Wealth International, Limited

Offshore News Digest for Week of August 11, 2003


Mutual Legal Assistance in Criminal Matters Treaties (MLATs) are relatively recent development. They seek to improve the effectiveness of judicial assistance and to regularize and facilitate its procedures. Each country designates a central authority, generally the two Justice Departments, for direct communication. The treaties include the power to summon witnesses, to compel the production of documents and other real evidence, to issue search warrants, and to serve process. Generally, the remedies offered by the treaties are only available to the prosecutors. The defense must usually proceed with the methods of obtaining evidence in criminal matters under the laws of the host country which usually involve letters rogatory.

Other international agreements include executive agreements, SEC arrangements, and narcotics agreements.

More on this story here.


From the site: “Overlawyered.com explores an American legal system that too often turns litigation into a weapon against guilty and innocent alike, erodes individual responsibility, rewards sharp practice, enriches its participants at the public’s expense, and resists even modest efforts at reform and accountability.”

Recent lead stories include: “Britain’s most senior judges have demanded an end to ‘the culture of blame and compensation’ in a landmark ruling which decrees that individuals must take responsibility for their own actions. The Appellate Committee of the House of Lords has used its judgement in a compensation case to brand Britain’s growing U.S.-style claims system as an ‘evil’ that interferes with civil liberties and freedom of will.”

And: “Theodore J. Kaczynski, the onetime UC Berkeley math professor better known as the Unabomber, wants the federal government to return all his stuff -- including one of his bombs -- that the FBI confiscated when he was arrested in his tiny Montana cabin seven years ago.”

More on this story here.


Switzerland has a strong financial regulatory framework and accusations from overseas that the country remains a pillar of banking secrecy are unjustified, representatives from the Swiss banking sector told a seminar recently.

Hanspeter Bauer, head of compliance at UBS, cited the case of ex-ruler of Zaire Joseph Mobutu who is alleged to have laundered much of his wealth through the Swiss banking system. “There turned out to be very little of [Joseph] Mobutu’s money in Switzerland after his death,” Bauer told the conference, continuing: “But nobody investigated neighbouring countries, where he had residences and who were the former colonial powers of his country.”

More on this story here.


Some 36 bills have been tabled, or will soon go before the House of Representatives as Cyprus enters the final stages of compliance with the acquis communautaire, Harmonization Coordinator Takis Hadjidemetriou said last week. Furthermore, Hadjidemetriou said that 23 more bills will be ready by the end of the month. “Our time limits are tight because the work for our final meeting in Brussels on September 25 has begun”, he observed.

More on this story here.


The Isle of Man Financial Crimes Unit (FCU) has warned investors on the Island not to be taken in by bogus investment schemes, according to the Isle of Man Online.

Speaking to the local news service, a spokesman for the Unit explained that: “With the stock market being fairly static and interest rates fairly low at the moment, some people may be tempted to become involved in attractive, high yield investment schemes. However, people should be wary of any scheme that guarantees substantial or unusual profit margins or rushes the person into making decisions, paying deposits or forwarding personal banking details.”

More on this story here.


The Pacific island country has elected its fourth president this year after incumbent Ludwig Scotty was forced out of office by a vote of no-confidence, and former leader Rene Harris reinstated, a government spokeswoman said. She says it is unknown if the vote of no-confidence in Mr Scotty was over any particular issue.

The island nation of 21.2 square kilometres, with a population of 12,000, is the world’s smallest independent republic.

More on this story here.


If you provide sufficiently detailed information on a tax cheat to the criminal investigation unit of the Internal Revenue Service, you may receive up to 15% of the amount recovered in taxes and penalties (but not interest) as a tip for your tip.

But don’t start shopping for that beachfront in Hawaii just yet. To have a chance at collecting on your high-living relative or slimy former boss, you have to have the goods, follow procedures, ask for a reward and wait an awfully long time -- it could be two years or more -- for the cash. Even then, the IRS is under no obligation to give you a dime. “We determined from a study that one in 10 informants actually asks for a reward and approximately one in 10 of those gets one,” says Jeaneen Heiskell, IRS senior program analyst.

