Friday, June 3, 2016

An Analysis of >1,000 American-Based Mossack Fonseca Companies Further Supports That The US Is a New Tax Haven

We previously posted US The New Tax Haven? and European Group Discloses The Role Of The US As A "Tax Haven" & The Implications For Europe where we discussed that some international families are moving their assets out of traditional offshore jurisdictions and into trusts in certain states of the US.

Now a USA TODAY analysis of more than 1,000 American-based companies registered by Mossack Fonseca, the law firm at the heart of the Panama Papers leak, casts the United States openly into the role as an offshore haven of corporate secrecy for wealthy business operations across the globe.

The analysis found that both Nevada and Wyoming have become secretive havens much like Bermuda and Switzerland have long been and at least 150 companies set up by Mossack Fonseca in those states have ties to major corruption scandals in Brazil and Argentina.

The corporate records of 1,000-plus Nevada business entities linked to the Panamanian law firm reveal layers of secretive ownership, with few having humans' names behind them, and most tracing back to a tiny number of overseas addresses from Bangkok high rises to post offices on tiny island nations. Only 100 of the Nevada-born corporations have officers with addresses in this country: 90 in Nevada, 9 in Florida and 1in Delaware. 

The financial records show more than 600 of the companies' corporate officers are listed at one of just two addresses in the world, one in Panama and the other Seychelles, a small Indian Ocean archipelago. The addresses, in both countries, are the same as Mossack Fonseca's headquarters.

For about 700 of the American shell companies, the corporate officers are business entities rather than people, meaning no individual is linked to the Nevada firm in state records.

The Nevada corporations have also been brought into the separate sprawling nationwide corruption investigation by Brazilian officials, dubbed “Operation Car Wash,” which centers on allegations involving the state oil company Petrobras. The names of least 45 Nevada-based companies and two Wyoming-based companies linked to Mossack Fonseca are listed in investigative documents connected to the Brazil investigation published online by Brazilian prosecutors. Among the documents made public by prosecutors is a slide presentation from Mossack Fonseca’s Brazil office featuring a pie chart of locations it has set up companies. 

Yet another of the Nevada companies, Cross Trading LLC, is involved in a federal criminal case in the U.S. District Court in New York involving officials at FIFA, soccer’s world governing body. The federal criminal complaint alleges a $5 million wire transfer was made from the Miami Bank account of a sports management company to a Swiss bank account held by Cross Trading as part of a set of alleged bribes related to international soccer tournaments.

Wyoming Secretary of State’s Office announced it conducted a review in response to the Panama Papers leak and found companies registered by an audit of M.F. Corporate Services Wyoming LLC “failed to maintain the required statutory information for performing the duties of a registered agent under Wyoming law.”  While the Wyoming investigation is ongoing, Nevada officials have remained quiet about the data leak.

Patricia Amunategui, who runs Mossack Fonseca’s corporation registration operations in Las Vegas and Wyoming, said in a 2014 deposition that very little is required of foreign businesses who want to register a corporation in Nevada. “Under the Nevada law, they don’t ask you any more,” she said, “just the name and (whether or not) the original of the company is in good standing.”

In our previous post US The New Tax Haven? we discuss that some advisors discuss what type of trust can avoid both FATCA and GATCA reporting, including GATCA reporting if the US is treated as a Participating Jurisdiction and the assets do not even have to be located in the US. Since this structure requires a US-resident trustee, the trust could also be structured to avoid US taxation.

America seems not to feel bound by the global rules being crafted as a result of its own war on tax-dodging. It is also failing to tackle the anonymous shell companies often used to hide money. The Tax Justice Network, a lobby group, calls the United States one of the world’s top three “secrecy jurisdictions”, behind Switzerland and Hong Kong.

No one knows how much undeclared money is stashed in these US Structures. Estimates range from a couple of trillion dollars to $30 trillion. What is clear is that America’s share is growing.

Need Legal Advise? 

Contact the Tax Lawyers at
Marini & Associates, P.A.

for a FREE Tax Consultation
Toll Free at 888-8TaxAid (888 882-9243).


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