The British Virgin Islands.
Road Harbour Panorama in the British Virgin Islands

The Panama Papers

Lawyers say ‘tax haven’ is a dirty word in Panama Papers case

Federal prosecutors should not describe offshore entities as “shell” companies or call Panama or the British Virgin Islands “tax havens” in the upcoming Panama Papers criminal trial in New York, according to defense attorneys.

Motions filed in New York’s Southern District court last week by lawyers for Joachim von der Goltz, a former U.S. taxpayer, and Richard Gaffey, a Massachusetts accountant, seek to blast a hole in the United States government’s allegations of tax evasion, wire fraud and money laundering.

Prosecutors allege that von der Goltz evaded U.S. taxes through offshore companies with the help of Gaffey and employees of Panama law firm Mossack Fonseca. Documents leaked from the law firm form the basis of the International Consortium of Investigative Journalists’ 2016 Panama Papers investigation.

Von der Goltz and Gaffey allegedly hid the former’s ownership of shell companies and millions of dollars in assets by falsely claiming that von der Goltz’s Guatemalan mother was the owner, according to prosecutors.

The men deny all charges. Von der Goltz managed the companies on his mother’s behalf, he claims.

Last week, attorneys asked Judge Richard M. Berman to exclude portions of the government’s evidence as prejudicial to a fair trial by jury. Judge Berman has not yet ruled on the request.

Gaffey and von der Goltz told Judge Berman that the words “shell” company and “tax haven” would inflame the passions of the jury.

“As a result of the sensational attention that the Panama Papers disclosures have drawn, including hundreds of newspaper articles, numerous books, and a motion picture with several Oscar winners in the cast and crew, the concept of ‘shell’ companies has become a four-letter word synonymous with illicit financial activity,” attorneys wrote. Attorneys cited a scene from the 2019 Netflix film The Laundromat in which Meryl Streep’s character links shell companies to the death of her husband.

Attorneys also argued that the federal government should not be allowed to claim that U.S. citizens were victims of von der Goltz’s alleged tax evasion.

“Comments about harm to United States citizens may lead the jury erroneously to assume that Mr. von der Goltz is responsible for the widespread ramifications of the alleged misdeeds revealed by the Panama Papers,” attorneys wrote.

Gaffey’s attorneys also asked Judge Berman to bar evidence of Gaffey’s exchanges with another former Mossack Fonseca client, Marianna Olszewski.

Gaffey allegedly provided advice to Olszewski, a financial advice guru, on how to evade taxes. The advice was allegedly not followed. Olszewksi has not been charged.

ICIJ previously disclosed Olszewski as one of the unnamed, uncharged co-conspirators listed by U.S. prosecutors. Prosecutors plan to use Olszewski’s testimony to affirm the authenticity of the Panama Papers documents.

Defense attorneys argued that Gaffey’s exchanges with Olszewski inaccurately portray him as “an accountant with a propensity to assist clients who cheat on their taxes.”

Defense attorneys also want Judge Berman to exclude testimony from Internal Revenue Service agents, including a computer forensics specialist, and a German police officer. Last week’s filings reveal for the first time that Germany’s federal police previously provided the U.S. with a “full copy of the Panama Papers database.”

The trial is scheduled to begin on January 13.



Read more
Inside The Panama Papers
Citing Panama Papers, Warren announces plan to fight global corruption
December 18, 2019 — The Democratic presidential hopeful pledged new laws to stamp out shell companies, and also planned to increase global collaboration to fight tax evasion.
Inside The Panama Papers
‘Urgent’ EU Plan to End Secret Company Ownership Poised to Miss Deadline
December 23, 2019 — Countries, including Malta and Cyprus, are running out of time to comply with new rules aimed at thwarting corrupt regimes, mafia groups and terror funders.
Inside The Panama Papers
U.S. poised to celebrate its first Panama Papers tax conviction
February 11, 2020 — A U.S. taxpayer will plead guilty to tax evasion and money laundering offenses in relation to the 2016 investigation.