an autodidact meets a dilettante…

‘Rise above yourself and grasp the world’ Archimedes – attribution

Archive for the ‘tax’ Category

getting wee Donny 2: tax stuff etc

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this goes back to 2016, but still no sign of justice

Canto: So there’s the more general matter of tax evasion, tax fraud, bank fraud, wire fraud and so forth – we’re no tax or finance experts, but we’re prepared to learn, for the fun of finding out how bad things might be for wee Donny.

Jacinta: Or should be, given effective white-collar crime legislation, and limitations to these endless appeals processes. By the way, I heard there was more news on the attempt, or desire, to evict him from Mar-a-Largo. Can that be included as a legal problem?

Canto: Why not? And what is this ‘largo’ thing? I’ve seen Key Largo – some thing to to with the Florida Keys…

Jacinta: That’s an archipelago, nothing to do with the keys to Mar-a-Lago (spelt without the ‘r’). Largo’s a coastal town in Florida, so I don’t know if it’s worth connecting the dots. As to tax matters, I heard a while back that ‘forensic accounting experts’ have been hired re investigations into wee Donny’s taxes, which reporters say is a big deal.

Canto: Okay so we’re leaving Mar-a-Lago for now (unlike Donny). Yes The Washington Post reported on this in late December. It concerns the DA’s office for Manhattan, headed by Cyrus Vance. They’ve been investigating Donny since 2018, initially in regard to alleged hush money payments made in 2016. But the investigation has since expanded to include insurance fraud as well as bank and tax fraud.

Jacinta: Stuff that appears to have been overlooked for decades. In fact they admit as much, since ‘the probe is believed to encompass transactions spanning several years’, according to the paper. All of this comes ‘from sources close to the case’  – Vance and his hirelings are naturally keeping mum about it all.

Canto: It’s explosive stuff, but heartening. Anyway, the forensics company they’ve allegedly hired is FTC consulting, and it’s a bonafide ‘global business advisory firm’. The paper mentions an ‘ongoing grand jury investigation’, so that’s a thing. We don’t do grand juries in Australia, so we might have to learn about that. 

Jacinta: Vance’s office is battling to obtain years of tax returns and such from Mazars USA, the accounting firm Donny uses. It’s described as ‘an independent member firm of Mazars Group, an international audit, tax and advisory organization with operations in over 90 countries’. It sounds legit – but everything wee Donny touches dies, according to Rick Wilson – so I suspect Mazars USA is feeling the breath of death on its nape right now. The tax records are described as the final piece in an already well-advanced investigation. We shall see. 

Canto: So this is a big one. Donny’s lawyers, such as they are, have been fighting all this, and the Supreme Court has already rejected the idea that he was immune from state court proceedings as Prez, which he ain’t no more. But of course the litigation has continued, with Donny’s lawyers claiming the subpoena for this financial stuff was ‘overbroad’ and issued ‘in bad faith’, and now it’s before the Supreme Court again, though Donny is no longer able to hide behind the presidency – which of course he should never be able to do. But in a banana republic…

Jacinta: Apparently he’s been granted a stay by the Supreme Court, and the technicalities of this are unclear to me, and I’ve been finding it hard to get free info about the length of this stay, so it’s frustrating. 

Canto: It’s a ridiculous ongoing situation, hopefully an only in the USA situation – I pity any other country that allows such legal horrors. But with Donny now being unemployed, there should be an easier path to justice – it’s much easier to charge unemployed people there than anyone else. 

Jacinta: Hmmm. I found reporting from early October that a federal appeals court then ruled against Donny’s lawyers, who tried to block the handover of tax documents to the Manhattan DA. Presumably that’s when the lawyers took it to the Supreme Court, and they granted a stay, presumably in mid-October. 

Canto: Mein gott, so what exactly is a stay, for what reasons can it be given, and surely there’s a time limit on them?

Jacinta: Good questions, but I’ve found a very interesting article by Richard Lempert on the Brookings Institution website from October 19, when an appeal was on its way to the Supreme Court, arguing that the Supreme Court should end things now – meaning then. In its first para, I learn that the New York Times already has Donny’s tax returns – the stuff Vance is filing for – and is sharing them with the public. Whether that’s the whole kit and caboodle, I don’t know. And of course Donny claims the docs are false. Anyway the article points out that Vance is asking for more than tax returns – supporting docs are needed to prove criminality. The article then goes into a lot of legal detail about subpoenas, Article 2 powers, precedent and how courts deliver their rulings, but Lempert’s essential view is that Donny’s legal arguments in the initial case were weak, and they’ve come up with nothing new in the interim. So the Supreme Court shouldn’t take up the case. 

