Offshore Asset Protection BLOG - Bob Bauman

Obama Continues Domestic Militarization of America

Quite a few of my readers who share my concern responded to my last blog entry that raised the question of whether the government of the United States was quietly being transformed into a potential presidential military dictatorship.

But what I did not know at the time I wrote about this a few days ago was that, in furtherance of the past militarization actions taken by President George W. Bush, President Barack Obama signed Executive Order 13528 on January 11, 2010 which added another major nail in the coffin of the dying U.S. Constitution.

Rubber Stamp

Among other things, Obama's Executive Order establishes a Council of Governors, an "advisory panel" chosen by the President that will rubber-stamp long-sought-after Pentagon contingency plans to seize control of state National Guard forces in the event of a "national emergency."

Clearly designed to weaken the Posse Comitatus Act of 1878 which bars the use of the military for civilian law enforcement, EO 13528 is the latest in a series of maneuvers by previous administrations to wrest control of armed forces historically under the democratic control of elected state officials, and some public accountability.

Sweeping Change

One consequence of moves to "synchronize and integrate" state National Guard units with those of the U.S. armed forces would be to place them under the effective control of United States Northern Command (USNORTHCOM), created in 2002 by Bush legislators in both parties under the pretext of the "War on Terror." At the time, Defense Secretary Donald Rumsfeld called USNORTHCOM's launch "the most sweeping set of changes since the unified command system was set up in 1946."

For extensive discussion of Obama's militarization order and the history behind it, along with links to interesting documents and reports, click here.

 

 The PATRIOT Act Report

In this special 44 page report I wrote (and have revised for the third time,), you learn all about the PATRIOT Act and its far-reaching invasion of your rights -- and what you can do to defend yourself.

Could America Become a Presidential Military Dictatorship?

I voted for John McCain for president, (did I have a choice?), but I'm wondering whether the senior senator from Arizona has taken leave of his constitutional senses.

Ten days ago McCain and his might-have-been 2008 vice presidential candidate, Sen. Joe Lieberman (I-Ct), introduced a bill entitled the "Enemy Belligerent, Interrogation, Detention, and Prosecution Act of 2010."

A close reading of the bill suggests it would allow the U.S. military to detain U.S. citizens without trial indefinitely in the United States based on suspected activity. Read the bill here and then read below.

The bill sets out a comprehensive policy for the detention, interrogation and trial of suspected enemy belligerents who are believed to have engaged in hostilities against the United States by requiring these individuals to be held in military custody, interrogated for their intelligence value and not provided with a Miranda warning.

Amazing Legislation

But the bill makes no distinction between "U.S. persons," (defined as green card holders or U.S. citizens) and non-U.S. persons. Any of them (of us) could be arrested by the military!

The McCain-Lieberman bill would require all of these "belligerents" to be coded as "high-value detainees" to be held in military custody and interrogated for their intelligence value by a "High-Value Detainee Interrogation Team" established by the president.

Any suspected unprivileged enemy belligerents considered a "high-value detainee" would not be provided with any Miranda warning.

More Power to the President

The bill directs the President to determine criteria for designating an individual as a "high-value detainee" if he/she: (1) poses a threat of an attack on civilians or civilian facilities within the U.S. or U.S. facilities abroad; (2) poses a threat to U.S. military personnel or U.S. military facilities; (3) has potential intelligence value; (4) is a member of al Qaeda or a terrorist group affiliated with al Qaeda or (5) such other matters as the President considers appropriate.

In other words, President Obama, or any president afterwards, could order the military to arrest Americans within the United States as he sees fit!

Militarizing America

During the past 20 years there has been an increasing "militarization" of police departments across the United States. Armed with military gear and weapons, civil police SWAT teams have multiplied at a furious pace. Tactics once reserved for rare, volatile situations such as hostage takings, bank robberies and terrorist incidents increasingly have been used for routine police work, especially in the long lost "war on drugs."

In October 2006, in a little publicized maneuver, President George W. Bush signed a law which, according to Senator Patrick Leahy (D-Vt) at the time, actually encourages the president to declare federal martial law. It revised the Insurrection Act, a set of laws that limited the President's ability to deploy troops within the United States.

The Insurrection Act (10 U.S.C.331 -335) has historically, along with the Posse Comitatus Act (18 U.S.C.1385), helped to enforce strict prohibitions on military involvement in domestic law enforcement. But Public Law 109-364 that Bush signed allows the President to declare a "public emergency," station troops anywhere in America and take control of state-based National Guard units without the consent of the governor or local authorities, in order to "suppress public disorder."
 
Before he left office Bush also signed a law that allowed the establishment within the U.S. military of an unprecedented special command unit located in and operating within the United States.

