J5 Investigating US Euro Pacific Bank for Tax Fraud

An investigation by the Joint Chiefs of Global Tax Enforcement is looking at money laundering and tax evasion—on American soil.

The Joint Chiefs (or J5) was formed in 2018 in response to revelations from the Panama Papers about the vast sums of money being laundered and hidden around the world. Representatives from the UK, the US, the Netherlands, Australia and Canada joined together to boost tax enforcement on a global scale.

The target right now is Euro Pacific Bank, located in San Juan, Puerto Rico. An investigation, code-name Operation Atlantis, got underway earlier this year when officials from the J5 sent a raft of letters and subpoenas to clients of Euro Pacific.

Until recently, the bank at the center of the investigation was not revealed. The bank was exposed by an in-depth reporting effort from The Age, a daily Australian newspaper. Also reporting were 60 Minutes, and The New York Times. Overall, the investigation and the unraveling of the affairs of the bank are a primer in how tax avoidance occurs in secrecy jurisdictions. Consider the following:

• How it happens: Euro Pacific was founded by Mark Anderson and Peter Schiff, an economist with longtime ties to tax avoidance. His father, Irwin Schiff, spent his career arguing income tax is unconstitutional. Irwin Schiff passed away in 2015, while serving his third prison term for tax fraud and tax evasion. Mr. Schiff and Mr. Anderson registered their bank which operated profitably until the investigation began to unravel the firm at the edges. The bank is alleged to pay no interest on deposits but offers a low to no tax offshore tax parking spot for money from around the world, including Australia. In word, the bank was supposed to investigate potential clients to avoid money laundering; in deed, the bank operates differently.
• What happened: Investigators, including those from the Australian Tax Office (ATO), exploited a leak of the account details for thousands of Euro Pacific clients. The list carries names well-known in organized crime circles, as well as those already known to have committed financial and tax crimes. With the gold mine of account details, investigators will be working for some time to understand what criminal or financial allegations will be brought against which investors.
• What happens now: Now that Euro Pacific is under investigation, several mainstream companies and resources have cut their ties to bank for the sake of appearances—and to hopefully avoid being caught up in the investigation. The investigation will play out as it will, but the impact on the likely illicit offshore tax haven is real.

Best guess is that Euro Pacific will go the way of Mossack Fonseca, the bankrupt Panamanian law firm at the center of the Panama Papers scandal. Offshore tax havens are not illegal and can be a good place to protect and grow your wealth. But the best bet is on an institution on this side of money laundering laws that can protect your assets and your freedom from tax prosecution down the line.

Experienced criminal defense tax attorneys help you with tax controversy

For skilled tax representation or strategic criminal tax defense, the legal team at Robert J. Fedor, Esq, LLC, robustly serves your tax compliance needs. Serving clients in Chicago and Cleveland, our tax lawyers can answer your questions today. Call us at 800-579-0997.