In fiscal 2002, informant information prompted the IRS to pay $7.7 million in rewards and led to $66.9 million recovered in taxes, fines, penalties and interest. “To put it in perspective, the IRS collects more than $2 trillion a year; we have something like 227 million returns that we process every year,” says IRS spokeswoman Nancy Mathis. “There are only 100,000 IRS employees. It’s just difficult to keep up the pace. The $66.9 million is not a big figure in the scheme of things, but every little bit helps.”

More on this story here.


So you want to know what might happen to your assets when you send them offshore? Consider those persons who chose to do business with the Marc Harris Organization. Few people had ever heard of the Marc Harris Organization prior to the spring of 1997. It was at that time that the very well-dressed and well-manner Marc Harris began showing up at offshore seminars pitching the use of his full-service Panamanian offshore service provider.

At prices which were probably 1/3 to 1/2 of the going rate, the Marc Harris Organization provided everything from trust services and company formations, to offshore mutual funds and annuities, to offshore insurance company and bank formations. They also offered tax services, and through a variety of tactics detailed in the “Harris Matrix” (essentially, a list of strategies) could create enormous bogus paper losses for U.S. companies, while actually moving millions of dollars offshore to be controlled by the tax-evading business owner.

The Marc Harris Organization was an immediate success, and they were soon -- in total numbers of employees (~150) -- one of the largest, if not the largest offshore service provider in the world. Very quickly, the Marc Harris Organization made arrangements to “back office” many other offshore service providers, and had offices in most of the major offshore jurisdictions.

More on this story here.

Link to the now-defunct company here.

Don’t be caught out by fraudsters - a few tips.

Beware of requests for confidential information about your financial accounts.

More on this story here.


Gibraltar appears to be an increasingly popular choice again for online gambling firms after local press reports revealed three more firms have been advertising for vacancies in the jurisdiction in recent weeks -- an indication that the industry may be on the rise.

More on this story here.


It is not surprising the responses to a poll by The Freeport News as to whether or not The Bahamas should legalize the numbers game were all in favor. That seems to be the prevailing opinion of most Bahamians, but the government has been reluctant to address the issue because of strong opposition from sectors of the religious community.

What makes the current do-nothing stance on this matter somewhat disingenuous, however, is it is no secret there are people within the government who strongly support a national lottery, which would incorporate the daily numbers game.

Supporters view the stand taken by some religious leaders as the height of hypocrisy, since almost all Bahamian churches engage in “legalized” gambling when they sell raffle tickets.

More on this story here.


Five years after Swiss banks set up a $1.25 billion (SFr1.7 billion) fund for Jewish victims of the Nazis, only a third of the money has been distributed. Jewish organisations representing claimants say they want a review of the restitution process in a bid to speed up payouts. When the fund was drawn up, speedy restitution was seen as a prime concern due to the advanced age of many Holocaust survivors.

A five-year probe into Switzerland’s wartime past, whose findings were published last year, uncovered major failings in Switzerland’s policy during the Nazi era. The investigating commission found that business and financial institutions did little to help victims of the Nazis regain possession of their assets.

More on this story here.


An economic plan released by the Jersey Policy and Resources Committee this week has warned of the tax hikes for residents in the years ahead with the government committed to the goal of reducing corporate tax to zero per cent. The document outlines the financial plans for the States up to 2008 and makes provision for cuts in spending and capital projects. However, Finance Minister Terry Le Sueur has said that the taxpayer will have to bear some of the burden for closing a £100 million gap that has opened up in the island’s public finances.

More on this story here.


Digicel submitted its application for telecommunications licences on August 11, joining some 14 companies that have already indicated interest in being licensed as telecommunications providers in the Cayman Islands.

“As Digicel has done in newly liberalized markets in Jamaica, St. Lucia, St. Vincent & the Grenadines, and most recently in Aruba, we will help to bring the benefits of competition to consumers in the Cayman Islands. This means lower prices, a choice of the most up-to-date technology and a greater variety of services,” Mr. Seamus Lynch, Group Chief Executive Officer of Digicel, said.

More on this story here.


Last week, Marketocracy.com’s top stock-picking gurus, known as the M100, continued to sell off stocks under the belief that the market rally is set for correction. Among the top sells were technology stocks like Microsoft, while top buys included precious metals plays Apex Silver Mines, Harmony Gold Mining, and Freeport-McMoRan Copper & Gold.

