Wednesday evening I was having a little chat with the Diva, and I started to wonder about the offshore account theories surrounding Russell and Taylor Armstrong, and the money they took (but allegedly never returned) from investors. I wanted to see how hard it would be, first, to hide money in these types of accounts and, secondly, how hard it would be for those who were defrauded to recover it. The results of my late night sleuthing were stunning.
Just do a simple Google search with the terms “offshore accounts” and well, pick a country, and the responses are staggering. The Cook Islands, the Dominican Republic and Panama are just a few that loudly and proudly offer you all sorts of good places to hide your ill-gotten gains.
Since the Cook Islands has been the most frequently mentioned locale of the Armstrongs’ possible hide-a-bank, I will concentrate there. This is a very tiny nation with a population of around 25,000. It’s a beautiful place offering sun-kissed beaches, gorgeous weather and quaint resorts. It is an impoverished nation, well at least for the general population, with a per capita income of about $9,000. Both New Zealand and the People’s Republic of China offer aid on an annual basis, efforts which are less about altruism and more about political motives. It lists its main industries as agriculture, tourism, fishing and, what a surprise, banking.
Banks are abundant in the Cook Islands and business is very, very good. Between the 1st and 2nd quarters of 2011 alone, foreign assets increased 244%. Not bad at all. Even Goldman Sachs can’t claim those kind of quarterlies. It appears that if you don’t want your soon to be ex-spouse or hapless investors in your shell company to find the money, this is one of the places to go.
The real benefit for those in search of what one might call, oh, let’s say a tax shelter, is that the Cook Islands and their counterparts don’t care what kind of judgment or award a Court in the United States has written. This is where it becomes a financial and legal quagmire. These countries will simply not recognize or even acknowledge an order from any other country besides their own. They have passed laws which prohibit sharing any information with another country, thereby offering the best in privacy protection for those with stuff to hide. Add to this a culture of corruption among those who run these countries and banks, and you have all the elements of the perfect storm for those who have lost everything.
What this means is that plaintiffs are sure to be thwarted at every turn. While you may have that judgment in your favor from a United States Court, you will have to start the process all over again in those nations and in their courts. If the money has been put into banks in more than one of these countries, the effort would be never ending, with plaintiffs and their legal teams on a global treasure hunt. Not to be glib, but good luck with that.
So, to that end, the Armstrongs may have actually been pretty good at their craft. Their financial planning far surpasses a mere 401k or IRA. Settlement agreements normally range between 20 and 50 cents on the dollar. That means that Taylor, if there is any truth to the estimate of tens of millions in investors’ dollars, could be a very wealthy woman. With any luck, those corrupt politicians and bankers practice their own policy of quid pro quo.