New York Times
ERIC LIPTON | JULIE CRESWELL
(Part II )
After receiving the money, we will explain to them the nature of this transaction without giving details of your name,” the firm explained to William Ponsoldt, regarding the Caribbean bank through which the money was moving to his son. “Please let us know if you agree with this and if you will instruct the relevant parties to execute the wire transfer.”
Federal law generally limits such tax-free transfers between family members to $14,000 a year. But for this transfer, described as a “pre-inheritance distribution,” the documents give no indication that any United States gift taxes were paid, as would most likely have been required, said Jack Blum, a lawyer and expert in international tax evasion who served for more than a decade as a consultant to the Internal Revenue Service. “This is one way in which people with a lot of money step away from being average,” Mr. Blum said after reviewing the documents. Christopher Ponsoldt declined to comment. “I am sorry, I can’t help you,” he said before hanging up. Tracey Ponsoldt Powers, William Ponsoldt’s daughter, approached the firm in October 2008 with an urgent request for help in secretly moving some of her family’s money to Panama and then into gold coins. She feared political developments at home.
“I feel VERY unsettled with this election and how the media is censoring information and spinning the American Public to vote Obama,” she wrote to Mr. Owens at Mossack Fonseca. “It is so obvious to me, that they are setting us up with a Socialist — but most people can’t see it happening before their eyes! It’s like propaganda that is brainwashing Americans to forget the Principles of Hard Work, Ingenuity, Risk and Boundless Success!”
Mr. Owens suggested shifting the money into a “charity” account, controlled by the firm on the family’s behalf, in increments of less than $100,000, so it would not be detected.
Separately, that same month, William Ponsoldt moved $100,000 from a company Mossack Fonseca controlled on his behalf into the name of his daughter. This was confirmed in an email from Mossack Fonseca to the code name “daughter.” “The USD 100.000 is deposited as call Money with high liquidity at Berenberg Bank Schweiz, Zürich,” said the email, which added: “Your Father initiated this process as you know. We will treat you with the same esteem and conditions and service as the family is used to.”
The subsequent series of complicated transfers — money from the account would eventually be used by Mossack Fonseca in 2013 at Ms. Powers’s request to buy real estate — would be a challenge for American enforcement authorities, Mr. Blum said.
“Simply by constructing all this in such a complex way, they make it extremely hard for enforcement officials to ever have resources to reconstruct what taxes should have been paid,” he said. “What this is all about is obscuring the trail.”
Ms. Powers did not respond to a series of calls and emails, and then declined to answer questions when reached on a cellphone.
“I have no idea what you are talking about,” she said before hanging up.
‘Live This Potential Risk’
Across the United States, Mossack Fonseca picked up clients who had similarly urgent and delicate demands.
For more than 30 years as the founder of Boston Capital Ventures, Harald Joachim von der Goltz has built a reputation as a savvy investor in emerging companies.
What few know, however, is that over roughly that same span of time and with the help of Mossack Fonseca, Mr. von der Goltz has also come to command a vast offshore empire: interconnected corporations, foundations and bank accounts with about $70 million in assets, according to internal emails.
A lawyer for Mr. von der Goltz said the beneficial owner of all of the trusts and accounts is Mr. von der Goltz’s 100-year-old mother, who resides in Guatemala. One document also suggests that the tens of millions of dollars in the accounts originally came from businesses operated by Mr. von der Goltz’s father.
But numerous other documents prepared by Mossack Fonseca and signed by Mr. von der Goltz list him as the founder, manager and “first beneficiary” of the foundation that controls most of the family’s wealth. Mr. von der Goltz also put assets from companies he helped operate into the accounts, documents show.
Most important, Mossack Fonseca registered Mr. von der Goltz as a resident of Guatemala, which tax experts said could help him protect the family money from certain United States tax obligations.
“MF Trust has registered Harald Joachim von der Goltz as a client of Guatemala. However, we know he lives in Miami; and makes his residence for 5 months of the year in Boston,” Mr. Owens, the Mossack Fonseca partner, wrote in an email in 2009 to top executives at the firm.