More on this story here.


Two Philadelphia lawyers won a major victory for banks on Monday when the South Carolina Supreme Court ruled that victims of so-called identity theft have no valid claim of negligence against a credit card company that issues a card to an impostor. Attorney Burt Rublin of Ballard Spahr Andrews & Ingersoll said that the decision in Huggins v. Citibank is the first of its kind in the country and that the case was closely watched by the banking industry because the plaintiffs were seeking to create a “brand new tort”.

In the suit, plaintiff P. Kenneth Huggins alleged that a “John Doe” identity thief had applied for six credit cards in Huggins’ name and that the banks issued the cards “with no investigation, no verification, no identification, no corroboration, and no effort whatever to determine whether Doe was who he claimed to be.” Although Huggins ultimately suffered no financial consequences, his lawyers argued that he should be compensated for the distress and embarrassment he suffered in the ordeal.

“The relationship, if any, between credit card issuers and potential victims of identity theft is far too attenuated to rise to the level of a duty between them,” Justice E.C. Burnett III wrote for the court.

More on this story here.


A South African legal expert associated with the government’s Exchange Control Amnesty has speculated that the system will be unable to cope with an expected flurry of last minute applications, meaning that the November deadline may have to be extended. Advocate Wilhelm Heath, a member of the partnership Amnesty Solutions, created to advise individuals on their eligibility for the scheme, was quoted by News24 this week as revealing that the problem is “absolutely huge”.

One of the most likely sources of delays, apart from a potential glut of last-minute applicants, is the amount of documentation required to substantiate an application, Heath explained. He also said that the number of people applying for amnesty could be seriously curtailed by an inherent lack of trust in the government, as some remain convinced that information will be used to apply penalties at a later date.

More on this story here.


China’s top leaders have announced plans for changes to the constitution intended to promote the nation’s economic development. Although the politburo did not release details of its plans, discussion of the proposed changes among academics has centered on plans to formalise the rights of private enterprises, which have become a force for economic growth but remain stuck in something of a legal limbo.

Reform-minded officials and academics hope constitutional protection would lead to clearer laws on private business that would help to curb the corruption and influence-peddling that surrounds many of China’s most entrepreneurial and successful businessmen. The inclusion of references to former president Jiang Zemin’s “Three Represents” in the constitution would itself help to underline the new role of private business since the theory -- although vague and opaque -- is intended to bridge the gap between communist theory and capitalist practice.

While any changes could have huge symbolic implications for the tone and direction of policy, their direct effect may be more limited.

More on this story here.


After falling to two-decade lows in April, the benchmark Nikkei 225 climbed more than 30% by early July, not bad for a market that many people considered on the verge of collapse. The big question, though, is whether the market will ignite again after investors return from summer vacations. During this rally, unlike those that fizzled in 2001 and 2002, optimists clearly outnumber the pessimists.

The reasons are as varied as they are familiar. Household names like Toshiba and Honda Motor, as well as top-notch makers of steel and machinery, are still trading well below their all-time peaks. Most of them are exporters and are benefiting from a pickup in the American economy and from China’s booming expansion. Their products continue to hold their own against foreign competition in important markets.

Hit by years of slow growth and deflation, many companies have also been closing factories, trimming payrolls and cutting other costs. This has increased profit margins for nonfinancial companies on the first section of the Tokyo Stock Exchange to 5.1%, on average, a record high, according to JPMorgan Fleming Asset Management. The profit margins, though below levels in the United States and Europe, should continue rising as sales grow.

Japan’s stock indexes, at least when compared with other major markets overseas, are also cheap. After years of brutal losses, many foreign fund managers that track Morgan Stanley Capital International indexes had sold all their Japanese holdings. Given the collapse of many mini-rallies during the past few years, a heavy dose of skepticism is not unwarranted. The biggest time bomb remains the banks. There is also the risk -- confirmed in years past -- that corporate Japan will slow its restructuring efforts once sales pick up.

More on this story here.


