Lawyers in a Panama Papers Criminal Trial Argue That “Tax Haven” and “Shell” Should Be Excluded From the Prosecution’s Case Due to the Bias They Cause

The time has come for some of the criminal trials related to the Panama Papers to approach, which has led to a return of the controversy related to these papers. Recently, one set of lawyers argued against the use of terms like “shell” and “tax haven” in the prosecution’s case, citing the inherent bias in the terminologies.

The Motions

The motions in question came from the lawyers for Richard Gaffey, an accountant from Massachusetts, and Joachim von der Goltz, a former taxpayer in the United States. The pair’s lawyers filed motions in the Southern District of New York that could dramatically hurt the prosecution’s case against them, regarding allegations that include money laundering, wire fraud, and tax evasion.

The Case

Prosecutors have alleged that von der Goltz used offshore companies to evade paying U.S. taxes. They claim that Gaffey assisted von der Goltz, as did employees of Mossack Fonseca, a Panama law firm. The case relies on the law firm’s documents that were leaked as part of the Panama Papers. That law firm’s documents make up the bulk of the leaked records from the case.

The prosecution goes on to allege that Gaffey and von der Goltz hid the latter’s shell company ownership as well as millions worth of assets. They did so via false claims that the Guatemalan mother of von der Goltz was the owner.

Unsurprisingly, von der Goltz and Gaffey deny these charges. Von der Goltz further claims that he managed the relevant companies for his mother.

Details on the Motions

Because of the unusual nature of the motions that the lawyers filed, more detail is necessary. Recently, the attorneys motioned for the judge in the case, Judge Richard M Berman, to exclude parts of the evidence. They argued that these portions were prejudicial, hurting the chances of a fair trial from the jury. So far, Judge Berman has not made a ruling.

Specifically, the lawyers argued that using the words “tax haven” and “shell” to describe a company would “inflame passions” of the jury. They explained that due to the vast media coverage of the Panama Papers, including books, motion pictures, and newspaper articles, these terms have taken on a less-than-pleasant connotation. The lawyers argued that this coverage has led to “shell companies” becoming a term that is equated with illicit financial activity and calling it a “four-letter word.”

Other Related Motions

Additionally, the attorneys argued that it should not be allowed for the federal government to claim that von der Goltz’s alleged evasion of taxes made U.S. citizens its victims. The lawyers argued that this specific point that the prosecution has outlined could lead to the jury incorrectly assuming that von der Goltz is directly connected to the widespread impact of the various “alleged misdeeds” described in the Panama Papers.

Furthermore, the attorneys requested that Judge Berman prevent evidence related to Gaffey’s conversations that he had with Marianna Olszewski, another previous client of Mossack Fonseca. The allegations indicate that Gaffey gave this financial guru and client advice on evading taxes, which Olszewski allegedly did not follow. As such, Olszewski has not faced any charges.

The attorneys argue that these exchanges between Olszewski and Gaffey inaccurately show Gaffey as an accountant that regularly helps clients cheat with taxes. The defense lawyers also want the Judge to exclude the testimony from IRS agents, including a German police officer and a computer forensics specialist.

What It Means

The trial in question is scheduled to start January 13, and the potential implications of the Judge’s ruling could be far-reaching. If he agrees with these motions to ban evidence using terms like “shell” and “tax haven,” the prosecution would have a much weaker case. It could also make it easier for high net worth individuals facing similar charges to avoid them in the future.


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