant to do business in poor countries where lawbreaking is more common.\ 

Banks' withdrawal from some markets in East Africa, the Middle East, Latin America and other regions has provoked an international debate about the costs and benefits of authorities' efforts to counter illicit finance. 

"Until very recently, there really wasn't a conversation," Paul said. Without careful attention from policymakers, he warned, "it's going to be poor populations and these high-risk jurisdictions that get cut out of the financial system."  

Diplomats and charities have lost their accounts. Meanwhile, migrants working in developed countries as breadwinners for their families in poorer nations are paying more to send them money through informal channels. In the private sector and among nonprofit groups, some worry that rules issued by the U.S. government, along with the European Union and a 35-nation body called the Financial Action Task Force, are making the problem worse. 

Regulators must balance "restrictions that you want to put in place to keep the bad guys out" against "restrictions so strong that you keep the good guys out, too," argued Rob Rowe, a vice president at the American Bankers Association. "There's no easy answer." 

* * * * 

"We recognize that reduced access could impede the flow of money for a family member in need," Szubin said, but he added, "We don't yet see evidence of systemic retrenchment -- and even if we truly are seeing some consolidation, we have not yet identified its scope."

I work for a Swiss Private Bank and serve wealthy Russians (Reddit 4/9/16), here.  Still another view of the offshore account morass.

For 7 years I have been working in Swiss Private Banking, serving wealthy Russian clients. I work with offshore company accounts every day. Many of our clients also had their data leaked together with the 200k other companies. In my old job I even had a meeting with one of the top managers of Mossack Fonsecca but never directly sent clients to them. 

Defending what I do here on reddit is probably as popular as justifying paedophiles so I'm prepared to get insulted. I know that I am doing good work and made peace with the fact that most people probably always will hate me for what I do. 

Anyway, I want to clear up some misconceptions and write about what people like me do and how our industry works. I actually see the recent leaks as a great opportunity for banks like mine to show to the world that they did their homework and that the bad apples that give my profession a bad reputation get sorted out.

Articles on ICIJ's Panama Papers and Ramifications (4/13/16)

Introduction:  The following Wikipedia entries may offer updated information from time to time:

• Wikipedia entry on Panama Papers, here.
• Wikipedia list of people named in Panama Papers, here.

In addition, this searchable list from the Sunday Times might be worth consulting from time to time.  Josh Boswell, Tom Wills, Aendrew Rininsland, Panama papers: the names: Search our database of 37,000 names linked to Mossack Fonseca companies in the tax haven of Panama (Sunday Times 4/10/16), here.  The linked page offers at the bottom a downloadable zip file with the data, here, which includes a csv file which is apparently 102.54 MB in size (presumably this could be imported into an MS Excel file, although I have not yet done that) and a "README.TXT" file to explain certain matters about the data.  Apparently this file lists the companies and directors, shareholders, and legal agents for the companies.  

Panama papers: Mossack Fonseca headquarters raided (4/13/16), here.

Police carried out Tuesday's raid along with officials from an organised crime unit. Officers set up a perimeter around the headquarters while prosecutors entered the offices to search for documents. 

Afterwards, the attorney general's office said the aim had been "to obtain documentation linked to the information published in news articles that establish the use of the firm in illicit activities". 

The statement added that searches would also take place at subsidiaries of the firm.

Elida Moreno, Panama raids offices of Mossack Fonseca law firm (Reuters 4/13/16), here.

The national police, in an earlier statement, said they were searching for documentation that "would establish the possible use of the firm for illicit activities." The firm has been accused of tax evasion and fraud.

Peter J. Henning, Panama Papers Show How Lawyers Can Turn a Blind Eye (NYT DealBook), here.
Peter Hemmings is a frequent writer on white collar crime.

During the savings-and loan-crisis in the early 1990s, the question “Where were the lawyers?” was asked about the wrongdoing taking place at numerous banks. 

The confidential documents known as the Panama Papers, which show how lawyers helped set up offshore bank accounts and shell companies, provides one possible answer: The lawyers have always been right in the middle of it. 

This is not the only recent example of lawyers acting as willing participants in trying to help clients, while seemingly turning a blind eye to possible violations of the law. A report issued by the nonprofit organization Global Witness, featured on the “60 Minutes” news program in January, included undercover videos of lawyers in New York who appeared quite eager to advise the mysterious representative of an African minister about how to move funds into the United States to buy assets while keeping his ownership anonymous. 

