What You Need to Know About the Panama Papers

“[Our commitment to our clients’ privacy] has always been paramount, and in this regard your confidential information is stored in our state-of-the-art data center, and any communication within our global network is handled through an encryption algorithm that complies with the highest world-class standards.”

-Mossack & Fonseca Co. (Panama) April 2013 statement to clients nearly two years before it became known that 11.5 million electronic data records relating to 214,000 business entities had been hacked and released to the public.

On April 4, 2016, it was revealed that data from the computer servers of the Panama law firm Mossack & Fonseca Co. had been stolen and that about 2.6 terabytes of information had been delivered to a team of investigative journalists who analyzed the information for over a year. The world woke up to learn that the International Consortium of Investigative Journalists (ICIJ) had obtained and poured over e-mails, spread sheets, incorporation documents and client files of Mossack Fonseca. The ICIJ set up a website devoted to its findings and conclusions. See https://panamapapers.icij.org/.

The amount of information stolen from Mossack Fonseca’s servers is mind-boggling. To place it into perspective, if one equates Julian Assange’s Wiki-Leaks trove to be a pail of water (1.7 Gigabytes), the so-called Panama Papers from Mossack Fonseca would roughly equate to an Olympic-sized swimming pool. All of it secret, and all of it client-confidential. It’s not a treasure trove; it’s Treasure Island.

ICIJ has attempted to make the case Mossack Fonseca was the go-to law firm for any criminal, despot, tax-evader or philandering husband about to leave his wife to anonymously and securely protect assets. All of it safe from scrutiny and prying eyes of law enforcement agencies, governments, courts, legislative bodies, and spouses. Mossack Fonseca had one problem though: their servers were not as secure and encrypted as previously thought. Consequently, the law firm and the anonymous entities it created have been linked to 140 politicians and public officials from around the world, including 12 current or former world leaders. Hollywood personalities, fraudsters, billionaires, drug traffickers, and sports stars also were found to be associated with the firm. 11.5 million data records have been laid bare for every law enforcement and regulatory agency around the world to see.

Certainly, this massive breach in security will cause some to raise eyebrows and others to have severe intestinal dysfunction. There should be a concern on many levels, and the fallout will be huge. For Mossack Fonseca and its clients, they are now – or soon will be – under the scrutiny of criminal and regulatory investigations throughout the world, including – no doubt – the United States. In the U.S., the firm and its clients will surely be investigated for tax evasion, money laundering, fraud, racketeering and violations of the Securities Act and the Foreign Corrupt Practices Act. In case you think it was a typo, it was not: clients linked to Mossack Fonseca are at severe risk of investigation as well, even perhaps as co-conspirators with the law firm itself and risk penalties based upon all of law firm’s acts. Keep in mind that – under U.S. Law – one co-conspirator need not know the identity, or even the existence, of other co-conspirators. This means that the United States Department of Justice and the Internal Revenue Service can, and probably will, look to every Mossack Fonseca client as a potential co-conspirator and co-racketeer.

Click here to read complete article – What You Need to Know about the Panama Papers.pdf

Date Published: February 7, 2017

Written by: William Hughes Jr.

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