Posted by: Taxlitigator | April 27, 2016

PANAMA PAPERS: Public Identification of Individuals and More Than 200,000 Entities Follows Launch of U.S. Criminal Investigations

The Panama Papers. A massive law firm data breach of otherwise secretive financial information identifying numerous high-ranking government and public officials around the world was recently disclosed online by the International Consortium of Investigative Journalists (ICIJ). Almost forty years of confidential information from 1977 to December 2015 was somehow obtained by an anonymous source from the internal database of Panama-based law firm Mossack Fonseca & Co. and apparently includes approximately 11.46 million files comprising approximately 2.6 terabytes (the equivalent of approximately 600 DVDs) of otherwise confidential financial data.

“John Doe” Explains Reasons for His Actions – and as a Call to Action. “John Doe,” the anonymous individual who leaked the Panama Papers, issued a manifesto on May 6, describing his reasons for exposing what he referred to as a “massive, pervasive corruption” contributing to global income inequality. His manifesto  was published on the website of Suddeutsche Zeitung, the German newspaper to which he made the original disclosures over a year ago.

“[T]housands of prosecutions could stem from the Panama Papers, if only law enforcement could access and evaluate the actual documents,” the manifesto states. “ICIJ and its partner publications have rightly stated that they will not provide them to law enforcement agencies. I, however, would be willing to cooperate with law enforcement to the extent that I am able.”

Searchable Data Base re Panama Papers!  On May 9 the ICIJ released  a searchable database with information on more than 200,000 offshore entities that are part of the Panama Papers investigation. The database includes information about companies, trusts, foundations and funds incorporated in 21 tax havens, from Hong Kong to Nevada in the United States and links to people in more than 200 countries and territories. ICIJ won’t release personal data en masse; the database does not include records of bank accounts and financial transactions, emails and other correspondence, passports and telephone numbers.

US Launches Criminal Inquiry into Several of the 200 US Citizens Named in the Panama Papers! ICIJ confirmed on April 19 that it received an email (published by the Guardian)  from U.S. Attorney Preet Bharara for the Southern District of New York indicating that his office had “opened a criminal investigation regarding matters to which the Panama Papers are relevant.” Further, his office would greatly appreciate the opportunity to speak as soon as possible with any ICIJ employee or representative involved in the Panama Papers Project in order to discuss this matter further.”

The Guardian reports that U.S. Attorney Preet Bharara has “led several crusades against criminal wrongdoing in the financial sector, is already investigating several of the more than 200 US citizens named in the papers.”

ICIJ Pushes Back! ICIJ Director Gerard Ryle responded to prosecutors in Preet Bharara’s office that it would not turn over unpublished data. “We certainly welcome the U.S. Attorney’s Office reviewing all of the information from the Panama Papers series that we have made available to our readers and conducting its own investigation,” said ICIJ Director Gerard Ryle. “However, ICIJ does not intend to play a role in that investigation. Our focus is journalism.”

“ICIJ, and its parent organization the Center for Public Integrity, are media organizations shielded by the First Amendment and other legal protections from becoming an arm of law enforcement,” said ICIJ Director Gerard Ryle.

ICIJ Will NOT Share the Panama Papers with Governments! The long-standing policy of ICIJ, and our parent organization, the Center for Public Integrity, is not to turn over such material. The ICIJ is not an arm of law enforcement and is not an agent of the government. We are an independent reporting organization, served by and serving our members, the global investigative journalism community and the public.

HOWEVER . . . What About Mossack Fonseca? Although the ICIJ may not cooperate with any government inquiries, Mosack Fonseca has indicated that “Due to recent events that have taken place in our office in Panama, we would like to offer the following statement: ‘We have a long history of working proactively with relevant authorities in various jurisdictions when questions are raised and additional information is required, and in many cases we’re the ones who actually initiate that contact when suspicious activities are detected. In this case, we’re the ones against whom a crime has been committed. Our systems having been unlawfully breached by parties external to the firm. As we’ve always done over nearly 40 years of doing business, we stand ready, willing and eager to cooperate with authorities again on their latest investigations to ensure this situation is brought to a just conclusion.’ ”

What About You? Anyone, located anywhere, who is potentially impacted by the public release of the Panama Papers should consider immediately contacting competent, experienced counsel. Although ICIJ reported that the Panama Papers were not purchased, there are some reports this information has been sold to the German tax authorities and may have been offered to tax authorities in the United Kingdom, the United States and elsewhere.

U.S. individuals (citizens or legal residents) should contact competent tax counsel. The failure to declare certain interests in foreign financial accounts and assets can potentially bring about significant civil penalties and, in egregious situations, the possibility of criminal problems. Concern is not limited to those having some possibly remote link to the Panama Papers. Leaks of perceived confidential information from an internal data base of a law firm, trust company, and financial institution or otherwise can occur at anytime, anywhere in the world.

If you may have any potentially undisclosed interest in any foreign financial accounts or assets, get in touch competent, experienced counsel to immediately determine if you should be concerned. The Panama Papers investigation by the ICIJ represents the largest media collaboration ever undertaken. Most individuals (and their professional advisors) will sleep better if they get it right, somehow get into compliance and move on in life. Waiting is simply not a viable option . . .

For additional information, see the articles published at

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