Sunday, June 28, 2009

Former FINCEN agent says : US shell companies - It's time to end the hypocrisy

John Cassara is an expert in anti-money laundering and former FINCEN agent. In his blog he points out that finding beneficial owners of U.S. companies can be as difficult as in more famous offshore jurisdictions.

Bill S. 659 Incorporation Transparency and Law Enforcement Assistance Act is meant to improve record keeping of beneficial owners by State Divisions of Corporations, even though forming corporations is a state - not federal - power. Secretaries of State of Wyoming and other states have pointed out that they already complied with federal wishes to eliminate bearer shares and now they and small businesses are being asked to spend even more money in compliance.

Over the last few years, I have worked in approximately one dozen developing countries helping police, customs, and security services recognize and investigate money laundering and terror finance. During discussion periods, I am inevitably asked the following question. "Mr. John, my agency has a financial crimes investigation and the money trail leads to the American state of Delaware. We can't get any further information and don't know what to do. Can you help us?" As a former criminal investigator representing the United States, this question is, frankly, embarrassing.

From a money laundering and tax evasion standpoint, Delaware is not the only American state that has troubling incorporation and limited liability company (LLC) structures. In 2006, the US General Accountability Office (GAO) issued a report, "Company Formations: Minimal Ownership Information Is Collected and Available." (pdf) The report reviewed the legal requirements in all 50 states to set up corporations and LLCs, and found that most states failed to request beneficial ownership information. The GAO found that the absence of ownership information impeded law enforcement investigations of suspect corporations.

Some states seemingly compete against each other to see which can offer less accountability, less transparency, the most secrecy and, as a result, attract the most business and fees. Websites that offer incorporation services worldwide are touting US corporate secrecy. In transactions that can be completed over the internet in a few hours and for a few hundred dollars, corporations and LLCs can be formed in the US that provide many of the same secrecy provisions featured in traditional international tax and offshore havens.

US Senator Carl Levin (D-Michigan) has followed the issue closely. According to Senator Levin, "States allow persons to form nearly two million corporations and LLCs each year in this country without knowing – or even asking – who the beneficial owners are behind those corporations. Right now, a person forming a US corporation or LLC provides less information to the state than is required to open a bank account or obtain a driver's license."

The United States routinely points to other countries' anti-money laundering/counter-terrorist finance (AML/CFT) shortcomings. It has played a major role over the years in identifying "uncooperative" countries and jurisdictions and placing these countries on formal and informal "blacklists." Yet the proliferation of defacto shell corporations on American soil spotlights hypocrisy and undermines US policy.

For example, as noted in the recently released 2009 State Department International Narcotics Control Strategy Report (INCSR) Volume II on Money Laundering, the British Virgin Islands and Hong Kong each have nearly 500,000 international business companies (IBCs) registered in their jurisdictions. The INCSR states the Dominican Republic, Grenada, Jamaica, Trinidad and Tobago plan to open "international financial centers," most of which offer the same services as offshore financial centers. In Panama, approximately 46,178 IBCs were registered in Panama in 2007. The INCSR continues that, "Panama has no requirement to disclose the beneficial owners of any corporation or trust; bearer shares are permitted for corporations; and nominee directors and trustees are allowed. The result is that illicit funds can be laundered and taxes evaded with little fear of detection and prosecution."

I am not an attorney skilled in the intricacies of international law, taxes, or finance. I don't understand the differences between LLCs, IBCs, IFCs, off shores, shell companies, and taxhavens. Maybe I am missing something. However, I know as a criminal investigator that following a dirty money trail to Delaware is about as difficult as following it to those jurisdictions criticized above by the US State Department.

When I was assigned to Treasury's Financial Crimes Enforcement Network (FinCEN), I witnessed many requests for assistance from Egmont Group partner international Financial Intelligence Units (FIUs) that had investigations focusing on Delaware. There was not much we could do.

Domestic law enforcement agencies are equally stymied. For example, according to 2006 Congressional testimony, Immigration and Customs Enforcement (ICE) reported that a Nevada-based corporation received more than 3,700 suspicious wire transfers totaling $81m over two years. However, the case was not prosecuted because investigators could not identify the corporation's owners.

In 2008, Department of Homeland Security Secretary Michael Chertoff wrote to a Senate Subcommittee, "In countless investigations, where criminal targets utilize shell corporations, the lack of law enforcement's ability to gain access to true beneficial ownership information, slows, confuses, or impedes the efforts by investigators to follow criminal proceeds."

The Financial Action Task Force (FATF) has repeatedly criticized the United States for failing to comply with a FATF standard requiring beneficial ownership information.

Undoubtedly because company formations can be lucrative, nothing has been done. Perhaps things are about to change.

