Thursday, January 11, 2007

Saipan just a small link in a large chain of fraud

California, Denver, Germany, New York. These were the places the (alleged) fraud were concocted and conducted. But because the scheme touched down in Saipan on its way around the world, we get the following headline, from a Saipan news source of all things:

Saipan trader linked to fraud scheme
An unnamed Saipan businessman has been linked to a case involving questionable tax shelters, when a California trader pleaded guilty to charges of conspiracy and fraud and agreed to help federal prosecutors pursue indicted former employees of the accounting firm KPMG.

Chandler S. Moisen pleaded guilty in Manhattan federal court on Dec. 21, 2006, to charges relating to his participation in a conspiracy involving fraudulent tax shelters and the hiding of fee income-obtained as a result of the implementation of those tax shelters.

In his plea, Moisen said he conspired with three people to sell illegal shelters:
* Dominick DeGiorgio, an employee of the New York branch of the German bank Bayerisohe Hypo und Vereinsbank;
* an unnamed certified public accountant and attorney from Denver, Colorado who was formerly a partner at KPMG; and
* an unnamed businessman on Saipan, in the Commonwealth of the Northern Mariana Islands.

Moisen is the third person to enter a guilty plea in the tax shelter investigation. Prosecutors said the former KPMG executives cheated the U.S. Treasury out of at least $2 billion by selling illegal shelters.

As a result of Moisen's promotion and implementation of various tax shelter transactions between 1993 and 2002, he and his co-conspirators generated millions of dollars of fee income....

KPMG, after earning about $115 million from sales of the shelters, agreed last year to pay $456 million to settle the case.

Moisen, 51, who lives in Laguna Beach, California, faces a maximum sentence of five years in jail on the tax fraud conspiracy charge to which he pled guilty. He also faces 30 years on the wire fraud charge.

According to the information, the tax shelter transactions were fraudulent because they were based on false and misleading statements and representations, including false and misleading descriptions of the tax shelter transactions contained in the written documents relating to the transactions; were based on false and fraudulent losses being claimed on the tax returns filed with the IRS and other taxing authorities, including the taxing authorities on Saipan, by participants in the transactions; employed nominee, or “puppet,” nonresident aliens, including from the Philippines and Norway, who were inserted into the tax shelter transactions by the conspirators because their NRA status would not subject them to U.S. tax and because off-shore financial transactions and bank accounts involving these individuals would make detection and analysis of the underlying tax shelter transactions more difficult; and employed nominee, or “puppet,” entities, including entities known as “Skandia” and “Somer Leasing LLC,” which, although owned and/or managed nominally by NRAs or other third parties, were created, controlled and/or owned, in fact, by Moisen, the Denver accountant, and others.

Saipan does not deserve or need this kind of publicity. It had nothing to do with the fraud and should not feature in any headline involving it.

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