Unprecedented Power

A decision to dispatch U.S. troops to make arrests in the U.S. has few precedents in American history, outside the Civil War. That's because both the Constitution and the laws cited above restrict the military from being used to conduct domestic raids and seize property.

With these existing Bush-provided presidential legal powers, plus the radical powers suggested in the McCain-Lieberman bill, the president of the United States could well become a military dictator -- and who would stop him? The military?

Talk about a "police state"!

 

 The PATRIOT Act Report

In this special 44 page report I wrote (and have revised for the third time,), you learn all about the PATRIOT Act and its far-reaching invasion of your rights -- and what you can do to defend yourself.

 

UBS Chutzpah Very Un-Swiss

 The Yiddish word "chutzpah" long ago moved beyond its Hebrew roots generally to mean pushy acts characterized by a show of blatant nerve, unwarranted gall, even temerity.

In other words, actions that anyone who knows Switzerland and its people would find to be the very opposite of the reserved, conservative Swiss -- unSwiss.

But the hands down winner of the "Grand Swiss Chutzpah Award" has to be Switzerland's largest, though rapidly diminishing bank, UBS.

UBS Scare Tactics

A few days ago, embattled UBS officials warned that (in their own self-serving view) Switzerland's entire financial industry is at risk unless Swiss lawmakers approve a tax treaty with the U.S. and override the Swiss bank secrecy law, plus annul a court decision upholding that law.

For good measure, the cheeky UBS bankers also warned that other Swiss banks will be next to face pressure from the U.S. IRS, unless the Swiss Parliament follows UBS advice to surrender. (They will face it anyway.)

In a bold letter to parliamentarians, UBS said the U.S. Internal Revenue Service has collected information on the cross-border activities of about 20 Swiss banks and may press for a crackdown on American tax evaders at these institutions as well. So what?

Swiss Yield; IRS Wants More

Wow! Hardly big news!

In August 2009, I reported in this space that Switzerland’s chief negotiator in the UBS case, Michael Ambuehl, admitted then that the IRS would request names of American clients from other banks, even after the Swiss government agreed to hand over thousands of UBS account details.

What’s going on here is that some of the politicians running the Swiss government are scrambling to salvage the U.S. tax treaty after the Swiss Administrative Court ruled in January that parts of it and the IRS deal were illegal -- that UBS client names could not be given to the IRS.

Now the the government, torn between UBS demands and the Swiss people, has asked parliament to approve these IRS deals, which would weaken Switzerland's strict banking secrecy law and open up files on UBS American clients.

Opposition Left & Right

But Swiss parliamentarians, Left and Right, see these deals for what they really are -- a serious attack on the 1934 Bank Secrecy Law.

Marlies Baenziger, a lawmaker for the center-left Green Party and member of the parliamentary finance committee, said the letter showed UBS was trying to intimidate parties into approving the treaty. The conservative Swiss People's Party, the country's largest party, announced last week it would oppose these deals in parliament.

 
And even if parliament does approve, which is far from certain, that decision could be petitioned to a national referendum where it would very likely be defeated, based on current opinion polls.

And at that point --what's next? President Obama sends IRS storm troopers into Zurich and Geneva?

We Told You So

The current desperate UBS actions are yet another confirmation of the advice the Sovereign Society and its editors have repeated since our founding 12 years ago -- "Don't bank with UBS or Credit Suisse" -- the two monster size Swiss banks that care more about profits than about clients or laws.

Way back then we recommended against UBS and Credit Suisse, preferring accounts with smaller, sound private Swiss banks that have not been "Americanized" -- that, unlike UBS, still honor the strict Swiss bank secrecy law that until now has protected financial privacy.

Twelve years ago we denounced a previous a UBS surrender to demands of the U.S. Federal Reserve System.

Official U.S. acceptance of the 1998 merger of Swiss Bank Corp. and Union Bank of Switzerland creating UBS AG was not approved by the U.S. Federal Reserve until UBS agreed to provide U.S. regulators all information "necessary to determine and enforce compliance with [U.S.] federal law." Then, as in 2008, U.S. regulators had threatened to shut down the bank's extensive U.S. operations unless it knuckled under.

UBS Tax Crooks

Of course the most notorious instance that lead to breaching Swiss bank secrecy were systematic UBS staff actions aiding an unknown number of Americans to evade taxes they owed.

I'll repeat what I've said before -- Worst of all, what UBS did allowed the tax bullies at the IRS to: 1) smear thousands of honest Americans who bank offshore; 2) attempt to scare away thousands more who could benefit by doing so; 3) pretend to extend U.S. tax law jurisdiction to the entire world; 4) use blatant economic black mail against not only one errant bank, but against a friendly country that has long been a faithful ally and against its 7.6 million people.

