The Shell game
Front companies still are the most popular means of shuffling money.
By Christopher Byron
January 17, 2003
Offshore hedge funds are only the most recent arrangement by which money is moved in and out of the United States by way of the Crescent of Corruption. The oldest, and most popular, remain so-called offshore shell companies, which are nothing more than stock corporations in which a nominee lawyer in the tax haven country holds perhaps 1 percent of the stock, and the other 99 percent remains anonymous.
New York City's legendary district attorney, Robert Morgenthau, who led the coalition that brought down the Pakistani-controlled but essentially stateless Bank of Credit & Commerce International at the turn of the '90s, sees no justification whatsoever in offshore shell companies. "The IRS and the Treasury Department are working hard to stop what's out there, especially now, in the wake of 9/11," says Mr. Morgenthau. "But there won't be real change until these countries stop protecting the secrecy of criminal operations."
Such ask-no-questions setups are available in virtually every tax haven country in the Crescent. In extreme cases, the "country" itself is actually make-believe.
Consider the so-called Dominion of Melchizedek, which promotes itself as the world's first "post-modern state" and claims as its territory the entire land surface of the earth. In fact, Melchizedek is nothing more than a cyberspace invention of a convicted swindler named Mark Pedley.
In 1997, a jet-setting bunco artiste named Gilbert Allen Ziegler reportedly entered Grenada under a Melchizedek passport and set up the First International Bank of Grenada. The bank, exposed by investigative journalist David Marchant in his "Offshore Alert" newsletter, collapsed in 2001, taking with it some $200 million from U.S. and Canadian depositors. Mr. Ziegler fled Grenada, and now lives in Kampala, Uganda, under an alias.
Web site http://www.gtrade.com calls itself a "securities exchange forum." In reality, it's a shell company--located on a Web server in the British West Indies. The man reportedly behind the site is Joseph Andy Mann, a penny stock promoter. At the moment, he's a fugitive from U.S. justice, following his indictment in summer 2000 as one of more than 100 reputed mobsters, stock promoters, and Internet startup executives charged with strong-arming brokers and manipulating penny stocks.
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