Rather than seeking to keep clients from violating the law, it appears that some lawyers are willing to go right up to the line of legality in their representation. By keeping themselves ignorant about what may be going on, these lawyers have been able to maintain the facade that they are not involved in potentially illegal activities, even though they are often the prime enablers of misconduct. 

Has the legal profession lost its moral compass?

 The article concludes:

It is no surprise that lawyers are at the center of the debate about how to deal with the use of shell companies and secret accounts to hide assets because lawyers are frequently involved in structuring the entities. Despite the elevated rhetoric about the role of lawyers in society, the legal ethics rules do little to restrict how lawyers can represent clients who flirt with the edges of the law. 

Limiting the tools for helping clients engage in misconduct would make it harder for lawyers to claim they are only serving the wishes of those clients.

Articles on ICIJ's Panama Papers and Ramifications (4/12/16)

I've been traveling most of the day, so don't have much to offer.  I'll be back up and running in full stride tomorrow.

Eamon Javers, Swiss banker whistleblower: CIA behind Panama Papers (CNBC 4/12/16), here.  This article quotes Bradley Birkenfeld as saying that "the CIA I'm sure is behind this."  Well.

Panama Papers: Spy agencies widely used Mossack Fonseca to hide activities (RT 4/12/16) here. Excerpts:

Intelligence agencies from several countries, including CIA intermediaries, have abundantly used the services of Panamanian law firm Mossack Fonseca to "conceal" their activities, German newspaper Sueddeutsche Zeitung (SZ) says, citing leaked documents. 

Both "secret agents and their informants have used the company's services," wrote the newspaper, which earlier this month published online materials based on 11.5 million documents from the Panamanian law firm. It has been called the largest leak on corruption in journalistic history. 

"Agents have set up shell companies to conceal their activities," the Munich-based newspaper reported, adding that there are CIA mediators among them. 

According to SZ, Mossack Fonseca's clients also included some of those involved in the so-called Iran-Contra affair, in which several Reagan administration officials secretly facilitated arms sales to Iran in the 1980s in order to secure the release of US hostages and fund Nicaragua's Contra rebels. 

The Panama Papers also claim to reveal that some "former high-ranking officials of the intelligence services of Saudi Arabia, Colombia and Rwanda" are listed amongst the company's clients. Among them was Sheikh Kamal Adham, the former Saudi intelligence chief, who according to SZ, was "one of the CIA's key intermediaries in the 1970s" in the Middle East region.

Holly Watt, Panama Papers: global tax officials to launch unprecedented inquiry (Guardian 4/12/16), here.  Excerpts:

Tax investigators from 28 countries will meet in Paris on Wednesday to launch an unprecedented international inquiry following the publication of the Panama Papers.
Senior officials from tax authorities around the world have said they intend to work together to analyse information revealed by the documents, which have provoked international concern over the offshore industry. 

Investigations have been launched in a number of countries over the past week, but the Paris meeting will be an attempt to develop a global strategy to crack down on offenders.
The sheer scale of the leak – 11.5m documents, covering 210,000 companies in 21 offshore jurisdictions – has led to Wednesday’s hastily arranged meeting.

Articles on ICIJ's Panama Papers and Ramifications (4/11/16)

Crawford Kilian, The Man Who Foretold the Panama Papers (The Tyee 4/5/16), here.  This is a book review of Thomas Piketty's new book, Why Save the Bankers? And Other Essays on Our Economic and Political Crisis, here, which was just published.  Piketty, here, is the author who stirred the global pot with his massive Capital in the Twenty-First Century, here, with more data and analysis of data than most of us want to think about much less read. (I have heard that Piketty's book has the lowest number of actual readers among persons who have purchased the book; disclaimer: I too purchased it and have yet to read it other than episodically.)  The book being reviewed here is a collection of other smaller works by Piketty that develop and sometimes predate publication of Capital in the Twenty-First Century.  Here are some excerpts (bold face-supplied by JAT):

But why bother to buy a scrapbook of ancient columns when you can read Capital in the Twenty-First Century? For one very good reason.

The world's greatest economic detective 

Because Thomas Piketty follows the money. He goes into the tax archives of the last two centuries, and he has become the greatest economic detective the world has ever known. He has tracked the wealth of the rentier class since Napoleon -- the families of the "independently wealthy" who live off the income paid them because they own moneymaking enterprises and land.  

In one column, published five years ago on April 5, 2011, Piketty offers what is almost a throw-away line: "... at the world level, the net financial position is negative over-all, which is logically impossible unless we assume that on average we're owned by the planet Mars. More likely, this contradiction suggests that a nonnegligible share of financial assets held in tax havens and by nonresidents is not correctly reported as such." 