In March 2009, Sen. Carl Levin, D-Mich., Sen. Chuck Grassley, R.-Iowa, and Sen. Claire McCaskill, D-Mo., introduced the Incorporation Transparency and Law Enforcement Assistance Act to help law enforcement stop the misuse of U.S. corporations. Among its provisions, the bi-partisan Act (S.569) would require states to obtain a list of the beneficial owners of each corporation or LLC formed under their laws, ensure this information is updated annually, and provide the information to civil or criminal law enforcement upon receipt of a subpoena or summons. The Act would also require corporations and LLCs with non-US beneficial owners to provide a certification from an in-state formation agent that the agent has verified the identity of those owners.

As the Group of 20 prepares for a meeting in early April to try to improve global financial rules, there are reports that financial and tax havens of all sorts may receive scrutiny. As part of the process, I hope the United States is called to lift the veil of states' secrecy when it comes to corporate beneficial owners.

The current financial meltdown and a dangerous laxity in financial crimes enforcement should have taught us that we can no longer afford business as usual.

I suggest the American delegation at the Group of 20 headed by President Barack Obama should be guided by the following quote from then Senator Obama; "It's time for the United States to meet its international anti-money laundering commitments, and that means getting beneficial ownership information for US corporations."

Published in Complinet

S. 569, The Incorporation Transparency and Law Enforcement Assistance Act
S. 569 would ensure that persons who form corporations in the United States disclose the beneficial owners of those corporations, in order to prevent wrongdoers from exploiting United States corporations for criminal gain, to assist law enforcement in detecting, preventing, and punishing terrorism, money laundering, and other misconduct involving United States corporations.

National Association of Secretaries of State Congressional Activity: News Release: North Carolina Secretary Elaine Marshall Testifies Before U.S. Senate on State Business Incorporation Practices (06/18/09) * Testimony * More Testimony: Kansas Nevada Wyoming * NASS Company Formation Task Force

Concerns About 5.569 by Max Maxfield Wyoming Secretary of State: While we understand the premise of S.569; and while we applaud Senator Levin for his desire to better protect our country, we have serious concerns that the passage of S.569 will set Wyoming back in our efforts to fight fraud. We have the following serious concerns.
1. Our greatest concern is that if the federal law passes, there will be serious attempts to rescind Wyoming's laws. The argument will be that as long as a company meets the federal law that should be enough.
2. IfWyoming's laws were to be rescinded, we would lose the key component of requiring a human being in our State TO BE RESPONSIBLE FOR REPRESENTING THE COMPANIES THEY SERVE. We would be back to registered agents just being there for service of process, taking an otherwise hands off approach to the responsibility which they should shoulder.
3. If Wyoming's laws were to be rescinded, we would also lose the requirement that the registered agent have a contact person for each company they represent. We FIRMLY BELIEVE that a person leading you to another person is infinitely better than having paper on file. Fraudulent people file fraudulent paper; but a person face to face being held responsible generally knows of another person who can be contacted.
4. Whatever information is determined to be kept, it should be kept by the registered agent, not by government. This is a responsibility issue. States should not be taking the responsibility to know the players for each company; states are not forming these companies or using them for potential ill. Formation agents and the registered agents who are forming and making money off these companies (or the individuals themselves if the owner acts as his own registered agent) should be responsible for retaining and providing all required information. Without personal responsibility for the paper, the paper has very little value, except to make it APPEAR AS IF government is trying to locate the bad actors.

See also Levin - Obama Bill seeks to end confidentiality of US corporations


To form your own Delaware company click here

Letter criticizes bearer instruments in Panama, not in Wyoming or UK

Reporter Rafael Berrocal writes about the letter sent to the American Chamber of Commerce and the U.S.-Panama Business Council by the current U.S. Ambassador Barbara Stephenson (Anonymity in Corporations is Criticized, La Prensa 1832992.asp). According to the report, the Ambassador wrote that bearer shares ensure anonymity of the owners of a Panama corporation. “The damage to the reputation for lack of transparency is higher than the speculative damage of maintaining a public practice”, when justifying the pressure by US Democrats on Panama to shut down its financial center and sign a tax information exchange agreement. She said that the US also faced this problem when prohibiting bearer shares.

Panama has a Mutual Legal Assistance Treaty for Criminal Matters which allows US authorities to demand cooperation from Panama judicial authorities in criminal cases (even if Panama authorities complain that US assistance to Panama requests is close to null). This includes requesting Panama authorities to demand from Panama lawyers to provide client records despite attorney-client privilege rules. However, this has proven to be insufficient for competitors of the Panama financial center. Doubts are prevalent among local practitioners that ending Panama bearer shares will even take the country out of the OECD gray list, where British Virgin Islands (BVI) and Bahamas are still listed after discouraging or eliminating bearer shares.

