By Garrett Sutton, Esq.

The scene is a lush, tastefully appointed resort right on the bay. Beautiful sand beaches lead to calm, blue green waters. On a patio overlooking the spectacular view a party is going on.

It is the welcoming event for what is claimed will be a powerful, eye-opening, three-day seminar. Cocktails in hand, attendees are getting to know people from all over the United States. They have all flown in to learn secrets that only the rich have access to, secrets that must be communicated confidentially outside of America.

Scam or Incredibly Great Investment? Offshore investing amidst luxury, lure and the promise of tax breaks.

A new friend of mine, whom we’ll call Joe, is in attendance. He makes a decent amount of money and is upset with all of the taxes he pays. So Joe has paid $7,500 to hear what the experts have to say.

As the ice breaks, the sun sets and the liquor does its job, the party starts to click. People are having fun, voices get louder and connections are made. Joe does not drink and is a sober observer to the frivolity.

He notices people taking photos of each other with digital cameras. One man in particular is getting groups of people together and taking photos. The man’s wife (or girlfriend or friend?) is a very attractive blond in her mid 30’s wearing a mildly revealing outfit. She is easily able to chat up the predominately male group of attendees. Joe gets a closer look at parts the others aren’t focusing on. She is wired for sound.

Her male friend brings another group over for photos and shared fun. Joe notices the man’s shoes. They are black, heavy lace ups, almost government issue.

Joe wonders who the couple works for. Are they with the seminar group, a kidnapping ring, or the U.S. government? Whoever they are with, they are good at what they do.

In the Light of Day, the Seminar Begins

The next morning the seminar begins. Larry, the tanned and well dressed promoter, gets up and gives a stirring speech. The man is seemingly very knowledgeable and is backed up by impressive testimonials and incredible color brochures. In his remarks he says people have made the right choice and that their lives will be positively changed by the information they are about to receive. He notes with great pride that he and his team are not lawyers, because lawyers don’t know/can’t appreciate/won’t give the advice this lucky group will be fortunate enough to take in over the next three days.

During the seminar Joe learns about offshore corporations and asset protection and offshore investing. He has made the very conscious decision not to buy anything or agree to any services while in Panama. As such, he was keenly able to observe both the overt and very subtle pressure being applied by the promoter and his attractive, well-spoken minions to “buy now”. The special pricing was not available once the seminar was over. (Why not? Joe pondered.) “Buying right now” was the smartest and most important decision you could ever make. (More important than marrying the right person and bringing great kids into the world?) If you didn’t “buy now” you would regret it for the rest of your life. (I will? Joe wondered.)

Joe became friends with a man named Scott from Spokane. They both liked fishing and white water rafting and thus hit it off. They differed in one big respect:

Scott was primed to buy.

Offshore Corporations and Trusts

Scott bought five of the offshore corporations and trusts they were promoting. The combination of the five entities was structured in such a way to provide maximum asset protection and tax savings. The structure cost $20,000 to set up, but Scott was assured he would save $50,000 a year in taxes for the rest of his life. Who wouldn’t spend that kind of money for the savings? Actually, Joe wouldn’t.

Scott heard Nigel, a distinguished sort of British gentleman, present a seminar on managed offshore investment accounts where returns over 25% per year were guaranteed. Nigel cogently explained that the U.S. government deliberately limited the amount of money its citizens could make, and that the best returns were made by smart, independent thinkers investing offshore. Scott could not wait to turn over $250,000 to Nigel, his new investment advisor located in Panama. Joe actually could wait, and did.

Joe and Scott met a third attendee at the seminar. Ron was from Cincinnati and made it a point to meet as many people as he could at the Panama Seminar.

Ron just happened to be putting together a real estate deal in Belize. He needed asset protection advice, which is why he has spent $7,500 to attend the event (which was the best he’d ever seen). Ron and Scott had an involved conversation about Ron’s Belize project over lunch one day. Joe politely listened but did not rise to the bait, which was a 100% return in 18 months. Scott committed to an investment of $100,000, which Ron indicated had to be wired in the next 24 hours.