Faces Saved, Butts Covered

All of which makes a mockery of those pious statements by Swiss president, Hans-Rudolf Merz, (below) about Swiss bank secrecy being preserved -- under glass in a museum?

One of our longest serving Sovereign Society advisors in Zurich told me that while UBS had been more than stupid in allowing U.S. income tax evasion, the bank's subsequent dumping of its American clients had been "a high handed violation of trust" and a "crude attempt at their clients’ expense to get rid of a political hot potato."

He called this conduct "very un-Swiss."

"What bothers me most," he said, "is the false impression that Swiss bankers are law breakers. The truth is that the vast majority of our banks offer honest and valuable advice. It pains me to see our national reputation harmed, especially by some banks dropping and refusing American clients."

Maybe the Swiss Parliament should pass a law removing the "S" from "UBS" to protect the Alpine nation's good name.

Help for You

At the Sovereign Society we meet regularly with Swiss and other offshore banker who can be trusted. We have agreements with reputable Swiss banks willing to accept accounts from those who identify themselves as Sovereign Society members.

These arrangements are in full compliance with IRS and SEC rules and other U.S. laws. U.S. clients must sign an IRS Form W-9 that allows an offshore bank to report required information to the IRS.

As it has been since our founding 12 years ago, our staff is available to assist our members in opening a Swiss or other offshore account. Take advantage of these special Swiss banking arrangements and the advice of our Swiss advisors -- sign up here for Sovereign Society membership. Once you are a member, you can contact us for help via email at info@sovereignsociety.com

 

You can learn all about "going offshore, about Switzerland and about all the legitimate and legal offshore financial centers -- in my new 4th edition of Where to Stash Your Cash Legally: Offshore Financial Centers of the World. Find out how here.

Interesting Treaty News from Panama

O.K. amigos -- you knew it would happen, what with all the leftist welfare state tax collectors and the OECD clamoring for blacklists and boycotts aimed at one of the last nations with enough political courage and guts to stand up for financial privacy and banking secrecy -- our friends in Panama.

Yes, Panamanian President Ricardo Martinelli (left) and his Mexican counterpart, Felipe Calderón (far left) signed a "tax information exchange" treaty a few weeks ago at the Summit of Latin American and Caribbean Unity -- but this treaty is NOT what you may think of when you hear the dreaded "tax information exchange."

Article 26 Again

That phrase has taken on the meaning generally assigned to it by the loud, anti-tax haven advocates of Article 26 of the OECD model tax treaty.

Of course what these radicals really want is automatic tax and financial information exchange, and they are still working feverishly for that goal. (France has even adopted its own arbitrary blacklist of tax havens and imposed a huge tax on French transactions with the named places).

 
But generally "tax information exchange" is understood to mean negotiating and signing bilateral treaties between nations providing a specific method to be followed when one nation formally asks another nation for financial information about one of their citizens. Such requests are governed in each case by the specific terms of the bilateral treaty.

Bank Secrecy Takes a Hit

Some nations with (until now) strict banking secrecy, such as Switzerland and Austria, have publicly insisted that such treaty requests must name a specific person and a specific bank or other financial account, providing at least prima face evidence of a possible violation of the requesting nation's tax laws. No "fishing expeditions" allowed, they insist.

Panama's La Prensa report that the two leaders described the new treaty as "an agreement to avoid double taxation and to prevent tax evasion on income tax." In a political pas de deux, Mexican President Calderón said that with the signing of the agreement Mexico can promote Panama internationally as a country that meets OECD and international standards on tax and fiscal matters.

Panama's Martinelli added that the agreement was part of several actions his government is taking "to promote better transparency and competitiveness."

Devil in the Details

I have not seen the specific treaty terms, but our Panamanian sources say the agreement embodies Martinelli's strategy to avoid Panama being classified as a rogue nation or uncooperative tax haven by negotiating and signing bilateral information sharing double taxation agreements with like-minded nations.

These observers say that while the United States government wants to force Panama to "open it's books" in what the U.S. calls "information sharing," in fact the U.S. doesn't have any information Panama wants.

Territorial Taxes

Panama has a sensible "territorial tax system" which does not tax earnings outside its borders, so it does not need to know what Panamanians or foreign nationals earn elsewhere. Thus all information would flow one way, from Panama to the United States, negating the country's financial privacy laws.

Panama is one of many sovereign nations that share the view that the OECD and the United States have no right to twist their arms or force them to provide information on domestic corporations, trusts, family foundations and bank accounts, even if they are held by foreign nationals.

