US Clamps down on the Cayman Islands

The IRS in Houston briefs me to advise them on what could be done to stop money laundering in the Cayman Islands. This anti-money laundering battle to halt organized crime today is the legacy of Al Capone.

By the late seventies, it had become apparent to the US government that they were losing the war against crime not just organized crime, but disorganized crime.Petty gangsters and white collar criminals were experiencing relatively little difficultyin finding safe havens for their lucre. From the lowest level of protection money,extorted from widows out of their social security payments, to the most profitable levels of drug-dealing, government corruption, terrorism, and corporate fraud, the proceeds of crime were finding a welcome home in the ordinary banking system. First the money was inserted through deposits in accommodating or inattentive bank branches; then it was scrambled though various layers of seemingly innocent transactions, like futures trading or real estate; and finally the illegal funds were housed in investments or trusts, frequently offshore. The cover-up of much of the illegal transactions and earnings of the large corporations would have been impossible without the complicity of the major financial institutions and audit firms.

Tax fraud was becoming just as big a problem. The offshore tax havens were processing tax-free what was estimated by the FBI and Scotland Yard to account for 60 percent of all the money in the world.

The confrontation between the US and the Cayman Islands is where I receive my initiation into this struggle between Good and Evil. The economic stability of the strongest country on earth is being threatened by one of the smallest islands in the Caribbean. I learn that nearly every dollar bank note in circulation in the US for more than three months has traceable smudges of drug powder on it.

Before flying over to Grand Cayman, I study everything I can about the place. The Cayman Islands is projecting its image euphemistically as an international offshore financial center . The term tax haven has vanished from its vocabulary, and no mention is made of fly-by-night racketeers or of bankers and their accountants burning documents at night in the parking lots behind the banks. Official publications assure visitors that the Cayman Islands is paradise on earth but self-praise is no recommendation, and things are not always what they are claimed to be. It is a short while after race riots in the Bahamas and an assassination attempt on the Governor of Bermuda; so the Caymans are proud to boast that their little colony enjoys total racial harmony. The facts are rather different. Another Cayman boast is that they had eliminated mosquitoes. Perhaps true but no mention is made of the sand-flies that tear your
skin to pieces and that have taken over the island after a real estate development scam had collapsed leaving moist trenches a few miles from the capital Georgetown.

It is no secret that this huge and expanding financial center is being built by drug dealers and tax dodgers. A child could have written my opinion of advice to the IRS it was so obvious. Bring in the other big countries to force international collaboration, or nothing much will ever be able to be done to stop money laundering or prevent wealthy Americans from using the Cayman Islands to evade taxes on an industrial scale. The US could not possibly curb these illegal operations without effective cooperation from other countries. These recommendations are followed.

By the end of the century, the US is well positioned to pressure the Cayman Islands and other tax havens into a measure of collaboration and force exchanges of information. Try this one for size: If you don’t collaborate we won’t allow any of your dollars back into the world banking system. Even a worm may turn Anyone visiting the islands today will indeed find a bona fide international offshore financial center, excellent race relations, and some serious attempts at controlling bloodsucking insects and bankers.

The Cayman Islands government eventually came to realize that the better interest of the colony lies in cooperation with the US. Now the Cayman Islands is rated the most lawfully compliant of the Caribbean tax havens.

I always feel proud of opportunities to do anything useful for Uncle Sam he’s done a lot for all of us.

Tax Planning Tips from Al Capone on what NOT to do Tax Evasion

Al Capone, the most notorious gangster in the annals of organized crime, known, by no means affectionately, as Scar-Face , and the criminal who made more money out of crime than any criminal before or since, was, unbelievably, nailed for what was certainly the least heinous of his crimes tax evasion. At a time when the other law-enforcement agencies were losing the battle against the underworld, the only card that the US government was able to play effectively in its game to beat Al Capone, turned out to be his fiscal delinquency. When the Special Intelligence

Unit of the Treasury had obtained enough evidence to prove that Al Capone was evading tax, they invited him in for some intense grilling. Remembering that his brother Ralph had been sentenced to three years for tax evasion, Al Capone accepted the invitations and made several visits, suitably escorted by a Washington lawyer who answered all questions for him.

Al Capone said hardly anything to the Inspector. But as he left the interviews, he squinted through his scar-face and muttered: Now, just you take good care of yourself!

Al Capone was understandably somewhat sensitive about the source of his income, and his lawyer explained to the Commissioner that he was a member of an organization that kept no books. Consequently, it was difficult for him to reach any accurate figure of his share of the profits. Finally, his lawyer did admit that Al Capone had some income, though never in excess of $100,000 in any single year. The Commissioner asked for this in writing and Al Capone wrote confirming it, but drawing the Commissioner’s attention to the fact that he was the sole support of his widowed mother, that his house was mortgaged to the hilt, and that he had a sister and son to support. It was very touching. Nevertheless, it was the admission of undeclared income contained in this letter that helped to put Al Capone away for life.

Not only has Dr Spitz never lost an international tax case no plan he has constructed has ever been challenged - Offshore Investment

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