Bearer shares have proven to be like a gun with no bullets: banks do not open accounts for them, lenders demand that those bearer shares be pledged before disbursement and an “anonymous” shareholders loses his anonymity when he tries to enforce his rights in a Panama court (a “John Doe” shareholder cannot sue).

The bright side of the letter is that it shows the willingness of foreign diplomats to tackle issues which were considered meddling into another country's affairs. We just hope the same effort is displayed when tackling CORRUPTION by Panama judges used against US investors.

Those that still want bearer instruments can find them in the heart of the countries which criticize them: the Wyoming bearer scripts and the England LLC bearer shares.

Even though bearer shares are null in Wyoming after October 1, 2007, shares do not need to be issued and the Wyoming Business Corporation Act provides:

17-16-604.� Fractional shares.

(a)� A corporation may:

(i)� Issue fractions of a share or pay in money the value of fractions of a share;

(ii)� Arrange for disposition of fractional shares by the shareholders; or

(iii)� Issue scrip in registered or bearer form entitling the holder to receive a full share upon surrendering enough scrip to equal a full share.

(b)� Each certificate representing scrip shall be conspicuously labeled "scrip" and shall contain the information required by W.S. 17-16-625(b).

(c)� The holder of a fractional share is entitled to exercise the rights of a shareholder, including the right to vote, to receive dividends, and to participate in the assets of the corporation upon liquidation.� The holder of scrip is not entitled to any of these rights unless the scrip provides for them.

(d)� The board of directors may authorize the issuance of scrip subject to any condition considered desirable, including:

(i)� That the scrip will become void if not exchanged for full shares before a specified date; and

(ii)� That the shares for which the scrip is exchangeable may be sold and the proceeds paid to the scripholders.

This is similar to the blank transfer of suscription rights document, which Panama corporation founders sign in blank form to clients purchasing bearer shares.

Several Wyoming and UK incorporators advertise:

Wyoming Corporations
Why Use Wyoming Corporations?
There are many reasons why a Wyoming Corporation can be useful. The following is a list of some of these reasons.

Wyoming is a tax-free state, there is:
No corporate tax
No franchise tax
No inventory tax
No stock tax
No inventory tax
No personal income tax
No estate tax
No inheritance tax
No gift tax

Wyoming Does Not Share Information:
Wyoming is one of two states in the Union that do not voluntarily share information with the IRS or with any other state.

Wyoming Allows Bearer Shares:
It is one of two states that allows for bearer shares. Whoever holds bearer shares owns them. The stock does not need to be registered in anyone's name. In fact, in Wyoming it is not necessary to issue stock.

The names of owners or stockholders of Wyoming corporations are not a matter of public record. Only the officer’s names are made public. However, with creative planning you can remove your name as an officer or director. See Nominee Officer Services

Wyoming Allows Bearer Script:
A client can hold Bearer Script which can be redeemed for shares but the client is never required to own stock in the corporation. If asked if they own stock in a corporation, the client could state under oath that they did not.

Wyoming Protects Officers And Directors:
There is no personal liability. Wyoming indemnifies directors and officers from personal liability for act committed on behalf of the corporation or by the corporation.

Wyoming Annual Reports:
In Wyoming, as in Nevada, a corporation is required to list the names and addresses of Officers and director(s) when they file their annual report With the Secretary of State. All of these positions may be held by one person. International Registration Services, LC can provide a nominee to fill all of these positions, ensuring your complete privacy.

Wyoming does not require stockholders to register with the state. Because of this, you can own all the shares in the Corporation, maintain complete control of operations and designate representatives as your officers and directors. Your identity will be kept completely confidential.

Avoid Some Of Your Home State Taxes:
Have your Wyoming Corporation bill you for the services provided. The Wyoming Corporation will generally add some amount to the bill for its service costs and overhead. By doing this, you are able to transfer some of your profits to tax free Wyoming!

Example 1:
Have your supplier provide an invoice to your Wyoming Corporation for the products that you normally purchase. Let's say that the invoice is for $100,000. Your Wyoming corporation will pay the bill and bill your local company $150,000. You have just transferred $50,000 of your profits to tax free Wyoming. Major US corporations have used these tactics for years. Not only within the United States but worldwide.

Protect Your Substantial Assets:
When someone comes snooping around make sure there is no equity in your real estate.

Example 2:
Have the Wyoming Corporation put a lien on major assets such as your home, rental property, or business property.

International Registration Services, LC

WYOMING CORPORATIONS and LLCs have a tax haven within the United States with no income taxation,anonymous ownership and bearer shares. The annual upkeep costs less and you can issue as many shares as you want with no extra filing fee. We can help you set up banking for your Wyoming LLC or Wyoming corporation from your home state. Did you know that Wyoming invented the LLC? Numerous European companies as well as US companies have used the State of Wyoming for their Wyoming LLCs as well as for corporations. If you call we can tell you all of the similarities and differences between a Wyoming LLC and Nevada LLC. Click for details and pricing at $69 plus state filing fee. Please call us for any assistance or ideas.