Traditional and Limited

What Panama and Mexico signed, (and what Panama is negotiating with other countries), are traditional bilateral agreements to avoid "double taxation" on an individual's offshore income -- and that does not include tax information exchange beyond what is required to avoid that double taxation.

Meanwhile Panama can and does point to and proclaim that the country is being responsible internationally by signing such traditionaly limited treaties.

 
SPECIAL PANAMA NOTICE

* I invite you to join me, April 17-20th, at the Intercontinental Playa Bonita at Kobbe Beach, Panama (see above) for International Living’s 2010 Live & Invest in Panama Seminar, April 18-20. Click here for information. Prior to the seminar there will be a Panama Profit Expedition real estate tour, April 9-16th. Check out tour details here.

Liz Cheney Is Wrong

How much do you know about the concept known as "the rule of law?"

You really should know a lot about it, because the rule of law is central to preserving your constitutional rights and your ability to live in freedom. If the phrase is new to you, it's time you engaged in some badly needed self-education.

Criminal Defendant

When I was a young attorney, just out of the Law Center of Georgetown University, I set up my solo law practice in my home town of Easton, in Talbot County on Maryland's beautiful Eastern Shore.

Back in the day, there was no Public Defender system to provide government paid lawyers for indigent criminal defendants. Instead the circuit judge, Hon. Harry Clark at the time, assigned representation on a rotating basis to the 25 or so local lawyers. But it always seemed to me that the newest lawyers got the most cases -- and there was no pay for this pro bono work.

Oh well, it was a chance for us newbies to polish our court room style and establish a Court House (see above) reputation.

State of Maryland vs. Bowzer

My first, and as it turned out, only assigned criminal case was that of a young African American named William Bowzer, who was from out of state, but had a lot of local Shore relatives.

Bowzer was charged with forgery and uttering, meaning he allegedly signed someone's name to a check and raised the amount. Because he was poor, he had been held in the Talbot Country Jail for months, unable to post bail.

Long story short: I hired a friend, a former county sheriff, who knew the African American community that centered on Port Street in Easton, and within days we had what we felt was enough evidence to defend our man. (A drunken bar friend had given him a check and told Bowser to go cash it).

After a two day trial, the jury was out for less than an hour and acquitted Mr. Bowzer on all counts. He was so shocked when the judge told him he was free to go, that he ran out of the court room without even thanking me.

And the judge never did assign another indigent criminal case to me.

Real "Conservatives" Believe In the Rule of Law

I thought of the Bowzer case today when I read an article in the New York Times that reported on what it called "a conservative advocacy organization in Washington," Keep America Safe. The group last week released a video that questioned the loyalty of U.S. Justice Department lawyers who worked in the past on behalf of detained terrorism suspects.

Beyond the expected liberal outrage, the tactics of the group, which is run by Liz Cheney, (left) the daughter of the former vice president, also split the world of conservative legal scholars.

Many conservatives, including members of the Federalist Society,  the quarter century old policy group devoted to conservative and libertarian legal ideals, have vehemently criticized Ms. Cheney’s video, and say it violates the American legal principle that even unpopular defendants deserve a lawyer.

A letter from leading conservatuves cited “the American tradition of zealous representation of unpopular clients,” including the defense by John Adams (left) of British soldiers charged in the 1770 Boston Massacre, and noted that some detainee advocates, who worked pro bono, have made arguments that swayed the Supreme Court.

I certainly agree with that view.

Ms. Cheney is no conservative when she is trying to play cheap politics with the fundamental right to counsel that attaches to anyone who comes within the criminal jurisdiction of U.S. courts, either civilian or military -- and that includes those accused of the broadly defined crime of "terrorism".

Important Definition

The rule of law is defined as adherence by government to "due process of law." This popular American and British phrase encompasses a requirement that laws must relate to legitimate government interests, such as crime prevention, and may not result in unfair or arbitrary treatment of an individual, known as the right to "substantive due process."

In more recent times, the right to be represented by an attorney in criminal cases has been added to these guarantees. All these rights, in theory, are explicitly guaranteed by the U.S. Constitution.

Look around the world and you can see how important the rule of law is.

On January 12, Freedom House released its findings from the latest edition of Freedom in the World, the annual survey of global political rights and civil liberties. According to the survey findings, 2009 marked the fourth consecutive year in which global freedom suffered a decline --the longest consecutive period of setbacks for freedom in the nearly 40 year history of the report.

In a year marked by intensified repression against human rights defenders and civic activists, declines for freedom were registered in 40 countries in Africa, Latin America, the Middle East, China and the former Soviet Union, representing 20% of the world’s total polities.

