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Welcome
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 comments@riserreport.com or
use the feedback form on The Riser Report Web site at www.riserreport.com/feedback.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:
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Bearer shares are no
longer allowed.
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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.
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There must be at least
two directors.
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Directors and officers
are a matter of public record.
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Annual meetings are
required.
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Subject to Exchange
Control approval, IBCs may have Bahamian resident
shareholders and may carry on business in The Bahamas with
Bahamian residents.
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Removal of the
guarantee of tax exemption for IBCs incorporated under the
new IBC Act.
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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:
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to enable or assist
the Governor of the Central Bank in functions conferred on
him by law;
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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.
Proceeds
of Crime Act, 2000
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:
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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.
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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.
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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
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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.
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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:
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where there is a
Bahamian court order
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to enable or assist
the Central Bank in its functions;
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where there is consent
of a bank or trust company (respecting the affairs of the
bank or trust company, that is)
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where the information
is otherwise publicly accessible
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where the information
does not include identifying particulars
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for criminal or
certain disciplinary proceedings
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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:
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The Central Bank is
satisfied as to the confidentiality of the disclosed
information
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The Central Bank has
received a guarantee that the disclosed information will not
be further disclosed without the Central Bank's consent
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The Central Bank is
satisfied that the disclosure is required by the overseas
regulatory authority for its civil regulatory functions; and
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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:
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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.
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Certified copies of
the first four pages of the client's passport (or if the
client has no passport, the client's driving license).
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Certified copies of a
recent utility bill (telephone, power, gas, etc.) showing
the client's name and street address.
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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.
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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:
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Certified copies of
the certificate of incorporation or certificate of
formation.
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Certified copies of
the Memorandum and Articles of Association, Operating
Agreement or Partnership Agreement
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The identity of the
registered agent and the address of the registered office.
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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.
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A certificate of good
standing confirming that the entity or partnership is in
existence and not in the process of being wound up
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Names and addresses of
all officers and directors.
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A statement
containing:
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the date of
commencement of business, the products or services
provided by the entity or partnership, and the location
of the principal office
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the purpose of the
account, the anticipated size and transaction volume of
the account.
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confirmation that
all credits to the account will be beneficially owned by
the entity or partnership
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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.
OECD
Update
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:
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An extension of the
July 31 deadline for the signing of cooperation agreements
to the end of the year;
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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;
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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;
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Guaranteeing full
membership to all cooperative targeted offshore
jurisdictions in a global tax forum to be created later this
year;
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Allowing officials
from targeted offshore jurisdictions to participate in
monitoring and evaluating implementation of and compliance
with anti-harmful tax competition measures; and
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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.
Briefly
Noted
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.
In
My Own Backyard
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.
Another
Scam Bites the Dust
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.
And
Another One Gone
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 75074
CJ 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
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