January 2005_pg3_ Missive

From the Publisher's Desk
January 3rd, 2005

"The United States is currently developing new biometric passports
that contain Radio Frequency Identification (RFID) chips that can be read
remotely by anyone with a reader."

- Doctor Seymour Samson offshore guru, interview, January 2005



Is this in your future?

Continuation of Part I, Doctor Seymour Samson January 2005 interview.

PT Shamrock = PTS
Doctor Seymour Samson = DSS

PTS - And they might be for instance?

DSS - For instance, it is now a serious felony offence to use NON government issued ID to open a mail drop facility within the US in a name that is NOT your real name. The same applies if you try to travel via any mode of "federal" transportation, i.e. an airline, train, bus and even by an automobile if you travel on interstate (federal) highways. You can get a paid vacation in a small room with a tiny window (if you're lucky) for up to 15 years for such an offence, even if it is your first offence.

Trying to obtain a (US) passport using someone else's birth certificate in the US will get you 25 years. Clearly doing so is illegal, but 25 years? Murderers and rapist receive lesser sentences than that.

You can and will be classified as a terrorist or a person that 'might' be associating with terrorist if you speak out against American polices. Think Cat Stevens!

The US has a very long history of not respecting other nationalities. Its belief that it alone holds the ideals of truth, justice, freedom and democracy is both wrong and dangerous. As a result by stealth, the US is building vast databanks of personal information on citizens and non-citizens, criminals and the entirely innocent.

Worse of all, the current US administration, the Bushites, have made it patently clear that it does not consider itself bound by domestic or international laws when they conflict with its interests. All it takes is for somebody, from the President on down to a lowly border guard, to say so. As if in a dictatorship, the President has made himself prosecutor, judge and jury. And YOU are the poor bastard that's going to pay for those actions!

In a nutshell as a non American I believe I speak for a lot of people around the world when I say the United States cannot be trusted to respect any law or international protocol, and cannot therefore be trusted with the personal data of other nationalities.

That's entirely my opinion, but I've just laid out a hell of a lot of hard evidence about these very sad facts.

PTS - I must agree with you. But what can the average person reading these words do to protect themselves privacy wise and financially?

DSS - Two good questions, so allow me to answer the latter part first. Last fall I've returned from an extensive and exhaustive trip to China. I was more than impressed and can now say that China is no longer a sleeping giant. It's waking up and starting to realize that it can gain more influence in the world by financial means rather than political means. With its incredible hoard of cash, China is starting to buy up world renowned companies. Once they get their management act together, look out.

In 2003 China overtook the US for the top FDI spot, i.e. foreign direct investments for the very first time in history. Foreign investment in the US, traditionally the largest recipient of such money, plunged by 53 percent last year (2003,) to reach $30 billion, the lowest level for 12 years, according to the UN's World Investment Report, 2004.

China alone attracted more than 53 billion USD, nearly twice that of the US. In fact the entire Asian region attracted more investments than any other region in the world according to that same UN report.

In fact by 2034 China will become the world's number one economic power, beating the US from that spot. That's less than thirty years from now. Scary isn't it?

Now the US authorities are a lot of things, but stupid they're not. IMO the USD is overvalued by approximately twenty percent. The administration will either have to devalue the dollar in order to rebalance the global economy or suffer the consequence. Not only is that my opinion, but also that of the Group of Seven and the International Monetary Fund. That is what they were demanding during their meetings in Washington late September, early October last.

The US Government realizes they have a serious financial dilemma on their hands that's becoming very much worse. Foreign funds are going elsewhere, leaving America mainly because of arcane laws, severe compliance requirements, high taxation and the very real possibility that the (US) government can at any time grab your money for it to never to see the light of day again. Add in the factor that one, in many cases, can earn much higher and safer returns elsewhere; you can see the results above.

Americans lose out on 99 percent of the investment opportunities in the world. If the average Joe Q Public ever wakes up and realizes they can legally earn 10, 15 even 25 or 30 percent returns on their funds in Asia (think offshore) with minimal risk, even more money will flee America exasperating the US' financial problem. That could lead to a depression.

Your (US) government's mantra is that US residents must pay tax on their world-wide income. That's the (US) law and if you are an American or an American resident you better well heed that law or face very serious penalties and even imprisonment.

As a U.S. citizen or resident, you face additional compliance requirements. One is to report all "foreign bank, securities or 'other' financial accounts" if their aggregate amount exceeds US$10,000 at any time during the calendar year. What 'other' means is your guess as well as mine. In any event if you don't 'comply' with these 'requests' look for a fine up to US$250,000, imprisonment for up to five years, or even both. Any and all penalties are doubled if you violate other U.S. laws.

Even worse as a US resident there are other reporting requirements.

