As the District Attorney of New York County, my office, time and time again, finds its criminal investigations thwarted by an absurd system of secrecy whereby criminals can hide their money without even breaking a sweat — or the law.
Welcome to the bizarre world of anonymous shell corporations.
The average American likely knows very little about them. But your average terrorist, drug-trafficker, tax evader or money launderer is well versed in the art of legal anonymity. Every day they make or move illicit money, and America’s lax incorporation laws make it easy to hide the money behind anonymous shell companies and launder it through U. S. and foreign banks and their branches.
Take, for example, the case of Michel De Jesus Huarte, who defrauded Medicare of more than $4.5 million using a fake AIDS clinic in Miami and 29 other anonymous shell companies. It took years for law enforcement to cobble together the web of fraudulent companies that was spread across several states, and it confounded investigators.
Huarte was eventually caught and put behind bars, but his scheme was no isolated incident, as shell companies are a favorite tool of fraudsters. In October 2010, for instance, 44 members of an Armenian organized crime ring used 118 shell companies in 25 states to defraud Medicare of $100 million. Today, as well as during the time of my predecessor, district attorney Robert Morgenthau, this office has investigated cases in which anonymous shell companies were used in schemes involving mortgage fraud, tax evasion, larceny, bribery and much more.
Anonymous U.S. shell companies shielded the Iranian ownership of a midtown Manhattan skyscraper in a scheme designed to skirt U.S. sanctions and funnel money from the United States to Iranian agents around the world. Ironically, it was corporate records maintained by the UK’s Isle of Jersey that provided the key break in the case. That’s right, the Isle of Jersey — a jurisdiction many in this country consider a “tax haven” — has incorporation laws with greater transparency than those in our own country. Small wonder that many foreign jurisdictions accuse the United States of hypocrisy when it comes to international banking standards.