The investment was almost full and Ron, Scott’s new friend, wanted to make sure he got in on this incredible deal.

The Panama Seminar ended with a going away party. Once again, the liquor flowed and did its job. Some attendees talked of how much they learned and benefitted and fanned the fires of value and positive word of mouth. Joe, always the critical thinker, asked himself whether these hugely satisfied customers, who always seemed to be the first to jump up and buy the next product in the seminar, were well-placed shills.

The attractive blonde was again dazzling to look at, and she held court with a large number of new friends she had made. They were eating out of her hand and talking freely. More photos were taken and more confidences revealed. Most attendees went to bed satisfied with the whole event and the money they spent.

Joe returned home and decided against buying any offshore structures and investments. It just didn’t feel right. After a while the promoter’s pressuring sales minions stopped calling.

The Reality – A Few Months Later

But Joe did keep in touch with Scott. They spoke every month or so. At first, Scott was ecstatic with the results of the seminar. The offshore structures were in place and he was ready for tax saving. The managed offshore account was doing well. And Ron’s Belize project was funded and poised to provide a quick and significant return on investment.

But after three months Scott’s tone began to change. He told Joe his accountant couldn’t condone or wouldn’t deal with the offshore structures. Initially, Scott gave his CPA the party line he learned at the Panama Seminar: USA professionals do not and will not ever understand the complexities of beneficial offshore structures. But over time and into the next year his CPA’s objections took hold and were strengthened by a surprise IRS audit. Scott casually mentioned that two other seminar attendees he kept in touch with were suddenly being audited, but did not initially connect the dots.

Six months later Joe learned from Scott that Nigel, the offshore investment manager, had suddenly gone out of business. There was no forwarding number or address. Nigel was nowhere to be found. The country of Panama did not insure his investment account. Scott’s $250,000 had disappeared.

Then Scott received the news that the Belize project had failed. The story was that Ron from Cincinnati had not made the last $50,000 payment to the developer.

The $750,000 non-refundable deposit, including Scott’s $100,000 investment, would not be returned and was lost.

As Joe tried to console Scott he saw another side of his new friend. Just as Scott was quick to rise to the bait, he was dogged in fighting someone who took advantage of him.

Scott was on a mission and started digging. He soon learned that Larry, the promoter, had left Las Vegas after being charged for fraud in an online Ponzi scheme. Like so many criminals before him, Larry was able to easily reemerge without training or scruples as an offshore asset protection expert.

Scott learned from other investigators that there were very few barriers to entry to this scam. One could easily rent out a Panama hotel and lure attendees.

Printing color brochures was not difficult. In fact, Scott learned a rule of thumb in the asset protection world: the more expensive the color brochures, the bigger the scam.

Joe continued talking with Scott and was amazed by what he dug up. Nigel was a convicted felon from London who had drifted down to the Caribbean. Hooking up with Larry, they created a fake investment firm out of Nevis and Panama. Together, through seminars and other means, they had taken in over $12 million in investment monies by promising huge returns. When it was time to pull the plug they each disappeared with $6 million.

Ron from Cincinnati was one of the many shills in the room at the Panama seminar. He was there to praise Larry’s knowledge and creativity. He was one of the first five people to jump up and buy each session. His enthusiasm was contagious and others followed him with credit cards in hand.

Scott learned, not surprisingly, the Belize project was a scam. The developer, Ron and Larry split the $750,000 non-refundable deposit between themselves.

While Larry had disappeared, Ron and the developer were in Scott’s sights. Using very unorthodox and highly aggressive tactics not condoned by this U.S. Civil Courts, Scott was able to get his $100,000 back.

Still, Scott was out $270,000 from his experience in Panama. As he and Joe continued to keep in touch, Scott always hailed Joe for his restraint amongst the purveyors of greed and fear at the Panama Seminar.