ANTI CORRUTION

Paradise Papers Firm Managed Millions For A Carousel Of Millionaires And Fraudsters

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Asiaciti, one of the Asia-Pacific’s biggest off­shore spe­cial­ists, pro­vid­ed secre­tive com­pa­nies for clients across the globe.

It wasn’t most 4-year-old girls’ idea of an ide­al present.

In February 2008, gold­en-haired Happy received from her moth­er five books writ­ten by her father, James B. “Jim” Rogers, a U.S. bil­lion­aire investor, includ­ing one more than 430 pages long and anoth­er on how to invest in corn, cot­ton and coal.

Adventure Capitalist: The Ultimate Investor’s Road Trip,” was one title in young Happy’s birth­day bonan­za. “Hot Commodities: How Anyone Can Invest Profitably in the World’s Best Market” was anoth­er.

Happy’s moth­er didn’t give copies of the books to the 4-year-old. What she did was trans­fer the own­er­ship of the books’ copy­rights to Happy and anoth­er daugh­ter – still one month away from being born – known as “Baby Bee.” She did this via two off­shore trusts, often hard-to-trace cre­ations of a sort long regard­ed war­i­ly by tax author­i­ties as smoke­screens for hid­den wealth and tax-avoid­ance schemes.

The gift was one of dozens of trans­ac­tions used to fund sev­en trusts estab­lished for Jim Rogers’ wife and daugh­ters and him­self. Some trusts were struc­tured “for tax pur­pos­es,” Rogers’ lawyer explained in 2013 to Asiaciti, a Singapore-based off­shore ser­vices spe­cial­ist.

Rogers did not respond to requests for com­ment. The trusts were declared to the Internal Revenue Service, Asiaciti’s files show.

In the years that fol­lowed, the trusts of Happy and Baby Bee received more than $100,000 in roy­al­ties from their father’s best-sell­ing books.

By 2015, trusts worth more than $32 mil­lion had been estab­lished for fam­i­ly mem­bers by the adven­tur­ous Rogers, who is known as the “Indiana Jones of Finance” and holds Guinness World Records for glo­be­trot­ting by motor­cy­cle and by car.

The leak of 556,000 files from Asiaciti passed large­ly unno­ticed with­in the Paradise Papers, a trove of 13.4 mil­lion doc­u­ments that reveal off­shore secrets of politi­cians, celebri­ties, bil­lion­aires and com­pa­nies whose brands are house­hold names. Asiaciti’s emails, trust appli­ca­tion forms, fax­es and bank state­ments are vast­ly out­num­bered by leaked doc­u­ments from Appleby, a law firm and cor­po­rate ser­vices provider with offices around the globe.

Yet the files from Asiaciti – a trust spe­cial­ist head­quar­tered in Singapore, with branch­es in tax havens such as the Cook Islands and Samoa in the Pacific and Nevis in the Caribbean – shine a light on the prac­tices of off­shore clients rang­ing from the ultra-wealthy to the unre­mark­able, with a host of ques­tion­able clients in between.

Asiaciti did not respond to writ­ten ques­tions, but issued a state­ment that it com­plies with applic­a­ble laws and reg­u­la­tions at all times.

We are reg­u­lat­ed by high­ly com­pe­tent author­i­ties in the juris­dic­tions in which we oper­ate and are com­mit­ted to achiev­ing the stan­dards required,” Asiaciti said. “We absolute­ly deny any impli­ca­tion of wrong­do­ing.”

In offshore trusts they trust

Founded in 1978 by Graeme Briggs, an Australian accoun­tant, Asiaciti expand­ed through­out the 1980s and 1990s. It has described itself as “one of the lead­ing off­shore trust groups in the Asia-Pacific region.”

Asiaciti’s files reveal a sig­nif­i­cant American client base, includ­ing a California den­tist, an Alabama gro­cer, a U.S. hand­gun and rifle man­u­fac­tur­er, and a food-truck entre­pre­neur from Los Angeles. Also found are Chinese mil­lion­aires and clients from Switzerland, Romania, Nigeria, Thailand and South Africa, in addi­tion to an Israeli “brand­ing” expert, an Egyptian gyne­col­o­gist and a 26-year-old British eye serum and mois­tur­iz­er sales­man.