One requires that you, under penalty of perjury, report you're foreign accounts (each year) on Schedule B of your (US) federal income tax return. In addition you are also required to file Form TD F 90-22.1, better known as FBAR or the "foreign bank account reporting" forms.

Now just guess where you file that form? How about with the Treasury's Financial Crimes Enforcement Network (FinCEN).

Information demanded under severe penalties on the TD F 90-22.1 forms include how many foreign accounts you hold, their maximum value, the name of the financial institution where the accounts are held, the account numbers, etc. No privacy with that, is there?

PTS - That's incredible and makes me thankful I'm not an American or live there. But what do you, or rather they mean by reportable?

DSS - Okay let's take a look at the instructions on the FBAR forms. Those instructions make it absolutely clear that you must report the following relationships that, in aggregate, exceed the US$10,000 threshold:

Allow me to quote from some of the instructions regarding Form TD F 90-22.1.

You MUST report under penalty:

"Any financial interest, signature authority or "other" authority over a foreign bank or securities account. This includes any savings, demand, checking, deposit, time deposit or any other account with a foreign financial institution or other entity or person engaged in the business of a financial institution.

Any commingled interest in a fund in which you hold an equity interest. [Note: This covers offshore mutual funds, so please note that such funds are also subject to additional reporting requirements.]

Any joint authority over a foreign account. Both you and any other U.S. co-signatories must report the account.

Any relationship whereby you have direct or indirect control over an agent or nominee that has authority over foreign account(s) in which you have a financial interest.

A foreign account in the name of a corporation, partnership or trust in which you own more than 50% of the total value of the shares or beneficial interest or are entitled to more than 50% of the profits or current income.

If you can authorize payments in an account through your signature (or your signature and one or more other persons), you have signature authority over that account. You have "other authority" over it if you can authorize payments by direct communication to the bank or other person with whom the account is maintained (e.g., via telephone, fax, Internet or e-mail).

The IRS has tried to cover all the bases. However as usual there are always legal loopholes that can and are exploited.

Another exceedingly important item that will cause considerable consternation for Americans is to understand that form TD F 90-22.1 or FBAR, isn't a tax return. It's not subject to the same disclosure restrictions that apply to (US) tax returns. There's another blow to your privacy.

The information that you willing provide (under penalty,) is shared with any other federal agency in any "criminal, tax or regulatory investigation or proceedings." It will also be shared with "state, local, and foreign law enforcement and regulatory personnel.

Allow me to repeat "ANY foreign law enforcement and regulatory personnel."

Worse with FinCEN's Gateway initiative, local, state and surprise, surprise, foreign law enforcement officials, have on-line access direct to the agency's "Bank Secrecy Act" database, which consists of hundreds of thousands, perhaps millions of filings per year! Some Bank Secrecy Act, isn't it?

Even worse this filing (FBAR) that you make willingly (under penalty) can be used in any civil lawsuit, i.e. a divorce or employee suing you, etc. So much for bank secrecy in the good ole USA. With no privacy for its own citizens, how do you think the American authorities feel about protecting your privacy as a non American?

Nearly any government official local or foreign can go on-line via FinCen's so called Bank Secret Database and find out if you have an offshore bank account; why you reported $75,000 per year income but are driving a $100,000 automobile; travelling first class and staying at the Ritz Hotel whilst you travel outside America! The consequences of this could and are disastrous.

In spite of your absolute right to invest anywhere and anyhow you desire, this is in direct contrast to Big Brothers belief that it is NOT your money; rather it's theirs, temporarily 'borrowed' from big brother, and theirs to reclaim anywhere, at anytime and by using any methods.

PTS - Isn't there any way for our American readers to invest legally overseas without having to report their investments?

DSS - Yes, but not many.

PTS - What are they?

DSS - Certificates for gold and other precious metals are, so far, exempt from (US) reporting requirements. Certificates stashed away offshore are not reportable. In essence you could have $25,000 or $25 million safely stashed away for a rainy day and not legally today required to report this to the US authorities.

PTS - Can you recommend any dealers that can assist our readers?

DSS - I could but I won't. I dislike making public recommendations. Many newsletter folks who do that often have an undisclosed interest in making such recommendations, i.e. they earn huge commissions from their readers. I therefore respectfully decline to recommend anyone.

PTS - Fair enough. What other vehicles can US residents use to legally avoid offshore reporting?

DSS - A very obvious but many times overlooked investment is real estate. If one purchased property in the UK market six or seven years ago, they would have made a killing and more likely than not tripled their investment. However there's a caveat here. Be advised that in the event you rent the property out and receive income, that is a reportable event and the income would most likely be taxable and reportable to the local country as well as to the US IRS. So do govern yourself accordingly.

Insurance is another excellent vehicle for US residents. The Swiss naturally offer the best value and policies for insurance and are experts dealing with Americans. Stick with the AAA rated Swiss Insurance companies and you'll be okay.

