Panama Papers: US files first criminal charges over money laundering scheme

By Will Fitzgibbon

United States authorities have charged four men, including two former Mossack Fonseca employees, with money laundering and fraud, the Department of Justice announced today.

The charges are the first in the U.S. following the Panama Papers investigation, which was first published in 2016 by the International Consortium of Investigative Journalists, Süddeutsche Zeitung and more than 100 global media partners.

Ramses Owens and Dirk Brauer, two former senior employees of the Panama-headquartered law firm, were charged with a string of offenses “in connection with their alleged roles in a decades-long criminal scheme,” the DOJ said in a statement.

Authorities also charged Boston-based accountant Richard Gaffey, and former U.S. taxpayer Harald Joachim Von Der Goltz with tax evasion, wire fraud and money laundering.

A statement from the DOJ alleges that the four men “defrauded the U.S. government through a large scale, intercontinental money laundering and wire fraud scheme.”

“These defendants went to extraordinary lengths to circumvent U.S. tax laws in order to maintain their wealth and the wealth of their clients,” said U.S. Attorney Geoffrey S. Berman.

“For decades, the defendants, employees and a client of global law firm Mossack Fonseca, allegedly shuffled millions of dollars through offshore accounts and created shell companies to hide fortunes.”

U.S. authorities partnered with enforcement agencies around the world to arrest Brauer in Paris, France, and Von Der Goltz in London, United Kingdom. Gaffey was arrested in Boston on Tuesday. Panamanian citizen Owens remains at large.

“These efforts reflect the commitment of U.S. law enforcement to follow that trail and apprehend these criminals regardless of where they are in the world.”

The men are presumed innocent until proven guilty.

According to the DOJ, Mossack Fonseca employees deliberately created bank accounts in tax havens to hinder enforcement investigations and advised U.S. taxpayers to secretly repatriate money. The names of the real owners of shell companies “generally did not appear” on offshore company paperwork.

The Panama Papers investigation was based on a trove of 11.5 million files from inside Mossack Fonseca that were leaked to reporters Bastian Obermayer and Frederik Obermaier at German newspaper Süddeutsche Zeitung, and shared with ICIJ. The investigation, done in collaboration with more than 370 reportersworking for 100 media outlets, exposed the offshore holdings of world political leaders, links to global scandals, and details of the hidden financial dealings of fraudsters, drug traffickers, billionaires, celebrities, sports stars and more.

German-born Von Der Goltz, who lived in the U.S. from 1984, allegedly evaded taxes through shell companies and offshore bank accounts.

The DOJ alleged that Von Der Goltz falsely claimed his mother, who lived in Guatemala and is now 102, owned companies and bank accounts. Von Der Goltz denied wrongdoing, according to a 2016 report from ICIJ media partner The New York Times.

Gaffey allegedly helped Von Der Goltz and another unnamed U.S. taxpayer evade taxes, the DOJ alleged.

“The charges announced today demonstrate our commitment to prosecute professionals who facilitate financial crime across international borders and the tax cheats who utilize their services,” said Assistant Attorney General Brian A. Benczkowski.

4 men charged with fraud, money laundering in connection to Panama Papers investigation

By Doha Madani

The Department of Justice filed charges including fraud and money laundering against four individuals, one a U.S. citizen, in connection with their alleged roles in a decades long criminal scheme perpetrated by Mossack Fonseca & Co, a Panamanian global law firm.

The case is part of an investigation stemming from the Panama Papers, a massive leak of financial details about secret offshore accounts in 2016.

Richard Gaffey, a U.S. citizen; Ramses Owens, 50, of Panama; and Dirk Brauer, 54, and Harald Joachim Von Der Goltz, 81, both German citizens, were charged in an indictment unsealed on Tuesday, according to a Department of Justice press release.

“They had a playbook to repatriate untaxed money into the U.S. banking system. Now, their international tax scheme is over, and these defendants face years in prison for their crimes,” Berman said.