In other words, every country in the world is losing money, and therefore losing tax revenue. The implication is that every country is making up for the loss either by taxing its poorer residents more than they should be, or by cutting social services.
Five years later, almost to the day, the Guardian and the German newspaper Süddeutsche Zeitung broke a major global scandal: the Panama Papers.

Piketty's colleague, Gabriel Zucman, published on that issue in the The Hidden Wealth of Nations: The Scourge of Tax Havens (2015), here.

Juan Carlos Varela (President of Panama), Don’t Blame Panama. Tax Evasion Is a Global Problem (NYT 4/11/16), here.

DESPITE their name, the Panama Papers are not mainly about Panama. They are not even primarily concerned with Panamanian companies. The more than 11 million documents, illegally hacked and released last week relating to previously undisclosed “offshore” corporations, is roiling the world with revelations of the vulnerability for rampant abuse of legal financial structures by the wealthy. 

They are unfairly called the Panama Papers because this particular trove of documents came from a single law firm based in Panama. But the problem of tax evasion is a global one. 

Panama does not deserve to be singled out on an issue that plagues many countries. But we are willing to accept the responsibility for fixing it, in part because greater transparency is ultimately a continuation of reforms we have recently undertaken. The world must tackle this problem collectively and with urgency, and Panama stands ready to lead the way.

Articles on ICIJ's Panama Papers and Ramifications (4/10/16)

Introduction:  The following Wikipedia entries may offer updated information from time to time:

• Wikipedia entry on Panama Papers, here.
• Wikipedia list of people named in Panama Papers, here.

In addition, this searchable list from the Sunday Times might be worth consulting from time to time.  Josh Boswell, Tom Wills, Aendrew Rininsland, Panama papers: the names: Search our database of 37,000 names linked to Mossack Fonseca companies in the tax haven of Panama (Sunday Times 4/10/16), here.  The linked page offers at the bottom a downloadable zip file with the data, here, which includes a csv file which is apparently 102.54 MB in size (presumably this could be imported into an MS Excel file, although I have not yet done that) and a "README.TXT" file to explain certain matters about the data.  Apparently this file lists the companies and directors, shareholders, and legal agents for the companies.  

Josh Meyer, Feds 'Chomping at the Bit' to Use Panama Papers to Catch Criminals (NBCNews 4/10/16), here.  Here are excerpts from the article:

[US] Federal agents and prosecutors are "chomping at the bit" to exploit the Panama Papers and launch prosecutions, a senior federal law enforcement official told NBC News -- but want to be sure that the way the huge data dump about offshore money was obtained doesn't jeopardize their cases. 

"It is a bonanza," the official said in reference to the cache of 11 million financial documents about shell companies that a Panamanian law firm set up for some of the world's shadiest and most powerful people. 

* * * * 

But first the feds need to figure out the best way to use the documents without running afoul of a complicated thicket of laws, especially the attorney-client privilege that law firm Mossack Fonseca has used to protect its thousands of clients from public scrutiny over the past four decades. 

Authorities run the risk of having prosecutions thrown out, and investigations quashed, if the underlying information is found to have been improperly obtained. One key question, according to the U.S. official and others, is whether the documents were hacked or otherwise illegally obtained from Mossack Fonseca. 

* * * * 

U.S. officials believe they won't have trouble getting access to the Panama Papers, especially as there are indications that at least some of the documents will be released publicly in a few weeks. 

And they are confident that they will be able to use many of the documents by claiming Mossack Fonseca knew or should have known that particular clients were engaged in illegal activity, citing "know your client" financial transparency laws in the U.S. and internationally. 

In the meantime, another key step will be for the Justice Department to prepare a "clean team" that would vet the documents before introducing them into investigations and open cases where they might run the risk of tainting them.

 Panama Papers: PM sets up anti-tax dodging task force (BBC 4/10/16), here.

The [UK] government is to set up a new task force to investigate allegations of tax-dodging and money laundering in light of the Panama Papers leak. 

The unit will be led by HM Revenue and Customs and the National Crime Agency.
It will also include specialists from the Serious Fraud Office and the Financial Conduct Authority. 

It was announced by Prime Minister David Cameron as he released details of his tax returns in an effort to defuse a row over his financial affairs. 

The move is also being seen as an effort by Mr Cameron to regain the initiative on the issue of tax avoidance, after attention focused on his own involvement with his late father's offshore fund, Blairmore Holdings.