The proposal allows lawyers to breach the duty of confidentiality if a client uses the lawyer’s advice to commit a crime or fraud. The rules were drawn up in the aftermath of the Enron, WorldCom and other corporate scandals that shook the nation’s financial markets. Opponents of the rules argue that it could lead to the exclusion of lawyers from corporate boardrooms when questionable conduct is being considered. Supporters argue that 42 states already have some variation of the rule on the books, with no evidence of such consequences.

New York University School of Law professor and legal ethics expert Stephen Gillers spoke in support of the change. He pointed out that not one lawyer from a state with a crime-fraud exception on the books has stepped forward to say that the profession suffered because of it.

More on this story here.


Don’t want the government to know where you are? Throw away your cell, stop taking the subway, and pay the toll in cash.

If you purchased a new cellphone over the past 18 months or so, odds are that one of the features listed in small print on the side of the box was “E911 capable”. Or, as in the case of a recently-purchased Motorola, “Location technology for piece [sic] of mind.” Perhaps you asked the salesman to explain the feature, and he replied that it means that cops can home in on your phone in case of an emergency.

What your salesman probably failed to tell you -- and may not even realize -- is that an E911-capable phone can give your wireless carrier continual updates on your location. The phone is embedded with a Global Positioning System chip, which can calculate your coordinates to within a few yards by receiving signals from satellites. GPS technology gave U.S. military commanders a vital edge during Gulf War II, and sailors and pilots depend on it as well. In the E911-capable phone, the GPS chip does not wait until it senses danger, springing to life when catastrophe strikes; it is switched on whenever your handset is powered up and is always ready to transmit your location data back to a wireless carrier’s computers. Verizon or T-Mobile can figure out which manicurist you visit just as easily as they can pinpoint a stranded motorist on Highway 59.

So what is preventing them from doing so, at the behest of either direct marketers or, perhaps more chillingly, the police? Not the law, which is essentially mum on the subject of location-data privacy. As often happens with emergent technology, the law has struggled to keep pace with the gizmo. As things stand now, the only real barrier to the dissemination of your daily movements is the benevolence of the telecommunications industry. A show of hands from those who find this a comforting thought? Anyone?

The legendary hacker zine Phrack recently published a how-to guide on building a GPS-jamming device.

More on this story here.


They failed to get the attention of the invading U.S. military, but the civilians who traveled to Iraq as “human shields” to stop the war last winter have since attracted the attention of the Bush administration’s Treasury Department.

Over the past several weeks, Treasury’s Office of Foreign Assets Control has been contacting an undisclosed number of protesters who placed themselves in harm’s way before the war, warning them that they face $10,000 fines for violating U.S. sanctions that forbade most travel to Iraq and commerce with Saddam Hussein’s regime. If they do not pay, the human shields face up to 10 years in prison. Treasury spokesman Taylor Griffin said yesterday that the effort to enforce prewar sanctions is “absolutely not” politically motivated. “Choosing which laws to abide by and which to ignore is not a privilege that is granted to anyone in a society supported by the rule of law,” he said.

But the administration’s efforts to enforce the law are handing war protesters a new megaphone to broadcast their opposition to U.S. policies in Iraq.

More on this story here.


A Superior Court of Ontario Justice ruled that scheming and lying Canadian bureaucrats virtually destroyed the firm while defrauding the U.S. government. Amertek Inc., once a maker of fire rescue truck bodies, and its backers were unsuspecting victims of “shocking behaviour on the part of federal civil servants, behaviour that would cause the reasonably informed person to lose confidence in a Crown corporation and a department of the federal government,” Mr. Justice John O’Driscoll wrote in a searing 198-page decision handed down in Toronto last week.

The “shocking behaviour” included the sending of an e-mail by a bureaucrat describing the company as “suckers” who should be pushed into bankruptcy. The judge ordered the Canadian Commercial Corporation (CCC), a federal Crown corporation, and the Attorney-General of Canada to pay US$26.5 million plus interest and other damages.

The Amertek case is the latest in a series of criminal and civil cases in which alleged or proven misconduct by federal bureaucrats has been exposed in what Canadian Alliance MP John Williams calls an “ethical malaise” sweeping the public service. The incidents have included alleged bribery of Immigration judges and a Health Canada bureaucrat, embezzlement by a Public Works accountant and allegations by helicopter manufacturers that the Liberal government has rigged the bidding for its new Maritime helicopter to favour a French consortium.