The firm recognized that claiming the Guatemala residency represented a risk, but considered it a risk worth taking, given Mr. von der Goltz’s importance to the firm.
“My suggestion: Leave everything as it is with von der Goltz, i.e. stay and live this potential risk, we might prefer to send money orders and cashier’s checks, which have a slightly lower risk than bank transfers. It’s all well done, customer understands well and accepts it as is,” Mr. Owens wrote.
“I agree with your suggestion on my part,” responded Ramón Fonseca, one of the firm’s founders.
Money was frequently transferred from several of the offshore accounts to accounts in the United States to fund investments at Mr. von der Goltz’s firm, the documents show. A foundation paid for his daughter’s education, as well as his granddaughter’s high school tuition.
In a 2008 email, Mr. von der Goltz’s Boston-based accountant asked executives at Mossack Fonseca to wire money from Mr. von der Goltz’s mother, Erika.
“Erika would like to make a gift to Tica of $100,000 for his birthday. She hadn’t given him anything,” the email said, providing an account for Mr. von der Goltz at Espírito Santo Bank in Miami.
“Ohh, yes, I know ERIKA wants it to be done quickly, we will proceed,” Mr. Owens responded before confirming that the money should be moved as requested.
Legal experts consulted by The Times said it was difficult to determine definitively if the arrangements related to Mr. von der Goltz violated United States laws. But they said such moves were commonly used by investors seeking to hide their assets and evade federal taxes.
“There is reason to question if she was really directing that shift of money,” Mr. Blum said, referring to Mr. von der Goltz’s mother.
In a statement, Mr. von der Goltz said the companies were established for legal purposes, and that both he and the companies were compliant with United States tax and reporting requirements.
“There has never been any illegal activity associated with these companies,” the statement said.
Other case files examined by The Times show how Mossack Fonseca may have turned a blind eye in the vetting process while helping Kjell Gunnar Finstad, a Texas resident, set up an oil company offshore in 2013.
Mossack Fonseca has long maintained that it will not work for individuals with criminal records or whose conduct raises “red flags” during its due-diligence process. But the firm somehow either missed or overlooked Mr. Finstad’s past when it conducted a background search of potential directors for the new offshore oil company, OK Terra Energy, which was run out of Houston but registered in the British Virgin Islands.
Three years earlier, Mr. Finstad, the company’s controlling partner and lead investor, had been convicted in Norway for various breaches of securities and accounting laws involving a company called Norex Group. The case was major news in Norway.
The records examined by The Times show that Mossack Fonseca collected a copy of Mr. Finstad’s passport, and conducted a basic internet search and a cursory background check. But there is no mention of the fraud case, and no discussion of whether to proceed with setting up the new company, in light of Mr. Finstad’s involvement.
Reached at his office in Texas and asked about the Panama Papers, Mr. Finstad said only, “I don’t want to talk about that.”
For another client, Mossack Fonseca offered a special service for a premium price.
Marianna Olszewski, the New York City-based author of “Live It, Love It, Earn It: A Woman’s Guide to Financial Freedom,” wanted to shift $1 million held by HSBC in Guernsey to a new overseas account. The catch? She did not want her name to appear anywhere near the transaction.
Mr. Owens, the Mossack Fonseca lawyer, again offered a solution.
Mossack Fonseca would locate what he called a “natural person nominee” in a “tax-convenient” jurisdiction to stand in for Ms. Olszewski as the owner of the account.
“The Natural Person Trustee is a service which is very sensitive,” Mr. Owens wrote. “We need to hire the Natural Person Nominee, pay him, make him sign lots of documents to cover us, make him sign resignations, make him get some proofs evidencing that he has the economic capacity to place such amount of moneys, letters of reference, proof of domicile, etc., etc.” The process, he suggested, would cost her at least $17,500.
Ms. Olszewksi approved the maneuver — only to see the firm, at one point, accidentally disclose her name to the banks involved.
“Ramses, Please call me ASAP!! This is important!!!!” she wrote to Mr. Owens. “HSBC said someone said marianna olszewski is the principal / beneficary! Who has done this!! I need you to call me immediately and tell them hsbc that was a mistake!!!!!!!!!! This is not good and I asked you NOT to do this! this is why we have this structure.”