Periodic Posting of Articles on ICIJ's Panama Papers and Ramifications (4/9/16)

There are so many news articles on the ICIJ's Panama Papers and their ramifications that I have decided just periodically (mostly daily) post an aggregation of the news articles or other content on the web that I think may be useful to readers.  Readers should remember that I do not look at all that web content, so there may be good content that I miss.  I urge readers aware of content that I missed to post the missed items as content or email the missed items to me at jack@tjtaxlaw.com.

First, the Wikipedia offering on the Panama Papers is here.  I presume that it will be regularly updated and could be a good source of information.  Readers interested in the issue probably should check it from time to time.

Also, Wikipedia offers a list of people named in the Panama Papers, here.

Now, here are today's offerings:

Billionaire Reading Name In Panama Papers Totally Forgot He Even Had Funds In Seychelles (TheOnion 4/7/16), here.  Noting that the billionaire, Frederick Weldon, claims to have forgotten about funds stashed in the Seychelles.  Except:

“Oh, yeah, right—jeez, forgot about that,” said Weldon, who after thinking about it for several moments, began to recall having his attorney at one point set up a tax-free dummy corporation in the island nation off the coast of Africa to harbor a portion of his assets. “Wow, I haven’t thought about that in years. How much was it again? $30 million? $40 million? Anyway, I’m glad they reminded me. Who knows how long that would have slipped my mind.” Weldon added that, just to be on the safe side, he’d better make some calls to Switzerland, Luxembourg, Hong Kong, Singapore, Bermuda, Mauritius, Macau, and the Isle of Man to make sure he wasn’t missing any other funds he had stored away.

[Note to readers 4/12/16 1:24pm:  A reader made a comment below that the Onion is a parody news site.  I should have caught that.  So read the above offering as parody.  Had I realized that before posting, I would not have posted, but having posted, I thought I would leave it up.] 

John Letzing, Swiss Banks at Risk of Harboring Corruption Proceeds, Says Regulator (WSJ 4/7/19), here.  Excerpts:

Mark Branson, chief executive of the Swiss Financial Market Supervisory Authority, or Finma, noted in public remarks Thursday that Swiss wealth managers are “increasingly accepting money from faraway, previously less-familiar markets.” That, he said, shifts the danger for Swiss banks “away from risks connected with tax law towards money laundering risks.” 

“It is often more difficult to determine the origin of money from developing countries,” Mr. Branson said. 

* * * * 

“We need a culture in which bank employees feel personally committed to combating money laundering,” Mr. Branson said. 

More Swiss banks need to be proactive about reporting suspicious activity, he said, with 18% of such reports based on the bank’s internal suspicions, while 28% are “in response to a newspaper article.”

Ralph Atkins, Swiss banks warned of exposure to EM money laundering (FT 4/7/16), here.  I do not post excerpts because FT requests that links to the article be given instead of cutting and pasting.  I will note that the article is more detailed than the WSJ article above and does have some good information.  Readers may be required to have a subscription.

Luke Harding, The fallout from Panama Papers revelations so far, country by country (Guardian 4/8/16), here.  Good country by country update for Russia, Azerbaijan, Iceland, UK, China, Zimbabwe, Iran, Australia, Panama, Pakistan, Argentina and Syria.

NYT Article on the Panamanian Law Firm at the Center of the Panama Papers Leak (4/7/16)

A New York Times lead article focuses on the Panamanian law firm Mossack Fonseco, here, which is at the center of the latest leaks so prominent in the news in the last few days.  Kirk Semple, Azam Ahmed and Eric Lipton, Panama Papers Leak Casts Light on a Law Firm Founded on Secrecy (NYT 4/6/16), here   The Panama Papers Overview of the Report is here (with links); My blog on the Panama Papers Report is ICIJ Panama Report on Offshore Financial and Enabler Skulduggery (4/4/16; 4/5/16), here,

There are a vast number of news articles on the report and its ramifications.  The scope of the Panama Papers is so large that I expect that many more articles will appear for some time into the future.  I cannot read them all.  I can read selectively and pass on to the blog's readers the ones I think useful.  But my sampling is necessarily anecdotal.  With that caveat, I excerpt key portions from the NYT article:

The firm, Mossack Fonseca, was built on assurances of bulletproof privacy for its clients. But its operations were laid bare this week by a vast leak of millions of documents that have helped expose the proliferation of shell companies and tax havens for the world’s wealthiest people.  