+ Wyoming protects corporations with the strongest laws and protects your privacy.
+ Wyoming requires only one person to form a corporation. You have total control.
+ Wyoming has close corporations with less rules and paperwork for small family run companies.
+ Wyoming was the first state to offer LLC's. Close LLC's are available. Perfect for a family LLC
+ Wyoming allows Bearer Shares, Nominee Officers and Lifetime Proxies. These can make you invisible.
+ Wyoming allows corporations to be transferred in from other states and still retain original incorporation date.

Wyoming EZ Corp

A Side by Side Comparison of Wyoming and Nevada and Delaware





No state corporate income tax

No tax on corporate shares

No franchise tax

Minimal annual fees

One-person corporation is allowed

Stockholders are not revealed to the State

No annual report is required until the anniversary of the incorporation date

Unlimited stock is allowed, of any par value

Nominee shareholders are allowed

Share certificates are not required

Minimal initial filing fees

No minimum capital requirements

Meetings may be held anywhere

Officers, directors, employees and agents are statutorily indemnified

Continuance procedure (allows Wyoming to adopt a corporation formed in another state)

Doesn't collect corporate income tax information to share with the IRS

Nevada vs Wyoming

Perhaps you’re one of those who have read all the web sites that promote incorporating your business in Nevada. The reasons given usually are:

1. Nevada does not share information with the IRS.

Wyoming Answer: Nevada makes the IRS mad. Wyoming does share information with the IRS, but only the information given by companies with real assets inside the state. So you have the best of both worlds, the IRS is not targeting you because you are in a non friendly state (like they may in Nevada), and yet there is no information that is shared because most businesses do not have real assets inside the state of Wyoming.

Corporations Today, Inc.


British Companies with the Bearer Shares. Bearer Share Basics:

In addition to incorporating an ordinary company limited by shares we can provide formation & management of companies with bearer shares! Bearer shares can be converted into registered shares and vice versa.

Bearer shares are legal instruments denoting company ownership. They are not the same as stock certificates, however. Usually, the legal shareholders of a limited company are those persons whose names appear on the corporation's official shareholders list, or register. These shareholders may or may not be issued a tangible stock certificate which they may possess.

A common stock certificate will bear the name of the shareholder, and how many shares of stock the certificate represents. It will contain other information such as the name of the company, any par value the shares have, and most importantly, whether there are restrictions on the transfer of the shares.

Many UK residents have never heard of bearer shares. The trick behind Bearer Shares, however, is that they must be issued properly by a qualified and knowledgeable corporate director. As long as you do not have them in your possession at the time you are questioned, you can legally and truthfully say under oath, "I am not the owner of that corporation." It's always recommended that people keep their bearer shares.

This way, if your nominee officer is ever questioned about your corporation, he can say the same thing: "Bearer shares were issued, I don't know who owns the company, and I can prove it."

In contrast to ordinary stock certificates, bearer shares do not list the name of a shareholder. Instead, they state that shares of stock in the corporation are owned by the "bearer" of the certificate. Therefore, whoever has physical possession of the certificate can exercise the rights of a shareholder of the company. The advantage of bearer shares is privacy and ease of transfer. A company with only bearer shares has no shareholders list or register.

Therefore it is impossible to know for certain who the shareholders of the company are. Because a transfer of the shares can be made by simply handing them to another person, bearer shares can be transferred more easily than non-bearer shares.

How Bearer Shares are Suppose to Work:

Normally, when you fill out the back of a stock certificate, you must print the name or the company name of who owns that stock. Then you must record in the stock ledger the shareholder, address, date, number of shares, and if it was an original issue or a transfer. Obviously whomever the stock is issued to is the owner of the company. If it is to the bearer, then whoever holds that certificate, at a particular moment, will thereby be considered the owner of the company.


Tax Haven UK - 2 - Bearer Shares

August 2nd, 2007

Alistair Darling has said the UK is not a tax haven. That is not true. It is, using any reasonable definition, including that which I proposed recently. I’ve already suggested one obvious reason why it is, which is the existence of the domicile rule, so let’s take a second example that is less obvious.

