Posts Tagged ‘fraud’

Credit Card Companies, Processors, Other Financial Intermediaries and Their Clients May Be Targeted for Tax Fraud and Failure to Have Robust Anti-Money Laundering Processes

April 16, 2009

It was reported in the New York Times today that the federal government is widening its investigation of offshore tax evasion to include services sold by the First Data Corporation (“FDC”), a large processor of credit card transactions.


The IRS has asked FDC to turn over account information on “scores of merchants that sell or provide offshore services, like financial transactions processing and to identify American clients who through credit cards, debit cards and other financial processing

arrangements may have diverted unreported income offshore or received unreported income from undisclosed offshore sources…”


While not mentioned in the article, I would assume Treasury, FinCEN and the IRS as well as the Department of Justice and the FBI and State Attorney General Offices will widen the scope of the investigation to banks, credit card companies and other financial processors and intermediaries who may be facilitating both tax fraud and money laundering by both American and non-American clients in many offshore tax havens.


I would expect a likely result of this investigation will be front page civil and criminal enforcement of both tax fraud and money laundering under the tax laws and the Bank Secrecy Act as well as new  regulations which will impose robust reporting standards on these companies (e.g., SARs, CTRs, Tax reporting documentation, etc), as well as to require senior officers at these companies to certify that they have anti-money laundering and tax reporting processes in place together with other internal controls necessary to prevent tax evasion, money laundering and fraud by their clients.  



Will regulation of the hedge funds and private equity firms make the Bank Asset Plan Fail?

April 11, 2009

It has been suggested that hedge funds and private equity firms

will be reluctant partners in Treasury’s public-private investment funds

because Treasury Secretary Geithner and SEC Chairman Schapiro have both asked that new systemic regulations be adopted to manage these industries. 


I would think the result of these regulations will be to require senior officers in these firms to certify that they have robust AML and fraud prevention programs.  After the Madoff Ponzi scheme, the UBS case and other recent examples of greed, I would think that these regulations would be welcomed by both industries.


What do you think?  I encourage your comments

Will a Bankruptcy Filing for Madoff really protect his victims?

April 11, 2009

It has been suggested that permitting Bernard

Madoff to file bankruptcy will help those who

invested with one of the many big hedge funds

that lost money in his Ponzi scheme.

I question whether this is true for those investors

in the feeder funds who may be only unsecured

claimants falling very low in the bankruptcy


Don’t you think that these investors would be

better served through a asset forfeiture or fraud

proceeding alleging securities law violations for

failure by the principals in these feeder funds to diligence

the Madoff investments and find out that fraud

was occurring over many years? 


Dean Marsan