Asiaciti’s ser­vices range from tax, account­ing and “wealth pro­tec­tion” ser­vices for indi­vid­u­als to sec­re­tar­i­al ser­vices for glob­al cor­po­ra­tions. A major mon­ey­mak­er is trusts.

I instinc­tive­ly raise an eye­brow when I see a Cook Islands trust, because there are so few legit­i­mate rea­sons for using such a trust, but many bad ones.
Jay Adkisson

Offshore trusts are often inscrutable legal instru­ments with blurred offi­cial own­er­ship. The details are rarely a mat­ter of pub­lic record. Trusts allow the pub­lic­i­ty-shy to act out of sight of cred­i­tors, ex-spous­es or courts.

Asiaciti has spe­cial­ized in estab­lish­ing trusts in Samoa and the Cook Islands, nations of 200,000 and 11,000 peo­ple, respec­tive­ly. Within 24 hours and for less than $300, a client could buy “ ‘state of the art’ off­shore prod­ucts” to build and pre­serve wealth, accord­ing to an archived ver­sion of Asiaciti’s web­site.

The sad fact is that Cook Islands trusts are rou­tine­ly used by peo­ple to cheat legit­i­mate cred­i­tors,” said Jay Adkisson, an attor­ney and expert wit­ness in a fraud case that involved Asiaciti’s trust divi­sion.

It’s dif­fi­cult and expen­sive for cred­i­tors, attor­neys or the tax office to access funds held by a client’s trust, Adkisson said. “They say ‘nyah nyah nyah nyah nyah, you can’t get it.’”

I instinc­tive­ly raise an eye­brow when I see a Cook Islands trust,” Adkisson said, “because there are so few legit­i­mate rea­sons for using such a trust, but many bad ones.”

Global headaches

The leaked files reveal that author­i­ties found omis­sions in Asiaciti’s records, includ­ing client records that lacked infor­ma­tion nec­es­sary to com­bat mon­ey laun­der­ing and tax eva­sion. For exam­ple, an audit by the Cook Islands Financial Supervisory Commission in 2008 found a 33 per­cent lev­el of com­pli­ance with reg­u­la­to­ry stan­dards.

Grrr so annoy­ing,” an employ­ee at one Asiaciti office wrote about oth­er Asiaciti offices whose incom­plete files on four trusts were high­light­ed by a gov­ern­ment audit.

Asiaciti’s clients includ­ed the fam­i­ly of Serik Burkitbayev, a for­mer aide to Kazakhstan President Nursultan Nazarbayev and head of Kazakhstan’s state-owned oil and gas com­pa­ny. In March 2009, a Kazakh court con­vict­ed Burkitbayev of embez­zle­ment – the theft of $20 mil­lion – and oth­er crimes. Burkitbayev was sen­tenced to six years in prison, accord­ing to Kazakh news media.

By September 2012, as Burkitbayev lan­guished behind bars, his wife and two daugh­ters had set up three trusts in – accord­ing to the phras­ing of one lawyer – “a small island nation named after an intre­pid English sea cap­tain whose sur­name rhymes with book.”

A copy of the Mango Trust from the Paradise Papers.

The Cook Islands trusts list­ed Burkitbayev as a ben­e­fi­cia­ry, mean­ing that he could even­tu­al­ly receive the off­shore mon­ey. Asiaciti knew of Burkitbayev’s polit­i­cal past, but pro­ceed­ed with the family’s busi­ness, accord­ing to emails sent in 2013. Emails from 2013 make no men­tion of his con­vic­tion.

The trusts would be fund­ed with $2 mil­lion from a real estate deal and $6.6 mil­lion from the 2011 sale of one daughter’s inter­est in a for­mer Soviet clus­ter bomb fac­to­ry that was turned into a plant for the pro­duc­tion of oil and gas cylin­ders, accord­ing to an email.

