Kenneth Rijock

Kenneth Rijock

Sunday, September 25, 2016

LEON FRAZER, BEARER SHARES, AND OFFSHORE BANK ACCOUNTS


If you are a legitimate businessman or investor, your professional adviser, if he or she is honest, will always tell you that owning any assets through a corporation having bearer shares can be a fatal mistake. Unless a company's shares are registered, there exists a clear and present danger that ownership can be appropriated by criminal elements, including those very foreign corporation service providers that you engage to assist you. Only if you are a tax evader, or laundering the proceeds of crime, do you really need the level of anonymity that bearer share companies, such as those one can purchase in the BVI, or Panama, can give you; all others should never touch them. Do not let any sharp offshore lawyer tell you otherwise.

We have, over a period of years, told many sad stories, where North American or European investors purchased real estate or other assets, and placed them in a corporation with bearer shares, finding out too late that local "professionals," who were supposedly providing services to them, stole the stock, and thereby the assets, often without even using a forged notary certificate, confirming the "sale" of the stock, though this is often the case. Whoever holds the stock owns the assets, period.

 Our extensive coverage of one of the worst of those fraudsters, the Alaskan expat, Gary James Lundgren, detailed how he stole real property that he was supposed to be managing for his foreign clients, in the Republic of Panama. Lundgren, a broker-dealer whose securities licenses were revoked, by FINRA, for the rest of his life, simply transferred the stock of clients into his own name, and thus acquired ownership of the company, and its real estate holdings. You never have total control, unless your corporation issues registered shares.

Gary James Lundgren
Clients of Leon Frazer & Associates, Inc., whose professional investment counselor was William Tynkaluk,  an LF director, and one of the company's most powerful leaders, were advised that Revenue Canada would soon increase taxes, and that they must transfer their wealth offshore. To do otherwise was folly, according to Tynkaluk, who was neither a tax attorney, nor an accountant. His contacts abroad would form companies for those clients, who were now in fear of losing a substantial portion of their wealth, and those companies would have bearer shares, or privacy reasons, Tynkaluk stated. This was a case of a brokerage firm intentionally giving his clients advice that constituted malpractice, or worse, fraud. LF should never have recommended bearer share companies.
Conveniently, Leon Frazer had a relationship with the ownership of Dundee Corporation, which had an offshore bank in the Cayman Islands, Dundee Merchant Bank, trading as Dundee Bank. LF clients' money would be safe at Dundee Bank. Furthermore, Dundee Bank's two senior bankers, Derek Buntain, President, and Sharon Lexa Lamb, Senior Vice President, would be the directors of your offshore corporations, to assist you, and even be your financial advisers. Can anyone here spell Conflict of Interest ?

We all know what happened next: Lamb & Buntain placed the clients' money, not in segregated accounts, but consolidate the funds and assets in Dundee's own accounts at the Bank of NT Butterfield & Sons, Ltd., and later, without authorization, or right, transferred (read: stole) many millions of client assets, for their own use. This is known as the Cayman Gang of Four scandal.

When victims attempted to take control of their companies back, they found out, to their amazement and chagrin, that Buntain & Lamb would not cooperate, unless they received immunity, and who threatened them with exposure for tax evasion, even if that was not the case. The same financial criminals who stole their money and stock controlled their clients' corporations.

The ultimate insult occurs when the victims seek information about their accounts, at the brokerage firms they dealt with, only to be told that, since they cannot prove that they are directors, or beneficial owners, privacy laws bar the disclosure of that information. Should not Leon Frazer have disclosed that little detail to their clients, in writing, together with all the drawbacks that exist, when a client owns a corporation with bearer shares ? This is negligent conduct, plain and simple.

The lessons to be learned:
(1) Never, never form a corporation that has bearer shares, and do not ever purchase one that does.
(2) Consult a competent lawyer, whenever you need advice regarding corporation formation; you may also need to speak to a tax attorney, as well.
(3) Weigh all the pros and cons, whenever dealing with the offshore industry, and make an educated decision. Sometimes, the best thing to do is to just say no.



