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Offshore companies appear to be a favorite place to hide money, however, it turns out that not only users of such companies can be dishonest. There are also swindlers among specialists working with offshore companies. These people register companies, optimize taxes, and also manage client funds.
Petty fraud is common in this area, based on expensive seminars, overpriced selling of "valuable" and "unique" literature, and astronomical fees for drawing up some tax planning schemes that are often not viable at all.
However, the most dangerous option is when clients entrust their funds to specialists in the hope that they can better manage them. But possible litigation in such cases is very difficult. After all, the victim is reluctant to give all the information on pain of exposing his illegal tax evasion schemes, and the offshore authorities rarely meet their clients halfway in matters of their legal protection.
In 1997, a young man, Mark Harris, was spotted at a number of international seminars on offshore topics, superbly dressed and with impeccable manners. He invited everyone to use the services of his firm, the Harris Organization, for offshore tax planning, which was located in Panama.
The organization offered a full range of services in this area - registration, asset management, schema development, etc. The "chip" of the company was the "Harris Matrix" - a set of schemes that allowed corporations to withdraw funds to their own offshore, demonstrating losses on paper.
Born in the United States, Harris was a Panamanian citizen and was constantly accompanied by seemingly impeccable American tax and finance specialists. The swindler was a brilliant speaker and specialist, he invented new schemes on the go. His clients were impressed by the attitude towards them, they were taken to the office in a Jaguar, fed and watered free of charge. The cost of services was very low compared to competitors.
All this, together with an effective advertising campaign, ensured the company's success, soon the Harris Organization became one of the world leaders in the provision of offshore services, its staff was 150 people, many cooperation agreements were concluded, offices were opened in the main offshores.
Harris constantly collaborated with American lawyers, accountants, who ensured him a continuous flow of clients. According to the organization itself, it managed an amount of about $ 1 billion. Harris's competitors just shrugged their shoulders, because they could not offer comparable prices.
Only the most suspicious believed that there was a consumption of clients' money received for management. And many American experts were shocked by Harris's methods, since they did not fit at all with the modern US anti-offshore legislation.
The takeoff of Harris' company was stopped by journalist David Marchant, who conducted his own investigation for a meticulous client, the results of which were published in March 1998. According to the article, "The Harris Organization" was a giant offshore scam with the sole purpose of defrauding clients for millions of dollars in its own management.
The funds under the management of the company were not at all a billion, but 40 million, which is not so much for a company of 150 people. The company disposed of the entrusted funds extremely poorly, most of them were spent on the needs of the company itself, while the rest was invested in dubious or fictitious projects or enterprises.
So, half a million was invested in the production of bicycles in Chile, which never took place. There was no proper accounting, reports were drawn up at random, but clients regularly paid for all this. As a result, the conclusion was that the company's liabilities exceeded its assets by $ 25 million, the company, in fact, was bankrupt.
And among the former clients of Harris were criminals who went to prison on charges of drug trafficking and money laundering. Harris himself lost his auditing license back in 1990 for negligence and incompetence. It also turned out that the swindler had previously operated several offshore banks closed by the police for fraudulent activities.
Naturally, this article caused a scandal. A lawsuit was filed against the journalist, accused of defamation, and the amount of damage caused, according to the Harris Organization, amounted to 30 million. However, such a step was intended only to delay the investigation, the swindler himself chose not to appear in the United States, and his firm lost the process that took place in July 1999 with a bang. The journalist presented convincing evidence against which the lawyers could not oppose anything. Naturally, shortly after the trial, the company was blown away like a bursting ball.
Her reputation was hopelessly damaged, and the staff was reduced to a few people. Clients began to demand their money back, problems with payments began. However, there was simply no money, even the debt to the employees of his company was never paid off. As a result - 70 lawsuits with minimal chances of success. Harris himself moved to Nicaragua, where he continued his activities to provide this kind of services.
Cases of abuse of customer confidence are quite common in offshore business. An attractive firm can be a simple pyramid scheme, or it can simply be ineffectively managed, leading to inevitable collapse. An example of such a fraud on Russian soil is the Swiss firm Sovereign Finance Group, which has operated in Moscow since 1996. She offered services to wealthy clients in international markets and in managing their assets. The minimum deposit amount was $ 100,000.
The company itself estimated its turnover in 2001 at 120 billion dollars! Most of the operations were carried out offshore in St. Vincent, and Russia was the main place of fundraising, which suggests that the roots of the company lie here.
When clients had problems with refunds in 2002, they turned to the Swiss authorities, which, on the basis of a search, promptly closed the company, accusing it of conducting banking activities without a license and of money laundering. Debts to clients amount to tens of millions of dollars, and their return is extremely unlikely.