This is the fact that the UK allows the issue of bearer shares. This is deliberate. The right survived into section 779 of the Companies Act 2006. As one formation agent who seems to specialise in the more esoteric end of the market has noted, UK companies with bearer shares are ‘our most popular package with UK residents’

Thursday, June 18, 2009

Trail of Panama companies vanishes in Delaware

Title: Hearing Of The Senate Committee On Homeland Security And Governmental Affairs - Examining State Business Incorporation Practices: A Discussion Of The Incorporation Transparency And Law Enforcement Assistance Act
Date: 06/18/2009
Location: Washington, DC
Show All Statements Hearing Of The Senate Committee On Homeland Security And Governmental Affairs - Examining State Business Incorporation Practices: A Discussion Of The Incorporation Transparency And Law Enforcement Assistance Act
SEN. LEVIN: U.S. corporations with hidden owners have created a serious law enforcement and a national security problem. For instance, we're going to hear today from witnesses about U.S. corporations that it turns out were established by the military in Iran, a state sponsor of terrorism. We're going to hear about U.S. corporations involved with money laundering, about U.S. corporations that are used to commit tax evasion and more. And they all have one thing in common. The real owners -- the legal term is beneficial owners. Their real owners are hidden from view.

Here's one example of what's going on. In 2004, one of our key law enforcement agencies, the Immigration and Customs Enforcement, or ICE, who's here today, uncovered a collection of U.S. companies that were secretly controlled from entities located in Panama. The investigation began when bank reports showed that a single company formed in Utah was participating in nearly $150 million in suspicious international wire transfers. Further investigation by ICE uncovered a network of nearly 800 U.S. companies dispersed among nearly all 50 states controlled by the same Panamanian entities. These companies were transferring large amounts of money to each other and to high- risk jurisdictions overseas. The companies claim they were paying for the importer-exported goods, but it turned out no such goods were being shipped.

In effect, the money transfers were part of a massive financial shell game in which U.S. companies were being used to disguise the movement of funds and to mask suspicious activity. When ICE obtained the incorporation records for the 800 U.S. companies, not one identified a company's true owner. After analyzing the available information, ICE found that nearly 200 companies had been formed in Utah and used the same company formation agent in a small office in a Salt Lake City suburb. That company formation agent also served as the company's registered agent within the state to accept service of process.

When questioned by ICE, the Utah registered agent indicated that he had formed the companies at the request of another company formation agent located in Delaware, did not have any beneficial ownership information, and believed that all were, quote, "shell companies" with no real business operations in the United States. The Delaware company formation agent was already well-known to law enforcement. No less than eight previous investigations had led to its doors, each of which involved millions of dollars in suspected money laundering by U.S. shell companies associated with the same Panama entities.

When questioned by ICE in the prior cases, the Delaware company formation agent had freely admitted that he knew some of the corporations he formed, or caused to be formed, were intended to move money out of Russia and some former Soviet republics. He also said that he sometimes sold U.S. companies to the same overseas buyer at the rate of 40 companies per month. When asked about the actual owners of the 200 Utah companies, the company formation agent was unable to provide law enforcement with any names, since that information was not required by law.

The end result was that the ICE investigation, like the eight before it, hit a dead end, unable to proceed due to the lack of beneficial ownership information. A hearing exhibit -- and it's in our books -- summarizes the case.

Now, Michael Chertoff, former secretary of U.S. Department of Homeland Security, wrote the following: "In countless investigations where the criminal targets utilize shell corporations, the lack of law enforcement's ability to gain access to true beneficial ownership information slows, confuses, or impedes the efforts by investigators to follow criminal proceeds. This is the case in financial fraud, terrorist financing, and money laundering investigations. It is imperative that states maintain beneficial ownership information while the company is active and to have a set timeframe for preserving those records.

Here's another aspect of the problem. A few weeks ago, members of my staff conducted an Internet search and found numerous company formation agents advertising the sale of U.S. companies and trumpeting the fact that U.S. companies can be formed without disclosing the names of any company owner. One of the most blatant was Corporations Today, Inc., which advertises its ability to form U.S. corporations in nearly every state with minimal cost and effort. A copy of some of its Internet ads is presented in the two hearing exhibits, and the chart which I'm putting up here reproduces one of its advertisements, offering the sale of aged corporations, meaning companies which corporations today formed years earlier. One of the companies on sale for $6,000 is advertised as coming with four years of tax returns and an existing employer identification number, an EIN issued by the IRS.

Why buy an aged corporation? According to Corporations Today, quote, "obtaining bank loans may be easier when you can show you have history," close quote. So is, quote, "obtaining corporate credit cards and leases." The quote goes on. For example, "Dell Computers lease only to corporations six months old or more," close quote. They're selling aged corporations for a price, been in business allegedly for six months or more. So Dell is told, hey, this corporation's been in business for years, so we're now eligible to lease your product.