* * * * 

The leak has also brought more scrutiny to Panama’s financial and legal sectors, just as the country’s leadership was trying to shed its longstanding reputation as a haven for the loot of the criminal and corrupt. In February, Panama was removed from a watch list maintained by an international agency that sets standards to combat money laundering and terrorism financing, but it remains under scrutiny as a haven for tax evaders.

Panama’s president has vowed to cooperate with any judicial investigations stemming from the leaked information, which could put him in the awkward position of allowing an inquiry into his former adviser. 

* * * * 

Among the leaked documents was an email exchange obtained by the International Consortium of Investigative Journalists, in which the firm’s top partners realized they had worked for years with clients from Iran who had been listed on a sanctions list published by the United States government and the United Nations. 

“This is dangerous!” Mr. Mossack wrote in an email to Mr. Fonseca and others at the firm. “A red flag should have been raised immediately.” 

Mr. Mossack placed blame for the oversight on employees in the law firm’s London office who were “not doing their due diligence thoroughly, (or maybe none at all).” 

* * * * 

The rise of Mossack Fonseca coincided with the emergence of Panama as a capital of the worldwide offshore banking industry. The increasing flow of global capital across borders during the 1970s and 1980s fueled a market for lawyers and accountants capable of sheltering the money, and Panama was primed to take advantage of the boom. 

Beginning in the early 1900s, its station as a trade and shipping center — at the intersection of two continents and at the convergence of the Pacific Ocean and the Caribbean Sea — made it an obvious candidate for offshore accounting. International ships flew the Panamanian flag to take advantage of its advantageous corporate tax structure, which some experts say was copied almost directly from the state of Delaware. 

“Because it has always been at the center of international trade, it was a natural fit for things like offshore finance and international offshore tax planning,” said Victor Fleischer, a professor at the University of San Diego School of Law. “I don’t know if it is justified or not, but people have always thought of Panama as a little bit shady.”

ICIJ Panama Report on Offshore Financial and Enabler Skulduggery (4/4/16; 4/5/16)

The International Consortium of Investigative Journalists ("ICIJ"), here, has another blockbuster release titled Giant Leak of Offshore Financial Records Exposes Global Array of Crime and Corruption (4/3/16), here.  The focus this time seems to be on the nontax side of offshore secrecy.  The article mentions some rich, famous and notorious players of the game.  I excerpt certain key parts that caught my attention (without dwelling on the players other than the major Panamanian law firm discussed):

In this story

• Files reveal the offshore holdings of 140 politicians and public officials from around the world 
• Current and former world leaders in the data include prime ministers of Iceland and Pakistan, the president of Ukraine, and the king of Saudi Arabia
• More than 214,000 offshore entities appear in the leak, connected to people in more than 200 countries and territories
• Major banks have driven the creation of hard-to-trace companies in offshore havens

* * * * 

The cache of 11.5 million records shows how a global industry of law firms and big banks sells financial secrecy to politicians, fraudsters and drug traffickers as well as billionaires, celebrities and sports stars. 

* * * * 

“These findings show how deeply ingrained harmful practices and criminality are in the offshore world,” said Gabriel Zucman, an economist at the University of California, Berkeley and author of “The Hidden Wealth of Nations: The Scourge of Tax Havens.” Zucman, who was briefed on the media partners’ investigation, said the release of the leaked documents should prompt governments to seek “concrete sanctions” against jurisdictions and institutions that peddle offshore secrecy. 

* * * * 

Most of the services the offshore industry provides are legal if used by the law abiding. But the documents show that banks, law firms and other offshore players have often failed to follow legal requirements that they make sure their clients are not involved in criminal enterprises, tax dodging or political corruption. In some instances, the files show, offshore middlemen have protected themselves and their clients by concealing suspect transactions or manipulating official records. 

* * * * 

The documents make it clear that major banks are big drivers behind the creation of hard-to-trace companies in the British Virgin Islands, Panama and other offshore havens. The files list nearly 15,600 paper companies that banks set up for clients who want keep their finances under wraps, including thousands created by international giants UBS and HSBC. 

* * * *

Court Orders Compliance with Formal Document Request Upon Taxpayer Motion to Quash (12/30/15; 12/31/15)

Section 982, here, authorizes the IRS to issue a formal document request ("FDR") for foreign documentation.  The consequence of a failure to comply with the FDR is generally that, in a court proceeding, the court must prohibit the taxpayer from introducing the documents within the scope of the FDR.  The taxpayer may, however, bring a court proceeding to quash the FDR.  The taxpayer may bring a proceeding to quash the formal document request; if the taxpayer brings such a proceeding, the IRS “may seek to compel compliance with such request.”  § 982(c)(2)(A).  Thus, the taxpayer by moving to quash the FDR can turn the process from merely an evidence preclusion into a compulsory process.

