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:

NPR Fresh Air Interview of Bernstein About His Book Secrecy World (12/4/17)

On my daily walk today, I listened to this podcast.  Journalist Explains How Panama Papers Opened Up The World's Illicit Money Networks (NPR Fresh Air 11/20/17), here.  In the podcast, Terry Gross interviews Jake Bernstein who has recently written a book titled "Secrecy World" which has a chapter on the Panama Papers.  That book is now a best seller on Amazon, here.  He is also familiar with the Paradise Papers, the follow-up on the Panama Papers.  The link is to the podcast and to a transcription of the podcast for those who prefer to read (or just do a search of the transcription).

Some excerpts so that you get the flavor:

[GROSS:] Jake Bernstein, welcome to FRESH AIR. Let's start by just pulling back a little bit. What's the purpose of the offshore accounts that have been revealed in the Paradise and Panama Papers? 

JAKE BERNSTEIN: I mean, ultimately the purpose is secrecy. The purpose is to hide your activities or your money and to take advantage of certain benefits that you get from having stuff offshore, having anonymous companies. These are - there are tax benefits. There are benefits that one gets from being able to move money around in sort of secret ways. And so that's - ultimately, it's about tax avoidance or tax evasion and keeping your activities - your business activities - secret. 

GROSS: Especially if they're illegal activities. 

BERNSTEIN: Yes - very helpful to keep those secret. 

* * * * 

You know, the United States loses something like $70 billion a year due to the shifting of corporate taxes to tax havens. And that's money that could go to schools that could go to infrastructure. I could go to police. It could go to health care. But it's not. Instead, it's disappearing in the Caymans or the Bahamas or Bermuda or places like that. 

* * * * 

GROSS: So now we've been reading about the Paradise Papers. These are the papers that were leaked from another law firm that created a lot of shell companies, not nearly as many as MossFon did. But what's the difference between the Paradise Papers and the Panama Papers? 

BERNSTEIN: Well, at the firm that's at the center of the Paradise Papers is a firm called Appleby Global. It's based in the Bahamas. And they were a little bit more professional than MossFon. Their client was a little bit more high-end. They were more sophisticated. And they didn't skirt the law quite as much as Mossack Fonseca did. So there's a lot more Americans who used Appleby in part because Appleby is based in Bermuda, which is sort of culturally more acceptable, I think, to the Americans than Panama was - which is where Mossack Fonseca was based. But essentially, they're doing the same thing, you know? They're using the offshore world to hide money, to move it around, to avoid taxes. You know, it's the same MO.

And it goes on from there.  There is considerable discussion of Russian oligarch use of these offshore entities and Donald Trump's business dealings with them.

ICIJ Offers a New Trove of Offshore Activity Documents -- the Paradise Papers (11/6/17)

The International Consortium of Investigative Journalists (ICIJ) has struck again, disclosing a cache is new documents disclosing offshore activity of the rich and famous.  ICIJ calls the new cache of documents the Paradise Papers (which distinguishes it from the old cache, the Panama Papers, and from future caches).  The ICIJ web page for the Paradise Papers, here.

A helpful ICIJ introductory video is here.

The Wikipedia page is here.

BBC has a good piece "Paradise Papers: Tax haven secrets of ultra-rich exposed," here.

Offshore activity of the type disclosed in the Paradise Papers is not necessarily illegal.

My guess is that somewhere somehow related to these disclosures will be whistleblower claims.  Readers of this blog already have been introduced to the U.S. tax whistleblower regime in § 7623(b) that can be quite lucrative for whistleblowers -- 15-30% of collected proceeds.

A sensitive issue for whistleblowers is whether, in blowing the whistle, they violate U.S. law or non-U.S. laws (such as bank secrecy laws, etc.).  A related issue for whistleblowers affiliated with professional firms (such as law firms and accounting firms) whether they violate professional standards.  In either event U.S. Government agencies receiving such disclosures will be very concerned that the agencies not be viewed as affirmative actors in the violation of non-U.S. laws or professional standards.  And, if the whistleblower is violating legal or ethical standards, the U.S. Government agencies may not act, unless there is some affirmative support (such as the attorney-client crime-fraud exception).  For example, if the whistleblower is a lawyer, the IRS will be keenly interested in whether the attorney-client privilege is implicated with respect to the information and documents disclosed and may not use the disclosed information until they are assured the there is no taint that would prevent the use.  Those of us who have worked through the traps and landmines in this area know that anticipating and addressing these concerns are key to successfully getting to the goal of a whistleblower award.