So the ad invites fraud. It enables hidden owners to pretend that they've had a corporation operating in the United States for years when they haven't. Despite mounting evidence of misconduct by U.S. shell corporations, despite Internet advertisements selling U.S. corporations with promises of anonymity, despite the years of law enforcement complaints, many of our states are reluctant to admit that there's a problem in establishing U.S. corporations with hidden owners. Too many of our states are eager to explain how quick and easy it is to set up corporations within their borders without acknowledging that those same quick and easy procedures enable wrongdoers to utilize U.S. corporations in a variety of ways, both here and abroad.

In 2006, the leading international anti-money laundering body in the world, the Financial Action Task Force on Money Laundering, known as FATF, issued a report criticizing the United States for failing to comply with the FATF standard, which requires countries to obtain beneficial ownership information for the corporations formed under their laws. FATF gave the United States two years until July of 2008 to make progress towards compliance with the FATF standard. Next week, FATF is scheduled to review U.S. actions on this matter. How can we possibly justify our failure to do what we have committed to do; obtain beneficial ownership information to the corporations formed within the United States?
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To form your own Delaware company click here

Wednesday, June 17, 2009

Panama Arbitration Panel Rules in Favor of Foreign Property Buyers

A decision from a Panama arbitration panel upholds rights of foreign property buyers against local real estate developers.

Panama City, Panama ---- The Panama Center of Conciliation and Arbitration rendered an interesting decision regarding a purchase contract involving local companies as sellers and U.S.-resident foreign nationals as buyers of an apartment in Panama City. The decision is an exception to a string of abuses committed by local developers against foreign investors.

The economic group which developed and sold the residential apartment project and its individual architect as member of said economic group were condemned indistinctly to pay to the foreign promissory buyers the price of the property plus interest until the actual day of its payment, as remedies for damages caused by the defendants for an unilateral breach of the contract, with bad faith being found in their behavior.

The promissory sellers failed to communicate the promissory buyers when the construction of the project began in order to collect the second installment of the purchase price of a condo unit, as required by a promise contract which only stated “second payment must be made 30 days after construction begins”.

Instead, the sellers disposed of the condo unit and sold it to a third party –when the promissory buyers were on time to make the second payment. The promissory buyers later received a letter from the developer informing of their unilateral decision to end the contract because payments were not received in a timely manner which allowed for early termination. The developer offered to return the deposits only if the promissory buyers signed a liability waiver.

Lombardi Aguilar & Garcia in Panama served as legal counsel for the promissory buyers. The legal team of the firm included Guadalupe Martinez-Casas, an attorney with experience in international arbitration cases before fora such as the Court of Arbitration for Sport (CAS) in Lausanne, Switzerland. Ms. Martinez-Casas is a foreign law consultant in Argentine law, who previously served as attorney at the Buenos Aires firm of Llerena & Asociados. She is a graduate of Universidad Latina de Panamá (MBA), Universidad Torcuato di Tella (LLM and Economics), and Universidad de Buenos Aires - UBA (LLB).

About Lombardi Aguilar & Garcia
Lombardi Aguilar & Garcia was created as an alternative for clients worldwide who seek fast, innovative and effective solutions to their legal problems. The firm currently provides services to individual and corporate clients in Panama as well in the Americas, Europe and Asia. Its partners maintain a commitment with professional ethics and social responsibility by participating in the board of directors of groups such as the Panama Bar Association, the German and the American Chambers of Commerce (AMCHAM) of Panama, and the Association of Chinese-Panamanian Professionals (APROCHIPA).

The firm centers its law practice in private client services and asset protection (Private Interest Foundations, Trusts), business structures (Offshore Corporations), tax planning, real estate and e-commerce. It also advices in areas of Law such as Corporate, Commercial, Intellectual Property, Maritime, Tax, and Immigration Law as well as related litigation that may arise.

For more information, contact +507 340-6444, +507 66388707, e-mail aaguilar (at), or see: Lombardi Aguilar & Garcia

Keywords: Panama, real estate, property, investment, litigation


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See also Lawsuits against developers increase

Tuesday, June 16, 2009

Austria to keep banking secrecy

Austria in one of the countires withstanding OECD challenges against bank confidentiality. Article 10 of the Austrian constitution requires money, credit and banking officials to pledge secrecy as to facts obtained during their duties.

Austria to keep banking secrecy

VIENNA, AUSTRIA Mar 13 2009 12:27

Austria has decided not to lift its banking secrecy following talks with the Organisation for Economic Cooperation and Development (OECD) in Paris, Finance Minister Josef Proell said on Friday.

"Our laws are in line with OECD guidelines," Proell told a news conference in Vienna after returning from Paris on Thursday where he had held talks with the OECD on Austria's banking secrecy laws.

"The OECD criteria [on banking secrecy] must be global criteria and they must provide the framework for the European Union and the G20," Proell said.

Austria, along with countries such as Andorra, Liechtenstein, Luxembourg and Switzerland, are all coming under increasing international pressure over their banking secrecy regimes ahead of a Group of 20 summit in London on April 2.

