Offshoring Isn't Just a Problem in Panama, Nevada Has 1000 Secret Firms

By Steve Reilly, USA TODAY

08 April 16

USA TODAY analysis of more than 1,000 American-based companies registered by Mossack Fonseca, the law firm at the heart of the Panama Papers leak, casts the United States openly into an uncomfortable role: an offshore haven of corporate secrecy for wealthy business operations across the globe.

The analysis found that both Nevada and Wyoming have become secretive havens much like Bermuda and Switzerland have long been. And at least 150 companies set up by Mossack Fonseca in those states have ties to major corruption scandals in Brazil and Argentina.

The corporate records of 1,000-plus Nevada business entities linked to the Panamanian law firm reveal layers of secretive ownership, with few having humans' names behind them, and most tracing back to a tiny number of overseas addresses from Bangkok high rises to post offices on tiny island nations. Only 100 of the Nevada-born corporations have officers with addresses in this country: 90 in Nevada, nine in Florida and one in Delaware.

The financial records show more than 600 of the companies' corporate officers are listed at one of just two addresses in the world, one in Panama and the other Seychelles, a small Indian Ocean archipelago. The addresses, in both countries, are the same as Mossack Fonseca's headquarters.

For about 700 of the American shell companies, the corporate officers are business entities rather than people, meaning no individual is linked to the Nevada firm in state records.

“We shouldn’t be thinking about this as a Panamanian problem,” said Matthew Gardner, executive director of the Institute on Taxation and Economic Policy in Washington, D.C. “We should be thinking about this as a very American problem, and a problem that arguably is worse here in the states than it is in Panama.”

The registered agent for all of the companies in Nevada is M.F. Corporate Services (Nevada) Ltd., a one-employee operation located in an unassuming Las Vegas office suite.

In Argentina, a prosecutor’s 2014 report on the financial dealings of the former and current presidents, Néstor Kirchner and Cristina Fernández de Kirchner, and an associate, Lázaro Báez, included the names of 150 of the Nevada corporations with Mossack Fonseca links.

The Nevada corporations have also been brought into the separate sprawling nationwide corruption investigation by Brazilian officials, dubbed “Operation Car Wash,” which centers on allegations involving the state oil company Petrobras. The names of least 45 Nevada-based companies and two Wyoming-based companies linked to Mossack Fonseca are listed in investigative documents connected to the Brazil investigation published online by Brazilian prosecutors. Among the documents made public by prosecutors is a slide presentation from Mossack Fonseca’s Brazil office featuring a pie chart of locations it has set up companies.

“Panama, BVI (the British Virgin Islands) and Nevada represent 87% of our active corporations,” the slide states.

Yet another of the Nevada companies, Cross Trading LLC, is involved in a federal criminal case in the U.S. District Court in New York involving officials at FIFA, soccer’s world governing body. The federal criminal complaint alleges a $5 million wire transfer was made from the Miami Bank account of a sports management company to a Swiss bank account held by Cross Trading as part of a set of alleged bribes related to international soccer tournaments.

Cross Trading LLC’s corporate officer, according to Nevada records, is Camille Services S.A., which has an address in an office building in Seychelles, the island nation off the coast of East Africa. The company’s origin and purpose, in the Nevada business records, is completely hidden from public view.

Some of the Nevada companies do identify individual people as officers. A dozen of the companies birthed by the firm's Nevada shell-company factory were controlled by members of one of Thailand’s wealthiest dynasties, the Chirathivat clan that owns a sprawling empire of shopping malls, hotels and real estate developments in every major city in Thailand. Tos Chirathivat, the American-educated chief executive, is listed as an officer in six different Nevada corporations set up by MF Nevada. Another six Nevada firms have had officers that are Tos’ relatives or people associated with the family’s Central Group of Companies, all tracing back to the same Bangkok addresses. The Central Group, which Forbes estimates is already worth almost $12 billion, is expanding across Southeast Asia and into Europe. But it's unclear the purpose of his family's Nevada holdings, which bear names such as Anir One and Consolidated International One.

Beyond that, there are very few individuals that are listed as the officer in more than one of the vaguely-named, nearly untraceable companies. A few are names of people who've shown up in news accounts as operating affiliates or associates of Mossack Fonseca, but who are difficult to locate and therefore couldn't be asked to answer questions about their roles and duties as officers of the companies, or whether they had any beyond being listed on the paperwork filed with the state of Nevada.

In Wyoming, where Mossack Fonseca has also registered about two dozen companies, corporations are even harder to trace. Officers of the companies are not listed in public business records.

“They’re actively selling this stuff abroad,” Heather Lowe, director of government affairs at Global Financial Integrity, a Washington research group, said of the secrecy offered by a handful of U.S. states.

In a statement responding to recent media coverage of the leaked Panama Papers, Mossack Fonesca defended its practices and said incorporating companies in different jurisdictions is “the normal activity of lawyers and agents around the world.”

On Wednesday, Wyoming Secretary of State’s Office announced it conducted a review in response to the Panama Papers leak and found companies registered by an audit of M.F. Corporate Services Wyoming LLC “failed to maintain the required statutory information for performing the duties of a registered agent under Wyoming law.”

Wyoming added that did not mean it would change how it handles corporate filings. “We are not naive as to the importance of the release of these ‘Panama Papers,’ but we will not compromise the privacy of our customers,” Wyoming Secretary of State Ed Murray said in a statement.

While the Wyoming investigation is ongoing, Nevada officials have remained quiet about the data leak.

In response to questions about Nevada’s reputation for protecting corporate secrecy, Nevada Secretary of State’s Office spokeswoman Kaitlin Barker noted the state’s corporation laws state “a person shall not establish a corporation for any illegal purpose or with the fraudulent intent to conceal any business activity, or lack thereof, from another person or a governmental agency.”

Patricia Amunategui, who runs Mossack Fonseca’s corporation registration operations in Las Vegas and Wyoming, said in a 2014 deposition that very little is required of foreign businesses who want to register a corporation in Nevada.

“Under the Nevada law, they don’t ask you any more,” she said, “just the name and (whether or not) the original of the company is in good standing.”

In its statement, Mossack Fonseca added it has always complied with international protocols including the U.S. Foreign Account Tax Compliance Act, or FATCA, “to assure as is reasonably possible, that the companies we incorporate are not being used for tax evasion, money laundering, terrorist finance or other illicit purposes.”

In her 2014 deposition, Amunategui said she was advised by lawyers to stop signing her name to corporation documents as the secretary of the companies before FATCA took effect in 2015.

“I’m a U.S. person,” she said, “and I want to follow the law.”