More on this story here.


The Blaster worm continued to tear through the Internet Tuesday morning as security experts struggled to find and fix infected systems. The worm is presenting a unique problem for security specialists because it is infecting a large number of PCs owned by home users, many of whom may be unaware that their machines are compromised. And because Blaster’s scanning algorithm tends to start by looking for IP addresses that are close to the infected machine’s, the worm can rattle around inside a local network for quite a while, consuming bandwidth.

Officials at the CERT Coordination Center estimated that the number of infected machines is in the hundreds of thousands and will continue to grow. “A large number of the compromised machines are those of home users. In this case it isn’t as easy as downloading a patch because they can’t get enough bandwidth to get online and get the patch,” said Marty Lindner, team leader for incident handling at CERT.

The worm exploits the RPC DCOM (Distributed Component Object Model) vulnerability in Windows NT® 4.0, 2000, XP, and Server™ 2003. For users who cannot free up enough bandwidth to download the patch from Microsoft, CERT recommends an alternative remedy: Physically disconnect the infected machine from the Internet or network, then kill the running copy of “msblast.exe” in the Task Manager utility. Users should then disable DCOM and reconnect to the Internet and download the patch.

More on this story here.

Microsoft Security Bulletin announcement and link to a patch download here.

New York City mega call center falls to Blaster worm.

NYC 311 deals with all City functions except police and emergencies. The NYC .gov site has as its slogan “always open”. The 311 refers to the NYC phone number called by people to complain about potholes in the street, garbage collection, and other problems.

The project integrates 84 small call centers, and according to our source uses a large number of NT servers as well as hundreds of NT based clients. But the NT servers started to fall Thursday morning, and one source told the INQUIRER that when that happened, hundreds of client machines in 311 started falling over as well.

More on this story here.

Blaster underlines the emptiness of Microsoft’s “security initiative”.

There are two things that conspire to make infections like the Blaster worm an unfixable problem. Both of the problems, Microsoft and sysadmins are equally to blame, and neither will get any better.

Rest of rant here.

Blaster rewrites Windows worm rules.

The Blaster worm, which continues to create chaos by crashing numerous vulnerable Windows machines across the Net, has changed the rules on malicious code attacks. Unlike Slammer or Nimda, home users have borne the brunt of the attack -- although businesses of all sizes have also suffered.

Blaster shatters the partially reassuring notion that email-borne nasties are the most significant threat for Harry Homeowner. Now updating patches and using perimeter security, always good ideas, have become prerequisites for Windows users.

More on this story here.


A federal jury in Memphis has acquitted a FedEx pilot on six counts of tax evasion after she testified that she wrote letters asking the Internal Revenue Service what law required her to pay taxes but never received a response. The verdict brings into question the I.R.S. practice of ignoring such questions, which it regards as frivolous because the first words of the Internal Revenue Code are “a tax is hereby imposed”.

The pilot, Vernice Kuglin, 58, filed a withholding statement on Dec. 30, 1995, directing that no taxes be withheld from her pay. From 1996 through 2001 she earned $920,000 as a pilot for FedEx, but no taxes were withheld, she said. Normal withholding for the period would have been about $250,000.

“The questions I have asked are what section of the Internal Revenue Code makes me liable for the individual income tax and what law requires me to fill out the Form 1040” tax return, she said. The lead defense lawyer, Lowell H. Becraft Jr. of Huntsville, Ala., said he built the defense around the absence of response by the I.R.S. to Ms. Kuglin’s letters.

The acquittal does not relieve Ms. Kuglin of the obligation to pay the taxes. Joe Murphy, the federal prosecutor in the case, indicated in court that the government intended to pursue collection in a civil action. In February 2002, a Tax Court judge dismissed Ms. Kuglin’s claims of I.R.S. irregularities in determining she owed taxes for 1994 and 1995, but declined an I.R.S. request to impose penalties on her for filing frivolous actions to delay collection.

More on this story here.