That plant, a leaked U.S. State Department cable said, was tak­en from a U.S. com­pa­ny by “polit­i­cal­ly influ­en­tial” Kazakhs in late 2005. The Kazakhs “play dirty,” accord­ing to the cable, which report­ed that an assis­tant of Burkitbayev’s assailed the U.S. com­pa­ny with “what appeared to be an open threat to use polit­i­cal lever­age.”

Under the 2011 sales agree­ment, shared with Asiaciti, Burkitbayev’s 29-year-old daugh­ter and his for­mer per­son­al aide – the same assis­tant cit­ed in the U.S. cable – owned about 77 per­cent of the Kazakh plant.

Asiaciti reviewed the doc­u­ments and said it was “com­fort­able” pro­ceed­ing with the trusts. They were closed in 2016. The Burkitbayev fam­i­ly did not reply to requests for com­ment.

Among Asiaciti’s oth­er U.S. trust clients were Sean Novis and Gary Denkberg, mar­ket­ing exec­u­tives who tar­get­ed pen­sion­ers in a mail-fraud scheme, accord­ing to a civ­il com­plaint filed by the U.S. Justice Department. Novis, Denkberg and oth­ers told elder­ly vic­tims that they had won more than $1 mil­lion and asked them to pay a fee – “gen­er­al­ly in the range of $19.99 to $24.99” – to receive the prize, the 2016 civ­il com­plaint alleges. Victims often received noth­ing in return, accord­ing to the com­plaint. Over four years, the mar­keters and oth­ers alleged­ly pock­et­ed more than $30 mil­lion.

Novis and Denkberg had one trust each with Asiaciti that at one stage held more than $1 mil­lion each, accord­ing to Asiaciti’s files. In February 2007, Novis asked the firm to help him find a bank that did not have “a pres­ence in the USA.” Both men’s trusts were active in 2016 when Asiaciti learned of the civ­il case.

In 2016, a court imposed an injunc­tion that pro­hib­it­ed Novis and Denkberg from mail­ing prize offers and sweep­stakes in the United States. The Justice Department took no fur­ther action, a spokesman told ICIJ.

Denkberg told ICIJ that his trust was not involved in the civ­il case and that, to his knowl­edge, it had not held more than $1 mil­lion. The trust com­plied with the law and was declared to tax author­i­ties, he said. Novis did not reply to requests for com­ment.

Sherman Unkefer III in the Phoenix New Times.

Gold and juice trad­er Sherman Unkefer III used his Cook Islands trust, called the Mango Trust and set up by Asiaciti, to “con­ceal his accu­mu­lat­ed wealth,” accord­ing to a coun­ty pros­e­cu­tor in Arizona who brought a civ­il rack­e­teer­ing claim in 2014. During and after his eight years in prison on a pre­vi­ous fraud con­vic­tion, Unkefer con­cealed assets to avoid repay­ing $18 mil­lion to more than 1,300 fraud vic­tims, the pros­e­cu­tor alleged.

Asiaciti was list­ed as a co-defen­dant in the case and was served with the com­plaint in the Cook Islands in June 2014, emails show.

The rack­e­teer­ing claim against Unkefer has been dropped, although alleged vic­tims con­tin­ue to seek com­pen­sa­tion, a spokes­woman for the coun­ty pros­e­cu­tor told ICIJ. Reached by phone, Unkefer’s part­ner said the cou­ple had no com­ment.

The mon­ey in the Mango Trust was returned to the United States in 2014, said Michael FitzGibbons, the court-appoint­ed offi­cer who is seek­ing com­pen­sa­tion for Unkefer’s vic­tims.

It was obvi­ous they were try­ing to make his assets, if any, as unreach­able as pos­si­ble,” FitzGibbons said.

REPORTING BY Will Fitzgibbon and Scilla Alecci

Paradise Papers Firm Managed Millions For A Carousel Of Millionaires And Fraudsters

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