On Thursday, Andorra and Liechtenstein, which are on the OECD's list of "uncooperative tax havens", as well as Belgium, all announced they would ease strict banking secrecy rules and cooperate with foreign tax authorities.

The three countries announced separately that they would swap information with foreign governments to combat tax fraud and evasion, shedding light on the secret offshore accounts of non-residents.

Austria is not on the OECD blacklist but it has also come under fire because its banks are only obliged to supply client information if a court orders them to do so and targeted individuals can appeal such a move.

On Thursday, Austria central bank chief Ewald Nowotny said that Vienna was considering possible changes to banking secrecy laws, even if it was not ready to lift them completely yet.

"Realistically speaking, I believe there will be changes," Nowotny told the late night news programme of ORF public television.

The government has drawn up proposals in its talks with the OECD "but I don't believe Austria will lift banking secrecy altogether", he said.

According to a finance ministry spokesperson, Austria has no plans at present to rethink its banking secrecy laws, even though it took note of the decisions by Andorra and Liechtenstein to ease their rules.

"These are certainly moves that will move the international debate forward but they don't by themselves justify us changing our position," ministry spokesperson Harald Waiglein told AFP.

"We're in favour of equality in the face of competition and there are many countries which aren't transparent" in banking matters, he said.

Waiglein said Vienna would only alter its rules if all countries did likewise. The regime of "trusts" on the Channel Islands, but also rules in some US states such as Delaware, Montana or Nevada, should also be examined, he said.

"Unilaterally lifting banking secrecy will not contribute to transparency but will only divert financial flows and prejudice the Austrian economy," he said. -- AFP

Source: Mail & Guardian Online
Full text in:

See also Austria banks and Panama foundation enhance confidentiality

Sunday, June 14, 2009

Utah man arrested in Panama for wire fraud

Panama is a great place where to start a company, but not very good for seking refuge from the FBI... His lawyer did not advise him of the 1991 Panama-U.S. Mutual Legal Assistance Treaty The new Immigration Law makes the existence of arrest warrants abroad a just cause for revokation of tourist or residency visas, which results in deportation.

Video Courtesy of


Man wanted for wire fraud arrested in Panama
April 24th, 2009 @ 5:16pm
SALT LAKE CITY -- The salt lake office of the FBI announced Friday afternoon the arrest of a Lindon man accused of running a Ponzi scheme that cost investors millions of dollars.
The FBI and the U.S. Attorney's Office issued an indictment against 47-year-old Jeffrey Mowen on April 21.
Friday morning, they had their man. Mowen was arrested in Panama.
Among other things, Mowen is charged with defrauding as many as 200 investors out of $18 million.

The indictment cited one case where Mowen allegedly promised one investor a 33 percent return each month on a $100,000 investment.

The FBI says Mowen was tracked down after receiving tips from U.S. citizens living in Panama who had heard about the indictment earlier this week.

Tim Fuhrman, FBI Special Agent in Charge says tip led to Mowen's arrest.
Tim Fuhrman, FBI Special Agent in Charge, said, "Again, this proves that we can be as technologically savvy as anybody, but the people who called in the tips are what enabled us to get on him and affect this apprehension, and I can't thank the Panamanian authorities enough."

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Telemetro reports on the Panama arrest
Note on Mowen 2006 Utah securities case
Read also Debunking the myth of extraditions from Panama

Sunday, June 07, 2009

In Defense of Tax Havens

  • MARCH 17, 2009, 11:54 P.M. ET

In Defense of Tax Havens


If the government suddenly said you would incur more onerous and expensive tax regulations and reporting requirements if you moved your business to a low-tax state such as Texas or Florida from a high-tax state such as New York or California, you would be justifiably outraged. Now substitute Switzerland and Bermuda for Texas and Florida, and France and Germany for New York and California, and you'll understand a new form of "tax protectionism" that is infecting Washington.

Several serious proposals are being floated in the nation's capital that would penalize Americans for investing in low-tax rather than high-tax jurisdictions. Proponents say the measures are needed to catch tax cheats -- but ignore the fact that most of the low-tax jurisdictions such as the Cayman Islands, Switzerland, etc., already have tax information exchange (for cases of probable cause), or tax withholding, agreements with the U.S. and other countries such as the U.K. and France.

Nevertheless, Sens. Carl Levin (D., Mich.), Bryon Dorgan (D., N.D.), and Max Baucus (D., Mont.), as well as officials of the Obama Treasury, want to make it more onerous and costly for American companies to do business around the world and for Americans to invest elsewhere. They would even make it more difficult for non-Americans to invest in the U.S.