Canto: But they have taken it up?

Jacinta: It does seem as if they have. Or maybe not. An article from Bloomberg, dated January 20, so quite recently, said the case was ‘now before the Supreme Court’, but that they hadn’t acted on it for three months, without providing reasons. The pay wall descended before I could work out whether that meant they’d deferred looking at the case or they’d deferred a decision to look at the case. But their decision may not matter, as apparently Vance may have sufficient material for his case already. I suppose only he and his legal team would know. 

Canto: Michael Cohen was on cable news recently, arguing for SDNY to swiftly move on the matter of campaign finance violations, for which he was jailed, and also expressing an expectation that the new head of the DOJ, Merrick Garland, once approved – which may ultimately take another month – would look into Donny’s financial affairs as president,  which will be interesting. Biden seems to want the DOJ to keep out of politics, but have Donny’s financial shenanigans ever really been political?

Jacinta: We can only await events. Meanwhile, there seems to be a real concern about the dangers of neo-fascism in the country. Those right-wingers who’ve gone against wee Donny recently seem to be running scared. Could the fear of reprisals be inhibiting legal action against wee Donny? That’s another thing to look into, as well as the situation in Georgia, where they have pretty strong evidence of serious attempts to overturn a fair election. Still a lot to get to…

References

https://www.law.com/newyorklawjournal/2020/10/13/trump-asks-supreme-court-for-stay-of-manhattan-das-subpoena-for-tax-returns-arguing-2nd-circuit-ruling-showed-confusion/?slreturn=20210113233030

https://www.washingtonpost.com/national-security/trump-tax-returns-new-york-investigation/2020/12/29/11c43a38-43c8-11eb-b0e4-0f182923a025_story.html

Trump’s tax returns: Why the Supreme Court should end things now

Written by stewart henderson

February 15, 2021 at 2:08 pm

the wanker in the white palace 2: how did the USA get reduced to this?

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Unfortunately, all votes are equal – and by the way, they spelt Guard wrong

As I write, the wanker is, predictably, expending much energy in exacting revenge against his perceived enemies, and in seeking to manipulate the justice system in support of his long-time associates. I note that, over the last day or so, he has casually stated to the media, obviously not for the first time, that ‘I could do x, I have the absolute power to do x, but I think I’ll do it this way…’ I don’t claim this as a direct quote, because of course I don’t listen carefully to the wanker, and in any case, these remarks are essentially formulaic. This is of the thought-bubble type ‘I can do anything I want nya nya, nobody can tell me what to do, but I won’t do that coz mummy might shout at me.’ It’s nonsense from a reasoning perspective, but it’s absolute sense in the wanker’s little world.

Yet, so far, mummy hasn’t shouted at him enough, or he’s found that her shouts aren’t as prohibitive as he’d feared, so he feels more confident about being naughty. And being naughty and getting away with it is the most fun ever. It’s really quite addictive.

This isn’t a joke, and it’s not an exaggeration, or a simplification – it’s the reality. So how did the USA get reduced to this? 

The USA touts itself, more than any other nation, as the land of the individual. You can achieve anything there, apparently. Total freedom. You can advertise just about anything, you can buy a gun just about anywhere, and if you’re an expert at avoiding tax, you’ll be touted as a hero. The rich, in particular, are objects of veneration. And the wanker has been super-rich – at least from my perspective – since the age of three. 

Democracy has its issues, the most obvious of which was highlighted a couple of centuries ago by some Greek philosophers. They had seen how a super-confident-seeming blowhard, a wanker in short, had swayed the crowd towards disaster for their city-state. You can imagine the slogans – ‘lock up x, y and z, they’re enemies of the state’, ‘drain the swamp’, ‘punish states a, b and c, they’re wrecking our economy’, ‘make our State great again’. ..

In Australia, Britain, and most other democratic countries, we don’t directly elect one person to a position of great power, in a competition against another single person. We elect parties. The leader of the party, in election campaigns, will say ‘we will do, this, or that, for you’, ‘we will offer stable, effective government’, and so forth. This ‘we’ makes a big difference. Think about that, it’s really important. In Australia, in Britain, in every other Westminster-based system, we have a Prime Minister, a first minister, primum inter pares, the captain of the team. Famously, and rightly, if the captain goes rogue, she can be dismissed from her position by a simple vote of no-confidence from her party. The captain is replaced by another captain, and the team plays on. 