Major Factor

When we at the Sovereign Society recommend offshore financial havens for placement of bank accounts, asset protection trusts, annuities or life insurance the existence of a guaranteed rule of law always is a major factor in our choice.

Yet, dear reader, in the United States the Bush-Obama "anti-terror" laws and policies, especially the grotesquely misnamed PATRIOT Act, seriously have compromised the America rule of law.

So the question is: if our liberties are diminished, which is winning -- freedom or terrorism?

If we are forced by blind partisan politics to compromise further the rule of law, including the right to counsel, the terrorists have won.

Liz Cheney should know better.

You can learn all about "going offshore" and how to bank legally in legitimate offshore financial centers -- in my new 4th edition of Where to Stash Your Cash Legally: Offshore Financial Centers of the World. Find out how here.

The Sovereign Society is a recognized voice in the complex offshore world. Join the Sovereign Society and keep informed. 

What the Heck Is Going On in Liechtenstein?

Recent news reports prompt me to ask that serious question -- and I hope those in the offshore financial world will be given some good answers.

Understand that the Principality of Liechtenstein has, for several years now, been one of the Sovereign Society's four top recommended offshore tax, asset protection and banking havens. As with each choice, the factors we consider include stability of government, favorable laws and judiciary, available legal entities, low or no taxes, and maximum financial privacy.

Until last year the principality passed on all points with high marks. But money talks, as we all know, and the more cash involved, the louder the cry.

Money Drain

Liechtenstein's banking industry suffered a 60% drop in profits in 2009, in part due to the global economic downturn, but also as billions in deposits fled the country because of questions about its future as a leading tax haven. Assets under management by the principality's 15 banks were down 22% to 156.65 billion Swiss francs (US$144.3 billion) last year. These downward trends have continued this year.

No doubt at some point last year the royal Liechtenstein number crunchers concluded that the principality's strict financial privacy laws would have to be sacrificed in order to appease the OECD, the G-7 and the G-20.

First Over the Side

Thus it was that in 2009 Liechtenstein was the first tax haven to announce it would comply with Article 26 of the OECD model tax information exchange treaty, previously anathema in Vaduz. As in Switzerland, this meant banks would provide information in matters of foreign tax evasion when ordered to do so by the government, but, it was claimed, under limited conditions and only by applying the terms of tax information exchange treaties in individual cases.

That sounded comforting to some degree, but then last August the principality's government concluded a "ground breaking agreement" with the tax collectors of the United Kingdom.

Swap Shop

Under this extremely liberal deal, UK residents with Liechtenstein bank accounts would have their details shared with the British government to make sure they paid the right taxes.

This new tax information exchange agreement enables the UK and Liechtenstein to "swap information" on all accounts to ensure the right tax was paid in each country with minimal penalties, a guarantee of no prosecution in non-criminal cases and an exemption from the threat of "naming and shaming".

To sweeten the deal the tax disclosure program allows penalties on unpaid tax to be capped at 10% of tax evaded over the last ten years, a potentially huge savings, providing the taxpayer was fully open with the UK tax collectors.

Under Pressure

Liechtenstein devised the UK disclosure deal as a "creative and innovative solution" to the international outcry sparked by the evasion scandal following the 2007 theft of thousands of names from LGT Bank's trust business, stolen goods which were purchased by the tax hungry German government. (The German secret police agency, the Federal Intelligence Service (BND), (equivalent of the U.S. Central Intelligence Agency), paid an illegal €5 million ($ 7.3 mil) bribe to a disgruntled employee of LGT Bank).

Prince Max von und zu Liechtenstein, left, (one of thirty some royal princes) who heads LGT, the royal family's private banking group, said there has been no change of heart in Liechtenstein on the importance of privacy rights, but added: "With hindsight, we could have probably been a little more sensitive to the abuse that has taken place."

That Liechtenstein would abandon to such a degree its historic bank secrecy is somewhat amazing, even if understandable because of the international pressure.

Internal Dissent

Last October I spoke at a Washington Cato Institute forum entitled "The Case for Tax Competition, Fiscal Sovereignty, & Financial Privacy." The principal speaker was His Serene Highness Prince Michael von und zu Liechtenstein, (below).

Prince Michael complained that he felt his government had gone much too far in yielding to the OECD and compromising the principality's traditional financial privacy laws. Liechtenstein’s secrecy statutes historically had been considered stronger even than those in Switzerland.

Liechtenstein and the United States signed a tax information exchange treaty in December 2008 that entered into force on Jan. 1, 2010 providing for direct cooperation between the two countries' tax and judicial authorities. No doubt it too will be applied with this new found Vaduz liberality.

