As It Stands: Shell Corporations: The modern version of the old con game

By Dave Stancliff/For the Times-Standard

Posted: 07/10/2011 02:30:25 AM PDT

“Step right up, folks! It's your lucky day. Pick a shell. A pea is under one of the three. Find the pea and win the prize!”

You've heard of the “shell game.” It's been around since ancient Greece. It's also known as “Thimblerig,” an old Army game.

It's really a “short con” that's easy to pull off and swindle unsuspecting dupes. It's all about sleight of hand. You're never going to pick the right shell unless the operator wants you to. Which leads me to today's topic: A growing niche in the modern business con handbook is called shell corporations.

Like paper-only shells, shell companies are set up to hide the real ownership of assets. Once these secretive business havens were in the Cayman Islands and Cyprus, but that's changing rapidly.

For example, a recent investigation by Reuters discovered a “Cayman Island on the Great Plains.” Located in Wyoming. A single address (2710 Thomas Ave. in Cheyenne) is stuffed with an A-list of corporations. It's headquarters for Wyoming Corporate Services, a “business-incorporation specialist that establishes firms which can be used as 'shell' companies,” according to Reuters. In other words, if you want to hide assets, Wyoming Corporate Services is the place to go.

The company's website gleefully explains how “a corporation is a legal person created by state statute that can be used as a fall guy, a servant, a good friend or a decoy. A person you control... yet cannot be held accountable for its actions. Imagine the possibilities!”

How about that? Creating your own fall guy? You'll be offered a bank account for your shadow identity, and a lawyer as a corporate director to invoke attorney-client privilege. But wait! There's more. You'll have appointed stand-in directors and officers as high as CEO.

Wyoming Corporate Services offers a variety of “shell” companies which come with years of regulatory filings behind them. A solidarity coveted by those interested in hiding their assets.

You, too, can create shell companies like the one set up by online-poker operators to evade a U.S. ban on Internet gambling. Or like the owner of two other firms who was banned from government contracting in January for selling counterfeit truck parts to the Pentagon.

Wyoming Corporate Services offers 700 shell companies for sale in 37 states. The hotbeds of the shell company industry are three states with the lightest regulations: Delaware, Wyoming, and Nevada.

Here's something else to consider: The incorporation industry, overseen by officials in the 50 states, has few rules. Convicted felons can operate firms which create companies, with no background checks.

According to the Reuters investigation, “No states license mass incorporators, and only a few require them to formally register with state authorities.” No states collect the names and addresses of “beneficial owners,” the individuals with a controlling interest in corporations, according to a 2009 report by the National Association of Secretaries of State, a group for state officials overseeing incorporation.

The loopholes in U.S. disclosure of bank-account and shell-company ownership are as numerous as holes in a block of Swiss cheese. The U.S. was declared “non-compliant” in four out of 40 categories monitored by the Financial Action Task Force, an international group fighting money laundering and terrorism finance, in its 2006 evaluation report.

Sen. Carl Levin, D-Mich., chairman of the Senate Homeland Security Committee's Permanent Subcommittee for Investigations, has introduced the Incorporation Transparency and Law Enforcement Assistance Act each year since 2008. The bill would require states to obtain and update information about the real owners of companies and impose civil and criminal sanctions for filing false information.

I'm not surprised that this bill has failed to pass. The 2006 U.S. Money Laundering Threat Assessment, prepared by 16 federal agencies, devoted a chapter to the ways U.S. shell companies can be attractive vehicles to hide ill-gotten funds. I have no doubt that special interest groups have been involved in smothering the bill.

“In the U.S., (business incorporation) is completely unregulated,” says Jason Sharman, a professor at Griffith University in Nathan, Australia. He is preparing a study for the World Bank on corporate formations worldwide, according to an Associated Press story. “Somalia has slightly higher standards than Wyoming and Nevada,” Sharman added.

An estimated 2 million corporations and limited liability companies are created each year in the U.S., according to Senate investigators.

As It Stands, step right up, ladies and gentlemen, and pick a company. Any company. Why pay taxes when you can play the shell game?

Other websites and online magazines carrying this column:

God’s Vacation - blog about metaphysics, spirituality,kundalini, synchronicity, mystical experiences, personal para-normal experiences, politics, comparative religions, global warming, the future, you name it.

cross-referenced news and research resources about

shell corporations

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US Senate Newswire - Comprehensive Real-Time News Feed for US Senate.

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Latest Toys/Games News – scroll down (the 7th headline) strange site if you ask me.