REZA ZARRAB'S ATTORNEYS RESPOND TO GOVERNMENT'S OPPOSITION MEMO ON RECUSAL


Attorneys representing the Iranian businessman & gold trader, Reza Zarrab, who is charged with violating US sanctions on Iran, have filed their Reply Memorandum of Law, regarding their pending motion for recusal of the trial judge. They have made some persuasive arguments in the Reply.

First of all, they argue that the motion is timely, because the facts of the case, when applied to the four factor test cited by the Government, favor recusal:
(A) The parties have NOT "participated in a substantial manner in trial or pre-trial proceedings." Discovery is far from being completed.
(B)  The Court took appropriate action, to ensure against a "waste of judicial resources, " by canceling the hearing on the two pending motions.
(C) There has been no entry of judgment.
(D) There is good cause for delay. Defense counsel has been investigating the events in Turkey, which started with the failed coup in July.

Second, Recusal is warranted on the merits.
(A) The Government has applied the wrong legal standard. the correct one is whether "an objective, informed observer could reasonably question the judge's impartiality," not that the dense has the burden of showing "such a high degree of favoritism or antagonism to make fair judgment impossible."
(B) The Government has mischaracterized the Court's past comments. They were not "innocuous" or "noncontroversial statements" about the fundamental rule of law.

Finally, the defense maintains that Government has signaled it intends to detail the facts surrounding the Turkish case against Zarrab, where there are allegations that it was dismissed due to the payment of bribes,  and that Zarrab corrupted the Turkish judicial system.

Both sides have presented compelling arguments, but the law does favor Recusal under similar circumstances. The motions to dismiss, and to suppress evidence, will not be heard until the Court renders its decision on this motion.



Saturday, September 24, 2016

WHY CAYMAN ISLANDS CORPORATE FORMATION SPECIALISTS INCORPORATE THEIR CLIENTS IN THE BVI


If you were wondering why Grand Cayman corporate service formation firms are forming companies for their clients in the British Virgin Islands (BVI), and not the Cayman Islands, where you would think they would prefer to incorporate, read on.

 Take a good look at the Companies (Amendment) Law 2016; it removes the power of Cayman Islands exempted corporations to issue bearer shares. All existing bearer shares were required to be converted into registered shares before June 13,2016, or they will be considered void. Thus means that there are no companies formed in the Cayman Islands, with bearer shares, hereafter, and all the old one must be converted.

Now take the British Virgin Islands: it continues to be the jurisdiction of choice for financial professionals who must conceal the identity of their client, the beneficial owner. It is the favorite corporate formation destination of the dodgy lawyers at Mossack and Fonseca, according to the Panama Papers documents, because of the ability to form a company with bearer shares. It remains one of the last of the unreformed offshore financial centers, where "don't ask, don't tell" is the watchword of the day, for it pays all the bills in Road Town. THAT'S why the good people in the Cayman islands corporate services firms take all their illicit business to the BVI.


BAHAMAS LEAKS SHOW CANADA'S BIGGEST BANKS SERVED CLIENTS IN OFFSHORE TAX HAVENS



The Bahamas Papers/Bahamas Leaks documents have identified Canada's largest banks as participants in the formation, and servicing, of Canadian money in offshore accounts, for companies, trysts and foundations. Here are the number of tax haven accounts served by these banks. I will let you draw your own conclusions as to whether they are facilitating tax evasion, money laundering, or both.

The ICIJ data found this:
(1) Royal Bank of Canada (RBC) - 847 companies
(2) Canadian Imperial Bank of Commerce(CIBC) - 632 companies
(3) Nova Scotia Bank (Scotia) - 481 companies


These banks are actually physically in the Bahamas:
(A) Scotia Bank of the Bahamas & Nova Scotia Bank in Nassau.
(B) CIBC Trust Company Bahamas Ltd. & First Caribbean International Bank (subsidiary), in Nassau.
(C) RBC Royal Bank Bahamas Ltd., & Royal Bank of Canada, in Nassau


Let us hope that Canada's regulatory agencies, and law enforcement agencies, take a hard look at this information, and at the banks.



