Where Has All The Money Gone?

Offshore islands!! The Independent (06.05.05):

"The Manhattan District Attorney, the Securities and Exchange Commission (SEC) and the US Internal Revenue Service (IRS) are jointly probing a tax-shelter plan run out of the Isle of Man.

The scheme, devised by one of America's biggest banks and used by two billionaire donors to George Bush's election campaign among others, is being probed for possible breaches of securities and anti-money-laundering rules."

US probes Isle of Man scheme used by billionaire Bush donors

The scam estate-planning mechanism, "marketed by Bank of America to at least 42 corporations", involved transferring ownership of stock and stock options to trusts in which you (ostensibly) have no ownership interests. At least that's what you tell the IRS. When you cash the trust cashes the stuff in, there's no taxable event.

The IRS "changed the rules in 2003 to say that tax should be paid anyway", but until then, authorities believe "up to $100m of tax was saved through one scheme alone, and as much as $700m in taxes may have been avoided over an 11-year period."

Investigators "have contacted the regulators on the Isle of Man asking for information on one particular scheme used by two Texan billionaire brothers, Charles and Sam Wyly."

"The duo, who made their money in computing and retailing, not only gave over $200,000 to President Bush's re-election campaigns, but also bankrolled TV adverts attacking his rivals, John Kerry and Senator John McCain."

Here's a press release from Michaels Stores about the "inquiry concerning non-U.S. trusts that directly or indirectly hold and have held shares of common stock and common stock options of Michaels Stores."

More background from Greg Palast and the AP.