Step Right Up, Folks

But what really has shocked foreign observers has been Prince Max campaigning among wealthy British investors, urging them to come clean over assets hidden abroad, promoting his country's "unique and attractive" amnesty.

But for his plan to work, (and bring back those lost billions to Liechtenstein's banks), British non-tax compliant investors must move their money from Switzerland and other offshore centers to the principality.

"In Liechtenstein, we never had a huge UK customer base. If it's going to work, it will work through convincing UK citizens in other jurisdictions to come to Liechtenstein," he told the Financial Times.

As you can guess, this special, unique UK-Liechtenstein tax amnesty deal has been attacked by the British Left. But Prime Minister Gordon Brown, about to face a tough general election, insisted last week that the deal "...will bring £1billion (US$1.5 billion) of money back to this country".

Still Useful

Note: none of the above in anyway detracts from your using Liechtenstein as an excellent venue for the purchase of U.S. tax deferred annuities and life insurance, or even for banking – if you have paid your taxes back home. The times they are achanging.

 

You can learn all about "going offshore" and how to bank legally in legitimate offshore financial centers -- in my new 4th edition of Where to Stash Your Cash Legally: Offshore Financial Centers of the World. Find out how here.

The Sovereign Society is a recognized voice in the complex offshore world. Join the Sovereign Society and keep informed. 

IRS Millions for Informants

As do millions of others, I use Google, among other web sites, for my research. Interestingly enough, if you click on Google news and then type in "tax havens" in the search block, here below ironically is what you will see at the top of the page:

Tax Havens Still Legal

www.SovereignSociety.com   3 Legal Offshore Asset Protection Secrets Investors Must Know. Free

Get Paid by the IRS.

www.irs-fraud.com   Up to 30% Reward. Report IRS Tax Underpayments of $2m+.

 

Sovereign Society Tops IRS

 

Well, I must say that I am pleased that the Sovereign Society tops the IRS when it comes to Google ads, but look more closely at that IRS advert. It offers a substantial reward to informants who turn in U.S. persons that may be engaged in illegal tax evasion and who are convicted.

 

In December 2006, the IRS was given a much improved tool in their ongoing efforts to collect taxes from taxpayers. The IRS "Whistle Blower Program" provides that individuals who report substantial tax violations (at least $2 million in tax owed) have a legal right to receive rewards of 15% to 30% of the amount of tax that the government collects from a non-compliant US taxpayer.

 

One such informants a few months back was former UBS bank employee and IRS informant, Bradley Birkenfeld, (below right) was sentenced to 40 months in prison for facilitating offshore tax evasion through UBS banking schemes. He got hard time even though he assisted federal investigators in exposing the bank's tax frauds.

 

Just before he was sentenced Birkenfeld appeared on CBS "60 Minutes" on January 4, 2010 as part of his PR campaign to avoid prison. Even as the prison doors closed behind him he still was protesting loudly that this was no way for the IRS to treat their major UBS tax rat.

Not many people know Birkenfeld was the key player in the UBS scandal, the American inside banker who gave up all the information the IRS needed to make its case against UBS -- and, sadly, against Swiss banking secrecy in general.

Unfortunately for him, he failed to rat on one of his own UBS clients who later cooperated with the IRS and admitted Birkenfeld's part in helping him evade taxes -- thus Brad got prison instead of the probation he felt he had earned by turning in others.

Birkenfeld's Millions

More interestingly, most folks don't know that Birkenfeld has filed a claim under the IRS "Whistle Blower Rewards Program" that the Google advert (above) extols. One report says his claim is for US$34 million, roughly 30% by his calculations of what UBS clients may have to pay the IRS.  Thus there is big money to be made in "outing" tax cheats.

No More Whistles?

No doubt that Birkenfeld got jail time instead of probation may dampen the enthusiasm of other whistle blowers who may have been involved in the tax offense they report. But there are always those who have no direct involvement in the tax fraud -- ex-spouses, former business partners, disgruntled employees who know where the cash is stashed.

Under the IRS informant system even in criminal tax cases, the identity of the informant remains completely anonymous and will never be revealed to the taxpayer being prosecuted.

So a word to the wise for the wealthy: file and pay your U.S. taxes as required by law -- and be very careful about those you hire or assigned to handle your financial affairs -- even your banker. Extreme due diligence is in order. 

 

You can learn all about "going offshore" and how to save taxes legally in legitimate offshore financial centers -- in my new 4th edition of Where to Stash Your Cash Legally: Offshore Financial Centers of the World. Find out how here.

The Sovereign Society is a recognized voice in the complex offshore world. Join the Sovereign Society and keep informed. 

