.. his time on the witness stand provided an invaluable public lesson in how tax evasion, money laundering, and political corruption work.
.. The ability of rich people such as Manafort and his oligarchic clients to shuffle money across borders, beyond the purview of tax collectors and law-enforcement authorities, is a huge and intractable problem. In many places, these practices are
- denuding tax bases,
- corrupting a large class of professional enablers, and
- undermining public confidence in the political and financial systems.
.. roughly $7.6 trillion, or eight per cent of the world’s financial wealth, was held in offshore tax havens. In some countries, the proportion is much higher; in the case of Russia, it is more than half.
.. . In the United States, he has estimated, the annual tax loss is about thirty-five billion dollars.
.. It is only when there is a prominent court case or a leak—such as the 2016 Panama Papers, which exposed the dealings of the law firm Mossack Fonseca—that a light is shined on this system’s hidden mechanics. What Gates provided this week was a firsthand account of how the illicit game is played.
.. Manafort’s consulting firm was paid by Ukrainian businessmen close to Viktor Yanukovych, who was elected President in 2010. Many of these figures already had bank accounts in Cyprus
.. Gates described how he and Manafort used a Cypriot law firm to establish bank accounts in the name of shell companies that they controlled but weren’t publicly associated with.
“Did these companies sell a product?” Andres asked Gates.
“No,” he replied.
“Did they have any employees?” Andres asked.
“No,” Gates repeated. “The purpose of the companies was to accept payments and to make payments.”
.. The Cypriot law firm Chrysostomides “handled everything,” Gates said, including listing the names of locals, rather than the two Americans, as the directors of the shell firms into which the fees from Ukraine flowed.
.. he arranged to have money wired from the Cypriot accounts to vendors in the United States from whom Manafort had bought expensive clothes
.. problems arose, Gates said. So, again using the Cypriot law firm, he and Manafort transferred some money to bank accounts in the Grenadines, a chain of small islands in the Lesser Antilles. But, when the banks in the Grenadines were asked to transfer money to companies in the United States, they demanded invoices for the payments—something that the Cypriot banks hadn’t bothered with. At Manafort’s direction, Gates said, he created “modified invoices” and gave them to the banks.
.. “About 50% of the wealth held in tax havens belongs to households with more than $50m in net wealth,” Zucman, of Berkeley, noted in an article last year. “These ultra-rich represent about 0.01% of the population of advanced economies.”These were the type of people whom Manafort was working for in Ukraine, and it’s pretty clear from the life style he adopted that he wanted to join their ranks... he allegedly resorted to bank fraud rather than modify his spending patterns.Gates described how, in 2015, together with Manafort’s accountants, he helped put together bogus financial documents that Manafort then used to obtain bank loans... toward the end of Andres’s questioning of Gates, the prosecutor showed the witness an e-mail that Manafort wrote to Gates in November, 2016, shortly after Trump was elected. By that stage, Gates was working for Trump’s Presidential transition team. “We need to discuss Steve Calk for Sec of the Army,” Manafort’s e-mail said. “I hear the list is being considered this weekend.”
.. When he joined the Trump campaign, he’d long been known as the ultimate swamp creature. Thanks to Mueller and Gates, we now know more about how that swamp operates.
Paul Manafort Trial: Gates Admits Having Affair as Defense Attacks Him
When one of the defense lawyers tried to suggest to Mr. Manafort’s tax accountant Monday that Mr. Gates had kept Mr. Manafort in the dark about his own finances, the accountant, Cynthia Laporta, pushed back.
“In most instances, it was clear that Mr. Manafort was aware what was going on,” she testified.
Mr. Gates’s statements reinforced that picture. He said that Mr. Manafort knew it was illegal not to report his foreign bank accounts to the Treasury Department but asked Mr. Gates to help him deceive his accountants so he could conceal income and pay less in taxes.
“I assisted Mr. Manafort in filing false tax returns,” Mr. Gates testified. “We didn’t report the income or the fact that the accounts existed.”
.. He said that some of Mr. Manafort’s income was disguised as loans from 15 shell companies that Mr. Manafort controlled, most of them in Cyprus.
.. Once that income dried up, the government alleges, Mr. Manafort, with Mr. Gates’s help, falsified financial records so he could obtain bank loans to maintain his opulent lifestyle... Gates testified that Mr. Manafort also was paid $4 million a year to help Mr. Yanukovych govern after he was elected president in 2010... while Mr. Yanukovych ran on a platform of integrating with the European Union, while also maintaining good relations with Russia, he eventually pivoted toward Moscow.. Mr. Gates also said that two American lobbying firms — the Podesta Group and Mercury Public Affairs — assisted with their policy consulting efforts. Mr. Mueller’s team has referred cases related to the firms’ work to federal investigators in the Southern District of New York... Mr. Manafort asked Mr. Gates to help arrange inauguration tickets and administration posts — including secretary of the Army — for a banker from whom Mr. Manafort is accused of fraudulently seeking loans, Mr. Gates testified... Emails presented during Mr. Manafort’s trial showed that he sought the favors for Stephen M. Calk, the founder and chief executive of The Federal Savings Bank of Chicago. The bank began issuing loans that eventually totaled $16 million to Mr. Manafort in the days after Mr. Trump’s election based on false information provided by Mr. Manafort.
.. Mr. Gates said he was involved in discussions about nominating Mr. Calk to an economic advisory council.