Prosecutors say Owens and Brauer, while working with Mossack Fonseca clients, marketed, created, and serviced sham foundations and shell companies in foreign countries to conceal U.S. taxpayers’ actual incomes from the IRS, the Justice Department said in a statement.

Von Der Goltz was allegedly one of those clients and was assisted by Gaffey, an accountant, the statement said.

Three of the four defendants named in the indictment have been arrested while Owens, a Panamanian attorney, remains at large.

Owens, Gaffey and Von Der Goltz were charged with one count each of wire fraud, money laundering conspiracy, and conspiracy to commit tax evasion. Owens and Brauer were also charged with one count each of conspiracy to defraud the United States and conspiracy to commit wire fraud.

In addition, Gaffey and Von Der Goltz were charged with four counts of willful failure to file an FBAR, a disclosure report for U.S. taxpayers who have foreign financial accounts or interests worth more than $10,000. Von Der Goltz is also facing two counts of making false statements.

Police raid Deutsche Bank headquarters as part of Panama Papers money laundering investigation

By David Rising & Frank Jordans

BERLIN (AP) — German authorities raided Deutsche Bank’s headquarters Thursday amid suspicions that its employees helped clients set up offshore companies that were used to launder hundreds of millions of euros.

About 170 police officers, investigators and prosecutors swooped in on the bank’s offices in Frankfurt and premises in nearby Eschborn and Gross-Umstadt at 10 a.m. (0900 GMT), seizing electronic and paper records.

The investigation emerged from an analysis of documents leaked from tax havens in recent years, including the 2016 “Panama Papers,” said Frankfurt prosecutors’ spokeswoman Nadja Niesen.

It is focused on two Deutsche Bank employees, aged 50 and 46, and possibly other still unidentified suspects, she said. At least one site raided was a suspect’s home.

Analysis of the Panama Papers and other documents “gave rise to suspicion that Deutsche Bank was helping clients set up so-called offshore companies in tax havens and the proceeds of crimes were transferred there from Deutsche Bank accounts” without the bank reporting it, Niesen said.

In 2016 alone, more than 900 customers are alleged to have transferred some 311 million euros ($351 million) to one such company set up in the British Virgin Islands, she said.

The suspects, both German citizens, are accused of failing to report the suspicious transactions even though there was “sufficient evidence” to have been aware of it.

Deutsche Bank confirmed the search and said “the investigation has to do with the Panama Papers case.”

“More details will be communicated as soon as these become known. We are cooperating fully with the authorities,” the bank said.

Money laundering has become a growing problem in Europe, where a series of scandals has exposed lax regulation.

And it’s not the first time Deutsche Bank has run into trouble over the flow of dirty money.

It was fined more than $600 million by U.S. and U.K. authorities in January 2017 for allowing customers to transfer $10 billion out of Russia in what regulators said was “highly suggestive of financial crime.”\

The Panama Papers are a trove of documents from a law firm that handled shell companies for thousands of rich and powerful clients around the world. While owning a shell company is not illegal, it is used to hide the beneficial owner of a company or transfer, making it important for the handling and laundering of dirty money.

Several other institutions besides Deutsche Bank have been fined by authorities in the U.S. and Europe for not properly checking up on the beneficial owners of shell companies that send money through their accounts.

Analysts say that because these transactions can be lucrative and punishments are lax, banks have few incentives to do more than the minimum required by law to check on the identity of a bank.

“Even in the most egregious cases, banks are often only required to pay a monetary penalty for engaging in criminal activity, which is merely the cost of doing business,” said Jimmy Gurule, a former undersecretary for enforcement for the U.S. Treasury Department.

“The failure to hold banks accountable for money laundering encourages such criminal activity, including laundering hundreds of millions of dollars in Panama and other money laundering havens,” said Gurule, now a professor at Notre Dame Law School.