Big Brother's Money Laundering Fraud Expands

I'm writing today from Baltimore, Maryland where I am attending  meetings -- and my topic for you is the governmental fraud that is perpetuated by so-called "anti-money laundering" laws.

These Draconian laws have been on the books in the United States and other countries for the last two decades, supposed originally aimed at drug kingpins and their illicit cash. Later the AML laws were claimed by politicians to be needed to stop terrorist cash.

In fact, these laws have been mainly used as prosecutorial bargaining chips, since they impose heavy fines and prison sentences. Add ML charges to any threatened indictment and a putative defendant is likely plea to a lesser charge.

In the lead in promoting AML laws has been the Paris-based Financial Action Task Force (FATF), a subdivision of the stridently anti-tax haven, pro tax Organization for Economic and Community Development (OECD).

Mainly a front group for the high tax, welfare state G-20 countries, both the OECD and FATF have skillfully advocated AML laws for their tax hungry sponsors as a pious means to destroy financial privacy -- and to track down what they claim is massive offshore tax evasion.

Tax Offenses as ML Crimes

It was only a matter of time until it happened -- and this week it did; the OECD plans to list tax offenses as -- you guessed it -- a form of money laundering!

Such a move would add still more criminal penalties for alleged tax offenses that already are crimes. In some countries, such as Switzerland if tax offenses were reclassified as money laundering, local experts say lawyers, tax advisors, accountants and bankers who are implicated in such offenses could get up to three years in jail.

Worse still, some claim that Swiss bank secrecy laws would no longer block assistance to foreign tax authorities, since that secrecy law is waived in money laundering cases.

CFP Video Reveals ML Fraud

By coincidence, a new video just released y the Center for Freedom and Prosperity Foundation (CF&P) discusses how anti-money laundering laws, which require banks to snoop on their customers, are costly and ineffective.

Entitled "Making Banks Spy on Their Customers is Not Effective Crime Fighting: The Failure of Anti-Money Laundering Laws,"  the mini-documentary explains that these laws impose heavy costs on the financial industry. These costs might be worthwhile if they passed a cost-benefit test. Unfortunately, there is no evidence that anti-money laundering laws decrease crime. 

 Links to the video:  YouTube | Yahoo | Capitol Hub

"Anti-money laundering laws result in millions of reports on innocent bank customers and genuine hardship for many people who are improperly treated as potential criminals," said CF&P Foundation President Andrew Quinlan. 

Dan Mitchell of the Cato Institute. "The time has come for a dramatic reassessment of these laws so that resources can be allocated where they will best fulfill the legitimate government function of protecting life, liberty and property."

From the Sovereign Society

As it has been since our founding 12 years ago, our staff is available to assist in opening a Swiss or other offshore account.

Take advantage of these special Swiss banking arrangements and the advice of our Swiss advisors – sign up here for Sovereign Society membership. Once you are a member, you can contact us for help via email at info@sovereignsociety.com

Editor’s Note: You can learn all about going offshore, about Switzerland and about all the legitimate and legal offshore financial centers – in my new 4th edition of Where to Stash Your Cash Legally: Offshore Financial Centers of the World. Find out how here.

The End of Swiss Bank Secrecy?

That headline might be a reasonable question following an official statement last week by the Swiss Federal Council.

 
The country's governing body officially announced that it no longer wants "undeclared, untaxed funds from overseas". The council said it will act to "regularize untaxed assets" in Swiss banks and keep out new, untaxed cash known as "Schwarzgeld" or black money.

Saying that the "integrity and stability" of one of the world's leading offshore financial centers were crucial factors, Finance Minister Hans-Rudolf Merz (below) added: "We are not interested in untaxed money". (My, my, how times have changed!)

But there was no indication about how the government would go about determining whether existing funds in banks or new deposits had been taxed properly by foreign governments.

No Automatic Info Exchange

One thing Merz made very clear -- he ruled out Switzerland adopting automatic exchange of information for tax purposes. One must wonder how linger that will last?

"Automatic exchange of information would be the end of banking secrecy, and it would greatly damage the Swiss financial industry," Merz said. "The Federal Council continues to reject the automatic exchange of information in terms of laying bare every detail of citizens' lives," the statement noted.

Article 26 Again

Merz reiterated Switzerland’s commitment to adhere to the standards of Article 26 the Organization for Economic Co-operation and Development (OECD) model treaty on tax information exchange. The OECD procedure can only be accomplished in bi-lateral, double-taxation agreements.

Switzerland, under tremendous OECD and G-20 pressures, has signed 18 such treaties in the last year; the first with the United States. Five agreements are scheduled for discussions in parliament next month amid very real threats by opponents to challenge them to a nationwide vote where they may well be rejected.