Companies will be hit by a mountain of red tape if the Government presses ahead with an obscure tax change to bring the UK in line with Brussels, business leaders warned. The Institute of Directors said the proposals would put a “huge new burden” on businesses and accused the Government of allowing tax harmonization by the back door.

The Inland Revenue surprised businesses by proposing that companies with UK subsidiaries must follow rules aimed at cracking down on a tax avoidance scam used by multinationals. British subsidiaries of the same company will have to ensure any transaction between them is priced at market rates. The rule -- known as “arm’s-length pricing” -- prevents multinationals with affiliates in different countries from fixing their prices to exploit differing tax regimes.

Derek Brownlee, the Institute of Directors’s tax executive, said: “Introducing a requirement for arm’s length pricing in transactions between two UK companies will massively expand the scope of the current transfer pricing rules, creating a huge amount of additional work for these companies.”

More on this story here.


International companies could find their activities subject to investigation and censure by United Nations human rights officials under principles expected to be adopted on Wednesday in Geneva. The UN’s draft Norms on the Responsibilities of Transnational Corporations asserts that companies should be subject to the kind of enforcement procedures at the UN Commission for Human Rights previously applied only to nation states.

The move to adopt the norms marks a first step by the UN towards the regulation of multinationals. It is likely to spark a long battle by international businesses to prevent the move to enforcement being backed by the full 53-nation UN human rights commission.

More on this story here.


If gold is to be re-monetized, then this must mean that it has been de-monetized. But isn’t gold money? No, gold is not money. It has not been money for Europeans since 1914, when the commercial banks stole it from depositors at the outbreak of World War I, and central banks then stole it from commercial banks before the war was over. Gold has not been money for Americans since 1933, when Roosevelt unilaterally by executive order stole it from the public.

I realize that old-time gold bugs go around saying “gold is the only true money” and similar slogans. These slogans reflect a lack of understanding of either gold or money. They are comforting slogans, no doubt, for someone who bought gold coins at twice the price that they command today, and held them for a quarter of a century at no interest while all other prices doubled or tripled. If he had instead made down payments on rental houses, he would be a whole lot richer. But the fact is, gold is not only not the only true money, it is not money at all. When you can walk into Wal-Mart and buy whatever you want with a gold coin or gold-denominated debit card, then gold will be money. Not until then.

The question is: Will it ever again become money? This is the most important of all monetary questions.

The bankers hate gold as money. Gold as money acts as a restraint on their profits, which are derived from creating money “out of thin air” and lending it at interest. Gold as money acts as a barrier to the expansion of credit money. The public initially does not trust the bankers or their money apart from the right of redemption on demand. Depositors initially insist on IOU’s for gold coins. So, the bankers partially submit to gold, but only grudgingly.

To keep from facing their day of judgment -- redemption day, when the public presents its IOU’s and demands payment -- fractional reserve bankers call on the government. They persuade the government to create a bankers’ monopoly, called a “central bank”, which stands ready to intervene and lend newly created fiat money to any commercial bank inside the favored cartel that gets into trouble with its depositors. By reducing the risk of local bank failures, the central bank extends the public’s acceptance of a system of unbacked IOU’s, called “an elastic currency” when members of the banking cartel create it, and called “counterfeiting” when non-members of the cartel create it. Then why do central bankers use gold to settle their own interbank accounts? Because central bankers don’t trust each other.

Gold is an inflation hedge. There has been inflation since 1980. But gold has not risen in price since 1980 for many reasons: the gold bubble of 1979, the continuing de-monetization of gold by central banks, the steady sell-off of gold by central banks, the central banks’ gold leasing programs (disguised sales), and dollar supremacy internationally. The third factor, dollar supremacy, is looking shaky. Gold is not a deflation hedge whenever it is not monetized, and it has not been monetized for generations. But, in the midst of deflation, there is a possibility of the re-monetization of gold. I regard this as a distant possibility.

More on this story here.


Treasury is pushing to finalize a regulation that would require American banks to report interest paid to foreigners in order to allow foreign governments to tax interest income earned by their citizens. With over $1 trillion of foreign capital directly invested in the U.S. banking system -- approximately $200 billion of which could be covered by the proposed regulation -- banks would likely suffer an exodus of investors who wish to remain free of the taxman in their home countries. The banking industry opposes the regulation, as does the Federal Deposit Insurance Corp. (FDIC). But Treasury is pushing ahead anyway.