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The Federal Circle – Want advise on how to make money? Take a look at this site. The administrators also know how to make money…by bringing you aboard their team. I’m not recommending this site, just sharing it because it carried my column this week.

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Real people in comic books make an interesting conversation…

I grew up in what is often referred to as “The Silver Age” of comics, when Marvel Comics made their big marketing move against the well-established DC Comics collection of Super Hero’s such as Superman and Bat Man.

I was fascinated with the whole concept of  Super Hero's. I didn’t care much for comics like Archie, or the Donald Duck series that was so popular in the late fifties and early sixties. Spiderman vied with Thor and the Incredible Hulk for being my favorite character.

Comics books are often reflective of our society. It’s been that way for a long time and I don’t expect it’ll change soon. 

As the November elections loom, the philosophical gulf between President Obama and former vice-presidential candidate Sarah Palin seems to yawn ever wider. But there is at least one place they can find common ground: the Chok’lit Shoppe, venerable hangout for Archie and the gang.

Bob Hope and Jerry Lewis starred in long-running comic book series back in the 1950s and ’60s. Once-popular actors like Alan Ladd and Buster Crabbe had their own titles, as did western stars like Roy Rogers, Gene Autry and John Wayne.

But those comics were fantasy narratives about their on-screen personas, not the actors themselves. The same could be said about the rock band KISS, who battled Marvel Comics super-villain Doctor Doom in a 1977 comic.

Popular musicians are appearing in more realistic accounts of their real lives; Lady Gaga, Justin Bieber, Britney Spears, and Madonna are a few examples. But you don’t have to be a rock star to get your own comic:

You can be a politician (Barack Obama, Hillary Clinton), a TV star (Martha Stewart, Betty White or Stephen Colbert), a business mogul (Mark Zuckerberg, a planned Donald Trump bio), or just notorious (Lindsay Lohan appears on the cover of a series called “Infamous,” and a future issue on Charlie Sheen is in the works).

As It Stands, my only problem with comic books today is they’re so expensive. I still see those issues for a dime in my mind. Wish I’d have saved some back then!

Saturday stuff: over-reaction to flipping the ‘bird,’ gold coin controversy, and ‘Save Phonehedge West’

Good Morning Humboldt County!

It’s time to sip on the hot beverage of your choice while we leisurely look at today’s stories. I think this trio of tales ought to get you going: 

Guards over-react to middle finger

South African President Jacob Zuma's elite guards overstepped their authority when they arrested and roughed up a student who they thought made an obscene hand.

 Family fights government over rare ‘Double Eagle’ gold coins

A jeweler's heirs are fighting the United States government for the right to keep a batch of rare and valuable "Double Eagle" $20 coins that date back to the Franklin Roosevelt administration. It's just the latest coin controversy to make headlines.

Philadelphian Joan Langbord and her sons say they found the 10 coins in 2003 in a bank deposit box kept by Langbord's father, Israel Switt, a jeweler who died in 1990. But when they tried to have the haul authenticated by the U.S. Treasury, the feds, um, flipped.

They said the coins were stolen from the U.S. Mint back in 1933, and are the government's property. The Treasury Department seized the coins, and locked them away at Fort Knox. The court battle is set to kick off this week.

Calif. oddity's creator ordered jailed by judge

LANCASTER, Calif. – The eccentric creator of a Mojave Desert compound of whimsical buildings known as Phonehenge West was jailed Friday for failing to obey an order to cut electricity and keep guests out of the illegal structures.

Los Angeles County Superior Court Judge Daviann Mitchell put off Kim Fahey's sentencing for code violations, but ordered him held in lieu of $75,000 bail for disobeying a previous order.

Mitchell said Fahey's "blatant refusal" to demolish the structures and disconnect electricity put his family, the community and first-responders at risk because the buildings pose a significant fire hazard. The judge had allowed Fahey to remain free pending sentencing on the condition that he follow the order.

"I did not want to put Mr. Fahey in custody. I wanted to work with Mr. Fahey. I gave him an opportunity," Mitchell said. "I don't think he has taken the public risk to heart. He has chosen to do nothing."

The case has turned into something of a fight-the-system cause celebre with more than 29,000 fans of a "Save Phonehenge West" Facebook page.

What a surprise: Mexican cartel boss says he buys all of his guns from the USA

I’ve written about this subject a couple of times in the last three years. One of the many claims by the NRA and other gun activists is that the Mexican cartels don’t get a significant amount of their guns from the U.S.

I’ve always taken the position that the U.S. has been a main provider of guns for the cartels. My columns were both vilified by numerous NRA websites, and websites operated by outright wackaloon gun lovers who threatened me for suggesting we need stronger gun laws. I’ve just got one thing to say to all of those smart asses…sit on this story and spin!