Mr. Levin's bill is a hodgepodge of tax increases, more regulations and penalties on American taxpayers doing business in targeted low-tax jurisdictions. Mr. Dorgan's bill would prevent certain American companies that operate and are incorporated outside the U.S. from being treated as nondomestic corporations, thus denying them the right of tax deferral until their income is brought back to the U.S. Mr. Baucus, chairman of the Senate Finance Committee, is circulating a draft bill that, among other things, would extend the statute of limitations from three to six years for tax returns reporting international transactions. The Treasury Department is proposing expanded regulations on foreign financial institutions that bring needed investment funds into the U.S.

In addition to charges of tax evasion, some members of Congress -- echoing European politicians including France's President Nicolas Sarkozy and British Prime Minister Gordon Brown -- have even tried to scapegoat the low-tax jurisdictions as somehow being responsible for the global recession. They are demanding that the G-20 countries come up with action proposals against them at their meeting next month.

This is nonsense. The so-called tax havens are for the most part no more than way-stations to temporarily collect savings from around the world until they are invested in productive projects, such as building a new shopping center or semi-conductor plant in the U.S. This enables a better allocation of world capital, leading to higher, not lower, global growth rates.

Indeed, to the extent tax competition between jurisdictions holds down the increase in the growth of governments, citizens of all countries experience more job opportunities and higher standards of living. And to the extent that businesses and individuals are discouraged by taxes or regulations from investing outside their own jurisdictions, they may simply choose to work and save less, period.

Those who demand increased taxes on global capital often rail against financial privacy and bank secrecy -- forgetting they are necessary for civil society. It is true that not all people are saintly. But it is also true that not all governments are free from tyranny and corruption, and not all people are fully protected against criminal elements, even within their own governments. Without some jurisdictions in the world enforcing reasonable rights of financial privacy, those living in un-free and corrupt jurisdictions would have no place to protect their financial assets from kidnappers, extortionists, blackmailers and assorted government and nongovernment thugs.

It is a fool's errand to pass ever more laws against things that are already illegal, or to pass laws against people trying to protect themselves from rapacious and corrupt governments. Despite the hundreds of local, state and federal laws against financial fraud, and financial regulatory authorities like the SEC, Bernie Madoff was able to conduct the biggest ever Ponzi scheme for decades.

The chief tax writer in Congress, House Ways and Means Committee Chairman Charles Rangel, Treasury Secretary Timothy Geithner, and former Senate Majority Leader Tom Daschle apparently did not report all of their foreign-source income. Their actions tell us that either the tax law is too complex, or they thought the tax burden was excessive. Would their behavior and that of millions of others improve by making the tax law more complex and punitive?

U.S. companies are being forced to move elsewhere to remain internationally competitive because we have one of the world's highest corporate tax rates. And many economists, including Nobel Laureate Robert Lucas, have argued that the single best thing we can do to improve economic performance and job creation is to eliminate multiple taxes on capital gains, interest and dividends. Income is already taxed once, before it is invested, whether here or abroad; taxing it a second time as a capital gain only discourages investment and growth.

In fact, the U.S. does not tax most of the dividend, interest and capital gains' earnings of foreign investors in the U.S. -- which means, ironically, that the U.S. is the world's largest "tax haven" for non-U.S. citizens, and that we benefit from hundreds of billions of dollars of needed capital invested here. If the U.S. did not treat foreign investors better than its own citizens (who are double-taxed on most capital income), most of the "tax avoidance" problems critics complain about would disappear.

The proposals by Messrs. Dorgan, Levin, Baucus and the Treasury will almost certainly have the unintended consequences of driving more U.S. businesses elsewhere, discouraging foreign investment in the U.S., and actually encouraging more U.S. investors to move their funds (either legally or illegally) not only out of the country, but to places in Asia or the Mideast that tend to be less cooperative with U.S. tax authorities than are the European and British low-tax jurisdictions.

The correct policy for the United States to follow is to reduce its corporate tax rate to make it internationally competitive, and to move toward a tax system that does not punish savings and productive investment so severely. We know from the experiences of many countries that reducing tax rates and simplifying the tax code improve both tax compliance and economic growth. Tax protectionism should be rejected because it is at least as destructive to economic growth and job creation as are tariffs on goods and services.

Mr. Rahn is a senior fellow at the Cato Institute, and a former board member of the Cayman Islands Monetary Authority, which regulates the world's largest offshore financial center.

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Tuesday, June 02, 2009

Re: laws about cruelty to animals?

> Dottie wrote:
> > I've heard there is a law against mistreatment or cruelty to animals in Panama. I have not been able to find it. Does anyone have information about this law? Does it exist, and if so, what is the wording, etc.?
> >
> > Thanks,
Animal cruelty is a felony in the Criminal Code (Codigo Penal) since 2008, which means that no cases have gone to prosecution yet.
Since 1917 it is misdemeanor under several decrees listed in