.. Mr. Gates, 46, admitted Monday that he was guilty of a long list of crimes, including stealing hundreds of thousands of dollars from Mr. Manafort’s accounts by inflating his business expenses. He said that while he was helping Mr. Manafort hide income to evade taxes, and later to inflate his income to obtain bank loans, he was doing essentially the same on his own behalf.
.. In exchange for his cooperation, the government in February agreed to dismiss 22 criminal charges stemming from his involvement in the scheme for which Mr. Manafort is now on trial.
.. sentencing guidelines recommend a prison term of up to six years, he testified that prosecutors have agreed not to object if his defense attorney argues that he should receive probation.
Digital Nomads Are Not the Future
A privileged escape that’s hurting communities at home and abroad
.. The privilege of digital nomads
The World Domination Summit (WDS) takes place annually in Portland, Oregon and serves as a gathering place for the lifestyle-entrepreneurship, do-what-you-love (DWYL) community that has grown around the writings of Chris Guillebeau, Tim Ferriss, and the other gurus that dominate the niche.
In its early years, Amanda Palleschi wrote about the event for the New Republic, calling WDS out for being attended primarily by white people who “have advantages or significant successes that enable them to see the world through DWYL-colored lenses (and to pay for the $500 entry fee to WDS).” Guillebeau himself even acknowledged that he was “mostly attracting other Westerners” and told Palleschi, “[j]ust because we have privilege doesn’t mean we can’t enjoy our lives.” The summit has advertised a more diverse set of speakers in recent years, but that doesn’t mean its audience is significantly more diverse. As the community has grown, there were bound to be minorities who did well within it, just as in regular society, but that doesn’t mean they make up a sizeable chunk of its followers.
The reality is that the promise of digital nomadism is built on a quasi-libertarian worldview that’s closely related to the ideologies of Silicon Valley titans. In short, certain measures to promote social progress might be acceptable, but many believe that the government needs to take a hands-off approach on economic matters and not interfere significantly in the market.
DWYL is a privileged orientation focused on individual success, which ignores programs in developed societies the were designed to promote collective wealth and well-being. Miya Tokumitsu, a Jacobin contributing editor, called it “the secret handshake of the privileged and a worldview that disguises its elitism as noble self-betterment.” The movement’s gurus make a gesture toward charitable causes to not seem too selfish, but their initiatives often forward their worldview: helping others to escape the tyranny of traditional work and life structures by building their own lifestyle businesses.
The fierce individualism of digital nomads is damaging to communities, both at home and abroad, because people who feel “liberated” from space have no stake in improving their local area. They’re far less likely to work toward positive local change, fight for the rights of disadvantaged peoples, or be interested in halting the gentrification that displaces long-term residents — to which they usually contribute — because those issues don’t affect them.
.. Into this situation come the digital nomads, looking for locales that are inexpensive by Western standards, but where they can easily outspend residents to maintain a quality-of-life that would be difficult to achieve on local salaries. Chiang Mai, Thailand and Bali, Indonesia are some of the leading destinations for those seeking the location-independent life, causing a predictable development: developers chasing Western money.
.. The gurus talk of finding destinations where one’s money will go further, ignoring the consequences for local people because the only thing that matters is the achievement of their personal success.
.. Even though digital nomads come from developed countries and benefited from taxpayer-funded education, health, and social programs throughout their lives (and expect to in the future when they return to their home countries), they rarely feel any obligation to give back. Similar to tech libertarians, they do all they can to minimize their tax burden by finding the jurisdiction or country with the lowest tax rate to establish their business and, depending on the tax rules of their country of citizenship or residence, move often enough that they aren’t obliged to pay income tax.
.. Rhetorically, digital-nomad gurus say that everyone should follow their hearts and pursue their passion, but it’s clear that their message is only meant for a particular group of privileged Westerners, as their lifestyles are made possible by people rooted to place and not necessarily enjoying their work.
.. They may achieve an additional degree of freedom and enjoyment from structuring their lives in an unconventional way, but that’s only possible because they ignore the consequences of their actions by surrounding themselves with people who have similar levels of privilege and an unquestioning adherence to an ignorant, individualistic worldview strongly influenced by Silicon Valley’s brand of libertarianism.
.. Low-cost destinations exist because rich countries looted and plundered the rest of the world for centuries through colonialism and unequal trade relationships. The privilege to even consider becoming a digital nomad is a result of legal structures and high-quality public services that are funded through the wealth generated from those centuries of global dominance.
.. Privilege allows digital nomads to ignore all these things and live in a fantasy world where they need only worry about themselves. They take full advantage of their positions to live more fulfilling lives, while trying to avoid the responsibility to contribute to the society that granted them their privilege in the first place and actively augmenting the forces displacing locals in the places they treat simply as destinations, rather than communities. Digital nomads do not care about the societies they live in, and for that reason they have no place in the future.
Panama Papers: Mossack Fonseca was unable to identify company owners (bbc.com)
There’s a reason New York and London continue to be world leaders in processing financial transactions–the governments have been intentionally tolerant of shady characters, shady businesses, and shady nations as long as the transactions nominally followed the law. Among other benefits, that puts you in a good position to keep track of the bad guys and, when it really counts, to take them down. If you police too heavily all that activity goes somewhere else.
.. Like so much with the War on Terror, the better approach would be to improve HUMINT and investigatory resources, rather than pushing the activity further underground and playing a game of whack-a-mole.