During an interview recorded by Mexico’s Ministry of Public Safety, Jesus Enrique Rejon, alias 'El Mamito,' told officials that the feared drug gang purchases all of its guns in the US.

In the interview (the video of which is available here), Mr. Rejon claims the group used to sneak the arms through border checkpoints, but stricter security measures have forced them to smuggle them across the Rio Grande. He also alleged that the Zetas’ rival Gulf Cartels have an easier time bringing weapons across the border. “It got harder, but we can still get them,” Rejon said. “Those in the Gulf Cartel get them a lot easier; we don’t know why. It’s impossible to buy them and smuggle them in a vehicle trunk, but they do it. There must be a deal somewhere. I don’t know.”

It has long been known that gun stores in the American Southwest are a significant source of weaponry to Mexican cartels, a topic that InSight Crime has covered extensively in its GunRunners report.

Story Here - By Geoffrey Ramsey -

Geoffrey Ramsey is a writer for Insight – Organized Crime in the Americas, which provides research, analysis, and investigation of the criminal world throughout the region. Find all of his research here.

U.S. official says pre-infected computer tech entering country

This news is very discouraging…we, those with computers, could be pawns for other governments or private interests!

Confirming years of warnings from government and private security experts, a top Homeland Security official has acknowledged that computer hardware and software is already being imported to the United States preloaded with spyware and security-sabotaging components.

The remarks by Greg Schaffer, the Department of Homeland Security's acting deputy undersecretary for national protection and programs, came Thursday during a tense exchange at a hearing of the House Oversight and Government Reform Committee. The panel is considering an Obama administration proposal to tighten monitoring and controls on computer equipment imported for critical government and communications infrastructure.

Schaffer didn't say whether the equipment he was talking about included end-user consumer tech like retail laptops, DVDs and media players. If so, his comments, first reported Friday morning by Fast Company, would be the first time the United States has publicly confirmed that foreign consumer technology is arriving in the country already loaded with nasty bugs like key-logging software, botnet components and even software designed to defeat security programs installed on the same machine.

Schaffer made the statement under questioning from Rep. Jason Chaffetz, R-Utah, who noted that "the issue of software infrastructure (and) hardware built overseas with items embedded in them already by the time they get to the United States ... poses, obviously, security and intellectual property risks."

DEA Closes Eyes to Evidence, Rejects Petition to Reschedule Marijuana for Medical Use

After nine years of regulatory delay, the DEA rejected a petition by a coalition of groups including California NORML to reschedule marijuana for medical use.

The response came only after advocates sued in federal court for unreasonable delay.The petition, filed in 2002 by the Cannabis Rescheduling Coalition (http://drugscience.org), cited a growing body of scientific evidence plus the approval of medical marijuana in several states as grounds that marijuana qualifies as having "accepted medical use" and should be removed from Schedule I.

The DEA countered that none of the evidence was valid since it did not meet the standard of FDA new drug application trials.The DEA  cited a five-year old DHHS paper claiming that marijuana did not have medical use.  While referencing innumerable studies showing potential health risks of marijuana, it failed to reference any of the hundreds of studies showing medical efficacy of marijuana on the grounds that they did not meet the standard of well-controlled, large-scale, double blind FDA approval trials.  However, none of the negative evidence cited by the government met that standard, either.

The DEA failed to mention that it has deliberately obstructed FDA trials from taking place by denying the approval of a research-grade marijuana growing facility at the University of Massachusetts, contrary to the recommendation of its own administrative law judge. The only existing legal source of marijuana for U.S. researchers is the National Institute on Drug Abuse, which has stated that it will not pursue FDA studies of the drug for medical use.

"The government has created a Catch-22 situation, in which the DEA is free to ignore mounting scientific evidence and the experience of countless physicians and users who have found medical marijuana effective in order to protect its bureaucratic position," said California NORML director Dale Gieringer, who helped author the re-scheduling petition. " The government's response raises serious questions about its competence to manage Americans' health care. Surveys have shown that patients who use medical marijuana can dramatically reduce their use of other, more costly but less effective FDA-approved prescription drugs. Yet DEA drug bureaucrats are deliberately ignoring these facts so as to protect their bloated agency."