Mr. Owens sought to calm her down, saying that Mossack Fonseca could tell the bank that the natural person nominee actually controlled the account. “This can be solved,” he wrote.
Mr. Owens did not tell his client the identity of the natural person nominee, saying simply, “We would appoint a UK citizen residing in Panama since 50 years ago, engineer, entrepreneur,” as they needed someone who would be expected to have such a large amount of money available to transfer.
Twelve days later, Mr. Owens sent HSBC a copy of a passport for a man named Edmund James Ward.
“Kindly please find hereto attached the due diligence documents of the beneficial owner,” said the email sent to HSBC, noting that “the documents duly correct.”
The $1 million from Ms. Olszewski was then transferred to the new accounts, with an assurance that she need not worry.
“If for any reason something happens, please also bear in mind that Mossfon is covered by insurance policies for US$10 Million (per event),” Mr. Owens wrote. “We have never used our insurance policy to cover a ‘fraud,’ or something like this.”
The use of a stand-in to hide the true ownership of an account is one of the remaining illegal ploys favored by Americans today as international banks, under pressure from the United States, demand proof of account ownership, said Jeffrey Neiman, a former federal prosecutor from Miami who specialized in criminal tax offenses, adding that he could not comment directly on this case. “The fact that a law firm was willing to do this legitimizes the process for their clients,” he said.
A Firm’s Inner Doubts
Many of the client files — like those for Mr. Weill, the banker; Mr. Soriano, the ballplayer; and Mr. Akridge, the developer — contain little information on the purpose of the offshore accounts, or how they were used after they were set up, making it impossible, based on the records available, to assess whether they were used legitimately. But the experts who reviewed some of the documents related to the Ponsoldts, Mr. von der Goltz and Ms. Olszewski said that the firm itself seemed to realize it was taking risks.
“They were not always sure themselves which side of the line they were on at any given moment,” said Ross S. Delston, a former federal banking regulator who now specializes in combating money-laundering efforts. “It is apparent that members of the firm were aware they were treading very close to the line.”
In fact, the files contain instances, beginning before the Panama Papers came to light, of Mossack Fonseca lawyers second-guessing their actions. (In recent weeks, the firm has shut down many of its operations in Nevada, as well as British locations in Jersey and the Isle of Man, and is closing the asset-management division that served many of its United States clients.)
In 2013, Mossack Fonseca advised Ms. Olszewski to seek outside counsel and consider reporting herself to the I.R.S., warning of possible “severe” repercussions if she did not. The warning came in the wake of a Justice Department investigation of the role that certain Swiss banks had played in helping United States citizens evade federal taxes.
Records show that Mossack Fonseca had been paid at least $102,000 over nine years to help Ms. Olszewski handle various transactions.
Ms. Olszewksi took the firm’s advice, and belatedly disclosed her accounts to the I.R.S., the documents show. And by 2014, she asked Mossack Fonseca to shut down her accounts and offshore entities, which collectively held at least $1.7 million.
“I’m in complete compliance with all my U.S. tax and reporting requirements,” Ms. Olszewski said in an emailed statement when The Times asked about the accounts.
In a second statement, she said she had relied on the advice of legal counsel to establish a trust for her family while living abroad. “I am confident that I have acted properly,” she added, “and any insinuation otherwise is false.” eached by telephone in late May, Mr. Owens, who is no longer with the law firm, said only, “Regretfully, I cannot speak about individual clients or my time at Mossack Fonseca.”
Mossack Fonseca sent a series of similar and increasingly dire warnings to the Ponsoldts in 2013 and 2014, telling them that they had to provide a Swiss bank with documentation that they had paid all required United States taxes — or face possible investigation. “Neither your ex Trustees nor us would like to be involved into any measure the US Department of Justice might try to enforce,” the firm wrote. “In this regard, again we strongly urge you to take the necessary steps to avoid any negative consequences for you as well as us.”
The records examined by The Times give no indication whether the Ponsoldts complied, and family members would not say when asked. “I don’t know what you are talking about,” Christopher Ponsoldt said in a second brief conversation before he again hung up.
