From Ronald Holland's upcoming fourth book, Restoring Our American Legacy. Get ready for a new 21st century reappraisal of how Americans should look at politics and political action, the two-party system, domestic and foreign investing, real estate investments, wealth preservation, American history and our global foreign policy. He asks if it is time to consider an improved political paradigm utilizing successful Swiss style direct democracy and the confederation model along with our existing political structure to return our nation back to the limited Republic form of government established by our Founding Fathers. In this new century of instant communications, 24 hour news, the War on Terror, exploding government and private debt, a falling dollar and America's declining status around the world, he believes it is time for a change. Americans must retake control over our government policies at home and abroad by restraining politicians, the bureaucracy and special interests to restore the control of productive American citizens back over our own government. Our wealth, prosperity and ultimate liberty depend on Restoring Our American Legacy before it is too late!
Talking Points: Learn why the federal government's response to the 9/11 terrorist attack in combination with earlier measures to destroy offshore money centers and privacy have come together with the support of the U.S. financial service industry and tax authorities. Their goal is to deliver a knock out blow to many offshore tax havens, products and asset protection strategies. The result: many strategies and structures established previously to protect assets do not work any more. years ago.
"The whole aim of practical politics is to keep the populace alarmed (and hence clamorous to be lead to safety) by menacing it with an endless series of hobgoblins, all of them imaginary." -- H. L. Mencken
Think back to the mid 1990's when asset protection was all the rage. Tens of thousands of Americans were fleeing the lawsuit mania of the U.S. legal system and putting their wealth into asset protection trusts and other structures offshore. This was undoubtedly a smart move since any productive American who spent his or her entire working, career building, saving and accumulating wealth would not want to risk having it all stolen in a scandalous lawsuit or trumped up asset forfeiture attack.
Today if you read the newspaper or watch the news, you know in your heart, if not your head, that the American legal system does not always protect your wealth. Even if innocent and productive citizens win a lawsuit, they often still lose the battle with outrageous legal expenses. All to often, Americans can be in a lose/lose situation in most court proceedings since the legal profession and trial lawyers lobbying groups have legislated themselves a win/win contest. A sad state of affairs but such is the political power of the legal special interests in the United States.
Tax-Havens: From Boom To Bust
Just a few short years ago, offshore tax-haven jurisdictions were getting rich with the billions of dollars escaping the American legal system and investment markets. Some U.S. investors with offshore structures failed to report and pay taxes owed to the federal government therefore offshore jurisdictions and products certainly were unpopular with American politicians. After all, less government revenue meant less programs and funding for their usual vote buying political purposes.
This eventually began to cause a problem for some in the American legal profession because these offshore structures often had to be pierced and attacked by legal firms in that particular country or jurisdiction rather than by the American legal professional. Most of the offshore jurisdictions had a measure of wealth protection legislation therefore it was not as easy to attack their structures than if they were in the United States. Moreover, in the offshore location the plaintiff and American lawyer often had to hire a law firm in the foreign jurisdiction and they received the fees that would have gone to the American firm had the assets been domiciled in the United States. These are two main reasons the powerful legal lobby hated offshore jurisdictions-- a lower success rate for legal actionsand legal fees that had to be split with outside, offshore competitors.
Finally, these billions of dollars
fleeing offshore usually were managed by and invested into products
and markets outside the United States. This of course translated
into lost revenues and business for Wall Street and the rest of the
American financial services establishment.
Therefore politicians,
the legal profession and the American financial services
industry began to lobby for an attack on the protected offshore jurisdictions
because they were becoming a real threat to government revenue
and the profits of our financial and legal industries. They had a
point as after all, some
Americans unwisely moved assets to tax haven jurisdictions with a
measure of financial privacy and then did not pay the required taxes
on the capital gains and income. Thus the move of billions of dollars
offshore was starting to impact tax revenues. In addition, powerful Wall
Street and London interests were losing these billions of managed
investments, high commissioned packaged products and stock trading
revenues to offshore financial competitors. Thus the stage was set
to defend government revenues, legal fees and the Wall Street
financial service revenues.
Of Course Monopolies Always First Try To Destroy the Competition Rather Than Compete
"That's where the money is." -- Willie Sutton, replying to a question about why he robbed banks
By the year 2000, the financial special interests had taken control of the situation and the Organization for Economic Cooperation and Development (OECD) and the Financial Action Task Force On Money Laundering (FATF) devised a three-pronged attack to destroy offshore asset protection, personal privacy and the financial and investment competition in offshore money center jurisdictions. They warned that they would seek sanctions against tax havens unless they ended financial privacy in their sovereign jurisdictions and opened their doors to the U.S. and U.K. in order to go after “so-called” tax cheats.