The greatest irony, though, may not be that such a move would be made as the economy is struggling to regain its footing, but that it is the Bush Treasury Department that is going forward with a Clinton-era proposal in spite of significant opposition from conservatives.

More on this story here.


By failing to follow through on a high number of investigations involving businesses that have transgressed taxation laws, according to a report from the Treasury Inspector General for Tax Administration. Citing 1,841 cases where firms have either failed to withhold taxes on behalf of their employees, or have filed frivolous returns, the report found that only 233 of these actually made it onto the relevant IRS database, and then only half of the returns on the database were properly followed up.

The report, however, praised the IRS’s track record on the “Section 861” issue that many tax protesters argue excludes certain citizens and companies from domestic taxes. The report noted that the IRS has taken out civil injunctions against nine promoters of 861 schemes.

More on this story here.


When will the first lawyer be arrested, indicted and sent to prison for failing to help the government convict his client? You can bet it will be soon. Once the Securities and Exchange Commission, Internal Revenue Service and U.S. Department of Justice (sic) complete their assault on the attorney-client privilege, they will rush to make an example of a lawyer, lest any fail to understand that their new role in life is to serve as government informants on their clients.

Just as government bureaucrats used the terrorist attacks of Sept. 11 to assault the Bill of Rights and our constitutional protections, they are now using “accounting scandals” and “tax evasion” to assault the attorney-client privilege, a key component of the Anglo-American legal system that enables a defendant, whether guilty or innocent, to mount a defense against the overwhelming power of the state.

The sacking of the attorney-client privilege can only produce a nightmare. Many white-collar crimes and securities regulations are so vague and arcane that no one knows for sure what they mean. Their meanings are usually argued out in settlements or trials. What will happen now is that any attorney who fails to guess in advance the regulator’s interpretation of the regulation can be charged with helping his client commit fraud.

More on this story here.

Book review of Paul Craig Roberts’ The Tyranny of Good Intentions: How Prosecutors and Bureaucrats Are Trampling the Constitution in the Name of Justice here.


The American Bar Association, an outspoken critic of certain Bush administration anti-terrorism polices, on Tuesday opposed the renewal of surveillance powers granted to the executive branch in the act. The ABA’s policymaking body voted to oppose efforts to repeal the December 31, 2005, expiration date of the powers contained in the USA Patriot Act until Congress reviews whether they have been used properly and determines if they should be extended.

The recommendation approved by the ABA does not address the substance of the act, but seeks to ensure congressional oversight of the relevant government agencies. It said lawmakers included the 2005 sunset provision in the act to emphasize that the new powers were temporary. The ABA said lawmakers understood that the powers were granted quickly in response to a national emergency and “by their nature, are highly prone to potential abuse.” The deadline allows Congress to review the use of the powers before deciding whether to extend them. Such a study requires that government agencies turn over information to congressional oversight committees, the ABA said, but no such cooperation has yet taken place.

More on this story here.

Ashcroft planning trip to campaign for Patriot Act.

Faced with growing public questioning of his department’s anti-terrorism policies, Attorney General John D. Ashcroft plans to kick off a cross-country tour next week focused on defending the USA Patriot Act and other legislation as vital tools in the fight against terrorism.

Justice Department officials said the series of appearances at more than a dozen stops from Philadelphia to Salt Lake City will be aimed at countering criticism from civil liberties groups and some lawmakers that authorities have gone too far in wielding anti-terrorism powers granted by Congress after the September 11, 2001, attacks.

Much of the recent criticism has focused on the Patriot Act, wide-ranging legislation that dramatically strengthened the ability of the Justice Department and FBI to monitor people alleged to be terrorists or their associates. The legislation was easily approved by Congress in the weeks following the Sept. 11 attacks and has been praised by federal law enforcement officials as a crucial reform of outdated counterterrorism policies.

But Ashcroft’s travel plans underscore growing concerns within the Bush administration at increasing criticism from Congress, opposition from cities and counties across the United States and attacks from Democratic presidential candidates.

More on this story here.
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