There is absolutely no doubt in my mind that this is a vastly superior system than that which the USA has lumbered itself with. And yet, I have never heard an American journalist or historian or pundit admit as much. Why is this?

I think I’ll have to do a lot of exploring to answer that question.

Written by stewart henderson

February 14, 2020 at 2:33 pm

getting roolly rich in the USA 1: Jeffrey Epstein

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Epstein’s two islands in the Caribbean – Little St James is immediately below the Great one

The Jeffrey Epstein case, in terms of women, girls and exploitation, is something I’m far too squeamish to explore, and of course it’s very very sad and disgusting, but my interest was also piqued by the news that he was/is a hedge fund manager (but maybe not), with mansions and an island and oodles of moolah to invest in all sorts of science projects. This raised many questions. Was he obnoxiously rich to begin with, like little Donny Trump? And what is a hedge fund, and can you legitimately make millions from one?

I’ve never been rich and I’ve never invested in anything, unless you call giving money to Oxfam or UNHCR an investment, so I’m really starting from scratch here. The first definition I’ve found is that a hedge fund is ‘an offshore investment fund, typically formed as a private limited partnership, that engages in speculation using credit or borrowed capital’. So, if this is true, why invest ‘offshore’, and how are you able to do this with money you don’t really have or haven’t earned? I suspect I won’t find easy answers to these questions. The website Investopedia (which sounds immediately suss!) starts with another definition: ‘Hedge funds are alternative investments (?!) using pooled funds that employ different strategies to earn active return, or alpha, for their investors’. Alpha! What a lovely musical note that hits for investors (especially combined with ‘male’). But the mention of pooled funds (e.g. mutual funds and pension funds, as well as hedge funds) might explain how you can make money even if you have little personally to invest. Investopedia also tells us that hedge funds ‘are generally only accessible to accredited investors’, because they’re less regulated than other funds. And we all know that the wealthy are very very keen to have less regulation and oversight than what the Yanks call ‘regular folks’

However, it does seem that, to be an ‘accredited investor’, it helps to be already rich. The term applies to financial institutions such as ‘investment banks’ and corporations as well as individuals. Needless to say, this is a world of which I know absolutely nothing. All I’ve really heard about it is negative – high rollers, corruption, anti-government arrogance and the like – which says much about where I get my information from. Even so, the most objective analysis raises questions – for example, the Australian Corporations Act of 2001 ‘defines “sophisticated investor” [basically synonymous with ‘accredited investor’] so as to exclude them from certain disclosure requirements.’ That rings alarm bells for me – you’d think that these heavy investors would be the last people to be excluded from disclosure. The Act also says that such investors require an accountant’s certificate to the effect that they have a minimum of $2.5 million in net assets or a gross income of $250,000 over each of the previous two years. Presumably they’re not asked about how they acquired such income/assets. And the financial bar is considerably lower in the USA.

Hedge funds have grown in popularity, and as a proportion of the asset management field, over the years. After the GFC of 2007-8 there was an attempt (probably feeble) to rein in the sector. The essential hedge fund strategy (think ‘hedging your bets’) is to receive a positive return regardless of bear or bull markets, by spreading the risk in some clever non-risky way. If you get to be a hedge fund manager (which some reports have claimed Epstein to be, though Wikipedia doesn’t mention this in a fairly comprehensive bio) you get to keep a certain percentage of invested funds for yourself – generally a management fee (maybe 2% of assets) and a performance fee (a substantial percentage of any annual increase in net asset value). You can see how disclosure is essential in payment of such fees, and why the temptation to cook the books would be high.

Epstein seems to have ‘risen’ from humble beginnings. His mother was a ‘homemaker’ and one-time school aide, and his father was a groundsman and gardener, yet Epstein is described, at various periods in his career from the early eighties, as an options trader, a financial consultant, a limited partner (at the dodgy investment bank Bear Stearns), a finance manager and other such vagueries – all despite a patchy scholastic record (but as an autodidact and dilettante I certainly don’t hold that against him). However, one very interesting item stands out….

