Newly released documents illustrate the havoc created within a now-defunct Panamanian law firm after a whistleblower leaked 2.6 terabytes of data that pierced the veil around the money hiding habits of the world’s elite.
Part of a trove of documents held by the German newspaper, Süddeutsche Zeitung, the new information was shared with journalists earlier this summer. Since 2016, when the leak was first announced, the International Consortium of Investigative Journalists (ICIJ) has parsed and reported on activities that contribute to income equality around the world.
The leak of 11.5 million sensitive documents led to the downfall of the law firm Mossack Fonseca, one of many law firms and institutions that exist to service and keep the financial secrets of wealthy people, families, entities, countries, and shadow organizations.
Writing after the release of the information, the John Doe whistleblower wrote of his intentions:
“Income inequality is one of the defining issues of our time. It affects all of us, the world over. Shell companies are often associated with the crime of tax evasion, but the Panama Papers show beyond a shadow of a doubt that although shell companies are not illegal by definition, they are used to carry out a wide array of serious crimes that go beyond evading taxes.
I decided to expose Mossack Fonseca because I thought its founders, employees and clients should have to answer for their roles in these crimes, only some of which have come to light thus far. It will take years, possibly decades, for the full extent of the firm’s sordid acts to become known.”
Here is what happened after the information came to light
In the days and months following the leak, Mossack Fonseca scrambled to respond to the catastrophic information release.
The law firm desperately contacted financial advisors, tax attorneys, accountants, and others who had used Mossack Fonseca to set up anonymous shelter structures for their clients. The leak laid bare the failure of the law firm to verify and maintain identification of its clients and the holders of far-flung and mostly hidden financial assets.
Although the law firm stated it conducted due diligence in order to remain compliant, the new leaks indicate “the law firm had no idea who was benefiting from its services.” The leak reveals the firm was unable to provide identification for “tens of thousands” of clients for which the firm had created anonymous tax shelters to ensure they paid low or no taxes.
As a result of the exposure, Mossack Fonseca has shuttered its operations. Celebrities, politicians, countries, and governments have been outed for their income-hiding habits. Some have lost their jobs, toppled from power, or simply weathered the storm and moved their money elsewhere.
A push for public registers has also caused secretive tax havens grief. Yet even public registers are less valuable than a verified registry which would provide real accountability for both institution and client.
Protecting funds and assets through sheltered structure is not illegal. Our firm works diligently and carefully with clients to ensure their value is safely held—and reported. If you have offshore tax holdings, work with reputable, experienced financial entities and tax attorneys to ensure you do not end up on the wrong side of a leak – or the law.
Contact an experienced tax lawyer for skilled guidance on offshore tax issues
If you are involved in an offshore tax fraud or other tax issue, reach out to Robert J. Fedor, Esq., LLC for a confidential consultation. With offices in Cleveland, Ohio, and Chicago, Illinois, we deliver aggressive legal representation to resolve tax controversy and help you legally shelter your investments. Contact us online or call 800.579.0997 today.