PROMINENT EL PASO LAWYER CONVICTED OF MONEY LAUNDERING, IN SECOND CASE


Remember the case of Marco Antonio Delgado, the prominent El Paso attorney who laundered drug profits for the Milenio Cartel, and who was closely linked to powerful Mexican political figures, including the wife of the President of Mexico ? He was convicted in that case, and now he was convicted in a new case, involving wire fraud and money laundering, unrelated to the first.

That case was of great public interest, when it was disclosed that he was acting as a Confidential Informant for a US law enforcement agency, when he committed multiple offenses* The original 20-year sentence, handed down by the trial judge was reversed by the 5th Circuit in 2015; this year, he was resentenced, and received a 16-year sentence, which he is also appealing.

In the second case, Delgado represented a corporation that entered into a $121m agreement with a Mexican state-owned utility, the CFE. He illegally diverted $12m from the transaction, for his own personal use, and had the money deposited in an account in a Caribbean tax haven.

He was convicted, by a jury of :

(1) Wire Fraud - 3 counts.
(2)  Money Laundering - 7 counts.
(3) Engaging in Monetary Transactions of Criminally-Derived Property - 9 counts.

We shall be covering the appeal on this blog.
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* Perhaps the most interesting aspect of the first case was the effort, on behalf of his counsel, to have his mental health examined, when the defendant declined to enter into what was stated to be a plea negotiation. Perhaps defense counsel might have considered the fact that any cooperation on his part could very well have resulted in his assassination, by his Cartel client.


Friday, September 23, 2016

ST KITTS CALLS IN REGIONAL MILITARY UNIT TO COMBAT RUNAWAY CRIME


Though not being reported outside the East Caribbean, the Federation of St Kitts & Nevis recently requested emergency assistance from the Regional Security System (RSS), a caribbean-based military force that is generally used to assist in natural disasters, due to the exploding homicide rate on St Kitts, and the widespread availability of arms and ammunition, and its distribution to criminal elements. The RSS has arrived on the island, to assist Kittitian military and security forces.

The lack of domestic stability is a primary factor in the assessment of Country Risk, and you may wish to revise your calculations upward at this time.


CANADIAN WEALTH ADVISER SOLD BOGUS HYIP INVESTMENTS, PROMISING 30% PER MONTH RETURNS




William (Bill) Tynkaluk, the senior Director at Leon Frazer & Associates, Inc., a Canadian firm, sold the firm's clients, and non-clients, what he described as a unique High Yield Investment Program (HYIP), guaranteed by Tyunkaluk to return 400% interest, per annum. The only problem was, the investment program did not exist.

High Yield Investment Programs are fraudulent schemes that rely upon a promised extraordinary return upon investment to trick the victim into participating. In truth and in fact, there are no such programs available, anywhere, anywhere, that pay such amazing rates of interest. It promises a fiscal impossibility, that succeeds, based upon the greed and avarice of the victims, who fail to conduct even rudimentary due diligence, before investing, and who never recover their money, let alone make a profit. HYIP schemes often dazzle their intended targets with stories that seem to be too good to be true, because they are.




Broker-dealer William Tynkaluk entertained those investors whom he sought to participate in his $10m financial fantasy, at Toronto's prestigious Albany Club, at Leon Frazer's expense, where he introduced his marks to the "financial professionals" who offered the HYIP, for which referrals Bill T would earn substantial commissions. those investors who did not have the entire $10m were encouraged to pool their money, and several were known to have done so.  The victims relied upon Tynkaluk's long association with Leon Frazer, and his promises of unbelievable returns upon investment, to their damage and detriment.

Tynkaluk actually had the temerity to warrant that the program was being operated through the US Federal Reserve, and even distributed written materials to that effect. The materials were, unfortunately, created by brokers, and the Fed had no part in this scam, though the victims were suitably impressed. Other evidence of payment, by the victims does, fortunately exist,

Once paid, not only was the HYIP investment never seen again, let alone a return, and victim resulted in promises to inquire, but no follow-up by Tynkaluk was known to occur; excuses were politely offered, but since the investment, though seemingly guaranteed, was made through a third party, Mr. T  was not responsible, though the badges of fraud were painfully evident.

Let us hope that the wheels of justice turn swiftly, and that all those individuals, and companies, that illegally profited from the sale of these totally bogus HYIP investments, be punished for their role in the fraud.