Advocates are planning how to challenge  the DEA decision. Medical marijuana advocates are supporting a bill by Rep. Barney Frank (D-MA), the State's Medical Marijuana Protection Act of 2011 (H.R. 1983), which would end marijuana's schedule one status and let states regulate its medical availability. Under a policy recently reaffirmed by the Obama administration, the federal government has arrested, charged , threatened, and/or imprisoned hundreds of individuals in states with legal medical marijuana for violating  federal laws. (http://www.canorml.org/fedcasessum.html.)

California NORML is calling on  Congress to investigate the DEA's malfeasance with regards to medical marijuana.

DEA answer to CRC petition:

http://americansforsafeaccess.org/downloads/CRC_Petition_DEA_Answer.pdf

CRC rescheduling petition:

http://www.drugscience.org/PDF/Petition_Final_2002.pdf

canorml@canorml.org

California NORML, 2261 Market St. #278A, San Francisco CA 94114 -(415) 563- 5858 - www.canorml.org

Finally Friday: poo police, win a baby game, and French robbers copy Wild West tactics to rob train

Good Morning Humboldt County!

I’m looking forward to another beautiful day. Have you got your cup of coffee or tea? Well then, join me this morning as we check out the news. Let’s start off with a case of POO POLICE!

Doggie DNA nails owners of pets leaving smelly piles

Some pet owners who failed to clean up after their dogs got a nasty surprise from apartment complex manager Deb Logan. Using DNA evidence, Logan started fining the irresponsible dog owners $100 per offense. Logan, property manager at Twin Ponds in Nashua, New Hampshire, started using a dog DNA-testing system to reveal which pooches were leaving feces scattered about outside.

Logan says the DNA technology called "PooPrints", developed by BioPet Vet Labs of Knoxville, Tennessee, is working "amazingly" well for Twin Ponds, a 339-unit complex that is home to about 241 dogs.

At Twin Ponds, all tenants with a dog now must use a PooPrints pet DNA sampling kit when they move in. To set up a profile, owners come to Logan's office, swab their dogs' cheeks for a saliva sample, and Twin Ponds then sends that to BioPet, which creates a reference database that includes all the community's canines. Photo source

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New "win a baby" game draws fire

A controversial IVF lottery will launch in Britain this month giving prospective parents the chance to win thousands of pounds toward expensive fertility treatments in top clinics.The scheme, which the media have dubbed "win a baby," has already run into trouble on ethical grounds with critics calling it inappropriate and demeaning to human reproduction.

Britain's Gambling Commission has granted a license to fertility charity, To Hatch, to run the game from July 30. photo source

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French train robbers revive Wild West tactics

In a scene taken straight out of an American Wild West movie, masked men robbed a freight train in southern France Thursday night after blocking the railway tracks with shopping carts and metal beams. About 20 bandits looted several carriages and then vanished into the night. It was unclear what was taken.

"Attacks on trains aren't new, but it is a pretty rare phenomenon," David-Olivier Reverdy, a police union official in the area said. "It's worthy of stagecoach attacks in the Wild West," he said.

photo source

Time for me to head on down the road…

What's in your navel? Hundreds and hundreds of types of bacteria

When I was a teenager we use to kid about contemplating our navels to reach enlightenment.

It was back in the 60s and there were gurus and yogis everywhere.

Recently, scientists from the Belly Button Biodiversity project went navel-gazing and discovered 662 new species of bacteria.

Yuckkkk…read all about it here.

Immortal jellyfish: Does it really live forever?

While it is often joked that cats have nine lives, a certain species of jellyfish has been deemed “immortal” by scientists who have observed its ability to, when in crisis, revert its cells to their earliest form and grow anew.

That means that these tiny creatures, 4 mm to 5 mm long, potentially have infinite lives.

The creature, known scientifically as Turritopsis nutricula, was discovered in the Mediterranean Sea in 1883, but its unique regeneration was not known until the mid-1990s.

Muscle cells can become sperm or eggs, or nerve cells can change into muscle cells, “revealing a transformation potential unparalleled in the animal kingdom,” according to the original study of the species published in 1996.

Father gives daughter most unique name in America

It Was Bound To Happen: Baby Named After Facebook "Like" Button

Given the sheer number of people on Facebook — and given the vast number of parents who have no problem saddling a child with a name that will require an explanation for its entire lifetime — it was inevitable that someone out there would be so inspired by Facebook that they would name their kid after the site's "Like" button.

"We named her Like because it's modern and innovative," said the little girl's father. "I checked that the name does not exist anywhere elsewhere in the country, that was the main condition for me." The new pop says his baby girl's name is going over well, at least with his Facebook pals: "When I posted her picture and name on Facebook I got 40 'likes,'... Considering that I have only a little more than 100 friends on the network that's a lot."

image source