Wednesday, April 16, 2008

Debunking the myth of extraditions from Panama

Another hoax seems to be making the rounds on the Internet:

"The MLAT has no application to civil cases such as divorce, bankruptcy, civil judgments, business litigation, any sort of civil litigation, civil tax matters etc. Taxation matters of any sort are not covered by this as far as Panama is concerned. Income tax evasion is a civil (non-criminal) offense in Panama. Switzerland cooperates on income tax cases if the return is filed falsely like all income was not declared, things were omitted or so the complaining government says. Panama has no extradition treaties. Panama passes this test." (How to Compare Offshore Jurisdictions 09th November 2006)

By MLAT they refer to a 1995 Mutual Legal Assistance Treaty which allows judicial cooperation (subpoenas, extradition, seizures, or others) in cases between Panama and the US when it involves a crime punishable with imprisonment of more than 1 year in both countries. Until Panama penalized false statements in tax returns with 2 years of imprisonment, most US tax crimes were not subject to judicial cooperation.

Panama does have extradition treaties. The Panama Foreign Ministry lists several International extradition conventions as well as bilateral treaties signed with several countries.

One of the treaties is with the US. They call it "Treaty providing for the extradition of criminals. Signed at Panama May 25, 1904; entered into force May 8, 1905. 34 Stat. 2851; TS 445; 10 Bevans 673."

Those that were not hiding under a rock may have seen a little guy called Noriega being flown out of Panama in a helicopter almost 20 years ago. The 1904 extradition treaty served as legal support for the action, not that any Panama government was willing to argue the point with a larger, foreign army.

Tax cases may not be subject to extradition, but being a fugitive from an active tax case prosecution is still being a fugitive in both countries. Eddie Ray Kuhn, self-proclaimed tax protester and indicted as part of the Wesley Snipes tax case, found that the hard way in November 2006, when he was arrested by Panama authorities in an El Dorado shopping mall. Not even his Pensionado Visa helped him avoid a free flight back to "bucolic Ocala" in Florida. The legal argument for his deportation was that "false statements in his Panama pensionado application affidavit", which was a legal shortcut faster than a full extradition process under the MLAT. German George Schulze was also sent back to Germany for tax fraud.

Political momentum can have an effect, as several prosecutions of Panamanians fleeing to the US escaping Panama justice (yes, sometimes it actually exists) were being delayed by non-complaint US authorities. A report to Congress states: "The current extradition treaty between the United States and Panama was signed in 1904, and the Panamanian Constitution prohibits the extradition of Panamanian nationals. ... Despite its bar to extradition of nationals and an old treaty, Panama has continually demonstrated good faith efforts to surrender fugitives to the United States. Most of all, Panama has shown a willingness on numerous occasions to make use of legal alternatives to extradition (which are not reflected on the appended charts) in order to effect the return of non-Panamanians to the United States to face trial." The report also lists fugitives in Brazil and Costa Rica surrendered to the US for several crimes.

Lesson to the wise: Get professional advice and file truthful tax returns on time.

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Taxable Talk
Extradition from Panama to the United States—Eddie Ray Kahn
Eddie Ray Kahn From Wikipedia
White Collar Crime Prof Blog
Limitations of the Attorney-Client Privilege Under Section 7525 of the Internal Revenue Code

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