The smaller jurisdictions complained loudly but really did not put up much resistance. Realistically, how could they? For example, the Bahamas or Belize could not stand up to the power of the U.S. government when every Caribbean nation politician remembered what happened to Panama when it resisted Washington. Noriega, a former partner with the U.S and CIA decided to go his own way, so the U.S. invaded and he is now imprisoned in the U.S. for the remainder of his natural life. This example of disobedience was not lost on the tax-haven politicians who, like politicians everywhere, wanted to remain in office and out of jail. Of course, the Iraq invasion, occupation and subsequent capture of Saddam Hussein is a current example of what can happen to a U.S. ally who decides to "go off the reservation." Remember Saddam was our major ally against Iran in the years following the Shah's abdication.
Just to make sure that American offshore investors got the total picture, the coup de grace for the offshore jurisdictions took place in July of 2000 with the Anderson Case when a San Diego couple (the Andersons) were held in contempt of court for failing to return assets which were held in a foreign asset protection trust. This defensive failure of an offshore asset protection trust provided the excuse and precedent for many in the American legal system to simply threaten to throw those utilizing asset protection structures in jail until the money came back into the U.S. for the plaintiff and, of course, the contingency legal fees for the lawyers. It didn't make any difference what the trust documents said or the legal regulations in the jurisdictions, it was simply pay up or languish in jail. After all, many judges and lawyers despised offshore asset protection planning anyway because these jurisdictions made their jobs more difficult, not to mention the resulting loss in legal fees.
September 11th: Bad For America But Good For the Regulators
"Terrorism is a direct response to the crimes our government has committed against foreigners (besides which, the actual terrorists are within our own government)….{concerning drugs}, If they didn’t exist, our government would have to invent them, the better to enact laws aimed at keeping the citizens ‘sinless and obedient.” -- Gore Vidal
Along came the 9/11 terrorist attack and tragedy. Who would have ever believed that a few Islamic terrorists and $250,000 delivered the greatest financial attack and threat to the Western world since the attempted Moslem invasion of Vienna in October of 1529? Trillions were lost in stock market values, the world airline industry was crippled with many bankruptcies and then suddenly the screws began to turn even tighter on financial transactions in offshore jurisdictions.
Although funding for terrorism using western banking and tax havens apparently played no part in the terrorist attack, this was the false excuse used by Washington and the politicians to go after all remaining offshore tax havens and personal privacy remaining in the world today. Islamic terrorists use the traditional Islamic money transfer activity called "hawala" to move funds around the world which leaves no electronic fingerprint or paper trail. However you won't read much about the terrorist money network because our politicians are using the terrorist attack as their excuse to curtail your privacy, asset protection and access to offshore protected wealth.
This horrible tragedy provided the public support to totally destroy most remaining financial confidentiality, privacy and the economies of many offshore money centers that formerly had provided asset protection services and products as a way to generate revenue for their tiny islands. The increased scrutiny of offshore affairs, together with increased reporting requirements and the ability for Washington to manipulate politicians, regulators and laws of tax havens at will, means investors with non-reported or secret accounts will eventually be discovered, taxed, fined and in serious cases, jailed. Americans are required to pay taxes on their worldwide income and revenue unlike the citizens of most other countries and all Americans should pay their fair share of taxes.
A good example is the recent IRS demand that all of the "private" credit card records from foreign providers be turned over. The wheels of justice (or injustice) turn slowly but they always turn for the bureaucracy and against Americans who either through greed, ignorance (not a very good excuse) or poor advice, broke the law, and now just have to wait their turn.
Clearly, if you are a concerned American citizen who has attempted to safely and legitimately protect and defend a portion of your wealth through the old style measures, it may be time to reconsider your options, your level of protection and how the post 9/11 regulatory and offshore world threatens your financial future. Also if you have broken the law in your asset protection efforts it is time to get right with the Internal Revenue Service. The offshore world of investing and asset protection has certainly changed forever. Privacy and confidentiality are dead but Americans can still legitimately protect their wealth and assets both onshore and offshore will proper legal strategies.
For Additional Reading & Research:
Charles Adams, A Historian Looks at Tax Havens
Michael Lynch, Following the Money: The September 11th attack revives an attack on offshore banking
Irish Examiner, Counting the Cost of the Terrorist Money Trail
firm licensed in 47 states.Ronald Holland - For more information go to http://www.ronaldholland.com
Note, Ronald now lives at Asheville NC's Wolf Laurel Resort, where he markets ski property, homes and real estate in one of the highest elevation 4-season mountain resorts in the eastern United States. He is an internationally known financial & marketing consultant & author of 3 books and over a hundred articles & reports, a leading speaker at financial conferences in the US and abroad and editor of several internet based news sites. He invented several financial products & services including the first gold IRA account and the first Swiss franc denominated variable annuity portfolio in the US and was president of a Swiss owned investment
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Ronald
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