Fraud No, Evasion Yes

As I have often noted, foreign tax evasion is not a crime under Swiss law, but tax fraud is considered as a criminal offense.

In a landmark deal with the U.S., the largest Swiss bank, UBS last year was forced to agree to disclose bank account details of thousands Americans, who were alleged to have evaded taxes, but the Swiss Administrative Court blocked the release of the names, ruling that would violate Swiss law.

It is generally understood that under the OECD Article 26 procedure, the requesting country must name the individual and the bank involved and also show some prima face evidence of alleged tax fraud. No broad scale "fishing expeditions" are allowed.

R.I.P.?

So is Swiss bank secrecy dead? Not hardly.

The statement by the Federal Council was in the nature of a public relations ploy, another attempt to show that the top Swiss politicians want to cooperate with other nations seeking tax information.

But there remains in place a strict Swiss bank and financial secrecy law that, unless repealed by parliament, will not allow wholesale release of the names of foreign account holders -- no matter how apoplectic the OECD, the G-20 and the IRS may become.

So long as you, as a foreign person with a Swiss account, are not engaged in tax fraud or some other criminal acts, information concerning you cannot be released by Swiss banks. And if information is released improperly, you have the right to appeal to the Swiss courts that I just mentioned that have upheld the law.

Help for You

At the Sovereign Society we meet regularly with Swiss and other offshore banker. We have agreements with reputable Swiss banks willing to accept new accounts from those who identify themselves as Sovereign Society members.

These arrangements are in full compliance with IRS and SEC rules and other U.S. laws. U.S. clients must sign an IRS Form W-9 that allows an offshore bank to report required information to the IRS.

As it has been since our founding 12 years ago, our staff is available to assist in opening a Swiss or other offshore account. Take advantage of these special Swiss banking arrangements and the advice of our Swiss advisors -- sign up here for Sovereign Society membership. Once you are a member, you can contact us for help via email at info@sovereignsociety.com

 

You can learn all about "going offshore, about Switzerland and about all the legitimate and legal offshore financial centers -- in my new 4th edition of Where to Stash Your Cash Legally: Offshore Financial Centers of the World. Find out how here.

Excessive Bipartisanship

Our guest column today is by Glenn Greenwald. Since it was published yesterday the U.S. House of Representatives passed the extension of this odious, unconstitutional PATRIOT Act, by a vote of 315-97, with little debate. Few in Congress seem to care about the destruction of our liberties. 

 

Mr. Greenwald's column follows:

One of the strangest prongs of conventional Beltway wisdom is the lament that there is not enough   bipartisanship.  The opposite is true:  many of the most damaging acts inflicted on the country by Washington are enacted on a fully bipartisan basis -- the most destructive political act of this generation, the invasion of Iraq, was fully bipartisan, as were most of the post-9/11 civil liberties abuses and other Bush-era initiatives-- and, at least in certain areas, the harmonious joining together of Republicans and Democrats continues unabated:

 Senate votes to extend Patriot Act : Democrats retreat from adding new privacy protections to the law

The Senate voted Wednesday to extend for a year key provisions of the nation's counterterrorism surveillance law that are scheduled to expire at the end of the month. In agreeing to pass the bill, Senate Democrats retreated from adding new privacy protections to the USA Patriot Act. The Senate approved the bill on a voice vote with no debate. It now goes to the House. . . . Supporters say extending the law enables authorities to keep important tools in the fight against terrorism. It would also give Democrats some cover from Republican criticism that the Obama administration is soft on terrorism. . . . Some Democrats, however, had to forfeit new privacy protections they had sought for the law. . . .

"I would have preferred to add oversight and judicial review improvements to any extension of expiring provisions in the USA Patriot Act," said Sen. Patrick Leahy, D-Vt., chairman of the Senate Judiciary Committee. "But I understand some Republican senators objected."

A mountain of evidence has emerged over the last several years documenting pervasive, systematic abuse of the Patriot Act powers.  The proposed safeguards were extremely modest and would have provided minimal oversight on how those powers were exercised.  Leading Democrats such as Dianne Feinstein spent all years ensuring that the proposed reforms were weakened to the point of virtual meaningless. 

 
But as weakened as they were, "some Republican senators objected" and might have called Democrats "soft on terror," so that was the end of that.  The domestic surveillance law that Democrats spent years assailing as dangerously overbroad when out of power is renewed in full now that they are in power.  That's the Beauty of Bipartisanship, and the last thing we need is more of it.

 The PATRIOT Act Report

In this special 44 page report I wrote (and have revised for the third time,), you learn all about the PATRIOT Act and its far-reaching invasion of your rights -- and what you can do to defend yourself against this attack on our liberty.