In LaRue v. United States, 2015 U.S. Dist. LEXIS ______ (D. Or. 2015), here, the taxpayer brought a proceeding to quash.  The background stated by the court is interesting, important and short.  Here it is:

On August 27, 2013; May 8, 2014; and September 11, 2014; IRS Revenue Agent Ivan Bahamonde issued Information Document Requests (IDRs) in connection with the examination of Petitioners' tax returns. Declaration of Agent Bahamonde (Bahamonde Decl.) ¶¶ 7, 12, 16; ECF 10-1. Petitioners declined his requests for an interview and production of documents. Id. at ¶ 11, 15, 16. On May 8, 2014, and October 30, 2014, Agent Bahamonde issued summonses to Petitioners and requested the same information contained in the IDRs. Id. at ¶¶ 13, 18. In response to the October 30, 2014 summonses, Petitioners appeared before IRS Revenue Agent Susan Murrell and asserted their Fifth Amendment privilege under the act of production doctrine. Id. at ¶ 20. The IRS did not enforce the summonses and, instead, issued the present FDR on January 26, 2015. Id. at ¶ 21. 

According to Agent Bahamonde, the IRS has obtained information showing that Petitioners used Portcullis Trustnet Group to set up offshore trusts in order to avoid paying U.S. income tax. Id. at ¶ 4. The FDR seeks documents within the following categories of accounts over which Petitioners had signature or other authority or exercised control: foreign bank accounts; foreign credit, ATM, or charge accounts; foreign brokerage or securities accounts, in any name; foreign entities or structures; and foreign trusts. Id. at ¶ 24. The IRS is investigating: (1) the nature of the funds deposited into the offshore accounts; (2) whether income generated by the accounts was properly reported by Petitioners; (3) what happened to the funds when the offshore accounts were terminated; and (4) whether Petitioners filed the appropriate information returns related to interests in foreign bank accounts and entities during the tax periods at issue. Id. at ¶ 6.

The Court determined the standard to apply to the Government's request to compel as follows:

European Countries Up the Ante - Birkenfeld's Long Shadow (4/10/13)

Steven Erlanger and David Jolly, European Countries Move to Toughen Stance on Tax Evasion (NYT 4/10/13), here.

Excerpts from the opening:

Buffeted by a political scandal, a stagnant economy and angry public reaction to a report about secret offshore bank accounts, President François Hollande of France announced the creation of a special prosecutor Wednesday to pursue cases of corruption and tax fraud and vowed to eradicate tax havens “in Europe and the world.” 

As he spoke, one of those tax havens, Luxembourg, said it would bow to pressure from its European allies and begin forwarding the details of its foreign clients to their home governments. Luxembourg, with only half a million people and a banking sector more than 20 times larger than its gross domestic product, is one of Europe’s largest financial centers and has been compared to Cyprus, a fellow member of the euro zone that had a huge banking sector fueled by foreign money. 

The announcement from Luxembourg came a day after the five European countries with the biggest economies — France, Britain, Germany, Italy and Spain — agreed to exchange banking data and create their own automatic tax data exchange, one modeled on the U.S. Foreign Account Tax Compliance Act, passed by Congress in 2010 to try to track down the overseas assets of Americans who might be dodging taxes.
The European governments said they hoped the information exchange would not only “help in catching and deterring tax evaders” but also provide “a template” for a wider multilateral agreement. In a joint letter released Tuesday, they urged the European Union commissioner responsible for taxation, Algirdas Semeta, to work to get all 27 E.U. member states to sign up. 

The announcements come a week after the publication of an exposé by a Washington-based group, the International Consortium of Investigative Journalists, into the assets held in overseas tax havens. The report, which centered on the Caribbean, and especially the British Virgin Islands and the Cayman Islands, also embarrassed European governments, including Luxembourg, by showing how wealthy citizens routinely hide assets, sometimes legally and sometimes not, and avoid paying taxes by setting up offshore companies. 

The report has set off something of a scramble to calm public anger over widespread tax dodging by the rich at a time when governments are cutting their budgets and calling on citizens to pay higher taxes.

And you can read the rest.

I think these countries owe Birkenfeld at least a thanks, if not some monetary award.