Most recently, Denmark’s biggest bank, Danske Bank, admitted that some 200 billion euros ($235 billion) in suspicious money had flown through its Estonian branch from 2007 to 2015. Whistleblower and former employee Howard Wilkinson has indicated that Danske Bank’s management was aware of what was going on at the branch, which was among the bank’s most profitable units. He has also alleged that family members of Russian President Vladimir Putin and Russia’s spy agency were using the bank for money laundering. The bank’s CEO has since stepped down over the scandal.

Another Baltic state, Latvia, has also emerged as a major hub of money laundering, with a 2014 leak showing that tens of billions of dollars were funneled from Russia in 2010-14. Some of the money reportedly went through Deutsche Bank and ended up in major capitals like London, according to The Organized Crime and Corruption Reporting Project.

There was no indication that Thursday’s raid was linked to that scandal, though Deutsche Bank says that it has since stopped providing dollar transactions in some countries, including Latvia.

Will the U.S. Ever See a “Panama Papers” Situation?

The “Panama Papers” is a phrase used to describe at a minimum, an on going problem with shell companies, offshore accounts, and a clouded global tax reform for big money companies and single entities. This phrase and its true meaning may not only become familiar world wide, but possibly in the U.S.A. as well.

With the astronomical amounts of wealth being hidden in such accounts, most can agree that surely in the hands of some, these massive amounts of money can become without a question down right dangerous. One of the questions not only lies upon where these funds came from, but where these funds will end up once these accounts were emptied prior to being investigated.

Who benefits from the billions of dollars that were lost and liquidated within the “Panama Papers”? What steps can we take to hold large offshore account holders accountable, and are we at risk on our home front to the same types of money laundering?

To sum it up, the “Panama Papers” were obtained from an anonymous source and published in a German newspaper known as Süddeutsche Zeitung. The newspaper exposed the Mossack Fonseca law firm that has sold more than 214,000 letter-box companies worldwide. While the creation of offshore accounts through holding companies is not illegal for more common purposes, such as the protection of inheritance and estate planning, and the protection of assets from currencies restrictions, one must consider the detrimental possibilities of these accounts in the wrong hands on a larger scale.

At the beginning of the “Panama Papers” investigation over 140 politicians from more than 50 countries and their families, associates, heads of state, ministers, and elected officials have been connected to offshore companies that have resulted in approximately 21 unregulated tax havens. The countries that have utilized shell companies and offshore accounts for money laundering to conceal assets and to avoid taxes and other money frauds span across the globe.

For one to speculate and consider the intentions of each and every country, along with its subsidiaries, would merely be impossible. At this point to put it bluntly, we know that large amounts of money come into the hands of an offshore account holder from virtually anywhere. That money is then held in, and filtered through, accounts that are not regulated, monitored or investigated properly due to a lack of legal regulation or due diligence. It would appear to be obvious that specific laws by country, and or state, have plenty of loopholes. If not loopholes, than plenty of under qualified and unregulated officials involved in making this whole scheme work.

So where does that leave the U.S.A. within the “Panama Papers”?

There are roughly 3,100 shell companies operating in the U.S.A. That number compared to the amount of tax evaders in the U.S.A. may be low because of the lack of trust in the Organization of Economic Cooperation and Development (OECD), which is a common tax reporting standard that shares tax data in order to combat global tax evasion and crimes. Though Washington and the U.S.A. has yet to firmly plant its feet in joining in this effort to make big money accounts transparent, several other countries are on board to work within this effort to reduce money laundering through shell companies and offshore accounts.

Until we make the tax data of large holders and their accounts truly transparent and obtainable for all, our country may turn into one of the largest tax havens of all time. It would not be wise for any country to allow these loopholes to go untied in this day and age for many reasons. Our security and safety, economic financial health, and well being relies on the transparency and ongoing task of keeping large money holders and their clients in check and regulated.

 Sources:

The International Consortium of Investigative Journalists – www.panamapapers.icij.org

Rishi Iyengar,  Apr 04, 2016, What to Know About the ‘Panama Papers’ Leak, From www.time.com