Back in the eighties, Epstein became an associate of one Steven Hoffenberg, who hired him as a consultant for his company, Tower Financial Corporation (TFC). Epstein was paid $25,000 a month, which to me is an absurdly huge amount for anyone to be paid, though in this world it’s probably peanuts. Even before joining TFC (a collection agency that bought up other people’s debts – and if you think that’s dodgy, read on), Epstein had been bruiting it about among the crooked rich that he was a ‘high-level bounty hunter’, sometimes working for governments or the super-rich to recover embezzled funds, sometimes working for clients to secure embezzled funds. He and Hoffenberg became very close, flying around the world to do their dodgy deals, done not so dirt cheap, but in 1993 TFC collapsed and was exposed as one of the biggest Ponzi schemes in US history, with some $475 million of investor funds vanishing. Epstein, though, had already left the company and managed to escape without charge. Hoffenberg was sentenced to 20 years’ jail, and has always claimed that Epstein was intimately involved in the scheme. In fact, Wikipedia’s brief entry on Hoffenberg ends with this fascinating line:

In July 2019, he claimed that the American financier Jeffrey Epstein was his co-conspirator in the Ponzi scheme.

That’s right now, folks. Presumably he has the evidence for that – so why wasn’t Epstein prosecuted way back then?

Anyway, it appears, surprise surprise, that Epstein’s criminality isn’t restricted to his treatment of the opposite sex, which makes you wonder how many super-rich types who don’t draw attention to themselves vis-a-vis sexual exploitation can be shown to be criminals. And how is it possible to buy what is presumably an American island to use as a tax haven?

Tax havens are always described as ‘offshore’. That’s to say, not a part of the country in which you want to avoid paying taxes. The US site Investopedia underlines its dodginess by providing plenty of info on tax havens (hey man, we’re just tellin’ stuff, not selling’ stuff, I mean, peace off man), as well as providing a list which includes the British (but not the US) Virgin Islands. Epstein owns two of the US Virgin Islands, Great Saint James and Little Saint James, where he has one of his mansions. Great Saint James cost him $18 million in 2016, pretty cheap for an island I would’ve thought, and I can’t find the price he paid for Little Saint James back in 1998. This tiny island was his principal centre of sexploitation, aka Orgy Island by the cognoscenti.

The USA has an international reputation as a bad actor in respect of tax disclosure. With monumental hypocrisy, it implemented the Foreign Account Tax Compliance Act in 2010, requiring or ‘forcing’ (dog knows how) financial firms everywhere in the world to report accounts held by US citizens to their IRS, while at the same time refusing to comply with the OECD’s Common Reporting Standard – the only major nation to do so. To be clear about this the USA demands that other countries share information about US citizens’ offshore dealings, but refuses to share the same information with those countries about foreign investment in the USA. As a result, the USA is arguably now the world’s biggest tax haven. How this works exactly for US citizens like Epstein I’m not sure at this point, but the USA has become, especially over the last decade, one of the easiest places in the world for successful tax evasion, especially through the use of LLCs or shell companies. We’re finding this out through examination of Trump’s criminal activities, but of course I’m far from understanding the detailed nature of LLCs, offshore trusts and the like. I need to lern more.

I’ll end this piece – almost – with a quote from an organisation and site that’s the polar opposite of Investopedia, the Tax Justice Network:

The United States, which has for decades hosted vast stocks of financial and other wealth under conditions of considerable secrecy, has moved up from sixth to third place in our index. It is more of a cause for concern than any other individual country – because of both the size of its offshore sector, and also its rather recalcitrant attitude to international co-operation and reform. Though the U.S. has been a pioneer in defending itself from foreign secrecy jurisdictions, aggressively taking on the Swiss banking establishment and setting up its technically quite strong Foreign Account Tax Compliance Act (FATCA) – it provides little information in return to other countries, making it a formidable, harmful and irresponsible secrecy jurisdiction at both the Federal and state levels.

Of course, none of this clearly explains how Epstein ill-got the wealth to be tax-liable in the first place. Certainly the Ponzi scheme he seems to have gotten away with was one, possibly the main, source, but he seems even before this to have ingratiated himself into the world of dodgy financial entities and personae, presumably through schmoozing and force of personality. Certainly his relationship with Ghislaine Maxwell, daughter of that supremo of repugnant dodginess, Robert Maxwell, is an indication of the world Epstein had become familiar with, a world in which everyone is advising everyone else on how to make money out of nothing and how to retain as much of that money as possible, regardless of anything so inconvenient as the law.

References

https://en.wikipedia.org/wiki/Jeffrey_Epstein

https://en.wikipedia.org/wiki/Hedge_fund

https://www.investopedia.com/terms/h/hedgefund.asp

https://www.investopedia.com/terms/p/ponzischeme.asp

https://en.wikipedia.org/wiki/United_States_as_a_tax_haven

https://www.investopedia.com/terms/t/taxhaven.asp

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https://en.wikipedia.org/wiki/Robert_Maxwell

Written by stewart henderson

July 21, 2019 at 2:14 pm