In you agree with me about the USD being overvalued and possibly could be devalued by the US government or by free market forces, then it might be worth your while to risk a small percentage of your net worth, perhaps ten percent in non USD securities. That acts as a hedge against devaluation of anything related to the dollar.

Stocks, bonds or other securities purchased directly (not from an agent,) from a foreign issuer, or from a bank do not currently trigger reporting requirements. Just make sure you DO NOT have an account at the bank when acquiring the securities, etc. Most important, which brings us to my last investment advice for those Americans wishing to legally avoid reporting requirements; place your securities into a private safe deposit box offshore.

PTS - Where?

There are many such safety deposit boxes, also known as vaults in cities everyone would love to visit once a year or so. Some of the better known places are in London, Switzerland and also Austria.

Some of the lesser known places are Canada, Mexico (not safe though,) and of course in several other Caribbean countries. Even such vault places exist in the US, practically in the South West part of the country. I am told that it is possible to open such a private safe deposit box or vault legally without government issued ID, e.g. one can use a camouflage passport. The reason is these establishments are not banks per se. Rather they're private companies and do not fall under federal guidelines regarding ID.

PTS - That's great information for our readers, thank you. But what about protecting one's privacy? What if anything can one do to protect what's left of their privacy today?

DSS - The very first step, and "THE" most essential one, would be to acquire a 2nd passport from another country. Try to obtain that is valid for ten years and can be renewed for life.

PTS - That's easier said than done. Besides only a handful of passports by investment program are around, aren't they?

DSS - Correct. Austria, St. Kitts & Nevis and the Commonwealth of Dominica currently offer the possibility of acquiring legal citizenship on the basis of an investment and without prior residence requirements.

However you are looking at the very real possibility of investing a quarter of a million USD for a passport and never seeing your investment again. That is way beyond the financial capability of most persons looking to protect their privacy.

Worse each of the above countries reports your new citizenship to your home country. So what privacy is there in that, especially for a quarter of a million or more?

PTS - That paints a bleak and dismal picture for Americans, doesn't it?

DSS - Not necessarily. Citizenship through ancestry is a real possibility. Being Jewish or having a parent or grandparent or even if your spouse has a parent or grandparent that is or was Irish or born in Ireland offers the opportunity to obtain a valued European Union passport. In the event you are Jewish, or your mother was Jewish and you're so inclined, an Israeli passport is possible if you dare travel on and have one.

If either of the above is your case, contact your nearest Irish or Israeli consulate for the latest details and guidelines on obtaining citizenship.

PTS - That's good advice. But what about those who don't have ancestors qualifying them for a passport? How about those that don't have $250,000 or more to hand over for a new citizenship?

DSS - Marriage to a foreign national, in most cases, entitles one to a new citizenship if they live in their spouse's homeland for a period of time. In addition 5 years residency in a foreign land affords one the opportunity to become naturalized in that country and receive their new citizenship and a new passport.

Best of all Venezuela and Brazil offer special possibilities for those on a budget who are interested in a second passport. For a small investment starting at Euro 40,000, a second citizenship is possible, and you may be able to receive a name change as well.

PTS - Isn't that, Euro 40,000 still expensive?

DSS - That depends on how you look at things. For one person a glass can be half empty. For another it can be half full. Assuming one is 40 years old, they'll most likely live another 40 years give or take.

If you amortize your investment in a Brazilian on Venezuelan citizenship, that averages out to just Euro 1,000 per year. That's pretty cheap life insurance in my opinion.

PTS - Agreed. But how can one avail themselves of that opportunity?

DSS - You have to be one of my clients to receive that information.

[Much laughter]

PTS - Okay then, how does one become one of your clients?

DSS - Now that was a leading question wasn't it? As you very well know I am more or less retired. I have a handful of very wealthy clients who pay me handsomely with a bi-yearly retainer. I'm really not interested in taking on additional clients, at least at this time.

PTS - Come on Doc. We go back a long time. Can't you help our reader's?

DSS - Suffice that said; in the event you (PT Shamrock,) were to bring to the table 15 or 20 serious players, ready, willing and able to acquire a second nationality from Brazil or Venezuela, or to become a legal resident within the European Union or a few select other countries (which leads to naturalization, citizenship and a passport,) and you do all the leg work, then I would agree to service them on that basis.

That said I'm not interested in dealing with looking loos, time wasters or those looking for free information. I'm too old and getting too grumpy for such nonsense anymore.

So I'll repeat; if you vet the potential candidates and bring 15 to 20 serious players to the table, then I would proceed on that basis.

PTS - Excellent. Let's do it.

[Editor's note: Discussion takes place about requirements, cost and other modalities. Dinner break]

End of Interview Part I

Click here for Part II

To access our past missives just click here.

Click here to subscribe to our FREE privacy newsletter, PTBuzz.