Category: Money


Donald Trump put his name to a business deal intended to prevent the US Government collecting up to $100m in taxes, it is claimed. The Daily Telegraph obtained copies of two letters signed by the presumptive Republican presidential nominee in 2007, in relation to a $50m deal between the Bayrock Group, a US property firm, and Iceland’s FL Group.

In the first letter, the money is characterised as an investment by FL in four of Bayrock’s subsidiary partnerships, including the Trump SoHo, Mr Trump’s cherished Manhattan hotel and apartment building. But in the second letter, signed several weeks later, the deal is instead described as a “loan”.

Court papers seen by the newspaper claim that the change amounted to fraud, and that the agreement was altered to avoid millions in prospective tax payments. When partners sell a stake in a partnership in New York, they are liable for more than 40 per cent in tax on their gain – but if such a deal is labelled as a loan, the tax is not applicable.

At the time of the deal, Mr Trump had licensed his name to three Bayrock building projects, including the Trump SoHo, in which Mr Trump had a 15 per cent stake. His children Ivanka and Donald Jr also shared a three per cent stake in the project. Bayrock’s ties to Mr Trump were close: the company was based in Trump Tower, and the agreement with FL specified that the billionaire’s consent was required for the deal to proceed.

Former Bayrock employees, including the firm’s former finance director Jody Kriss, have alleged in a legal complaint that the “loan” deal was designed specifically to evade around $20m in tax related to the sale, as well as an estimated $80 in taxes on FL’s future profits from the property deal. Experts who assessed the documents told the Telegraph that the deal did indeed appear to be disguised as a loan, not an equity investment, in order to avoid tax.

Mr Trump’s lawyer, Alan Garten, told the newspaper that the mogul and reality TV star “had nothing to do with that transaction” and that signing the letters simply confirmed his participation as a “limited partner” in the projects. “He was not signing off on the deal,” Mr Garten said, insisting Mr Trump was not connected to the agreement’s tax implications because he was not a “party” to the final transaction between FL and Bayrock.

Bayrock said the allegations in the complaint by its ex-employees were “baseless”, that the complaint itself was “no longer operative” and that many of the allegations it contained “were based on misappropriated attorney/client privileged information [and] ordered stricken by a federal Court.” In a statement, the firm said the US Internal Revenue Service had audited the tax treatment of the FL loan found that it was “entirely appropriate,” adding: “The terms, provisions and structure of the FL Loan transaction evolved (as do most such transactions) and its final form was vetted and approved by outside accountants and tax counsel for both Bayrock and FL.”

FL Group went bankrupt shortly after the deal, during the Icelandic banking crisis of 2008.

Mr Trump has broken with recent political tradition by refusing to release his tax returns ahead of the presidential election in November, but said earlier this month that he “[fights] very hard to pay as little tax as possible.”

Source: Donald Trump signed off deal preventing collection of millions in US taxes | US elections | News | The Independent

The announcement by the MPs’ watchdog – the Independent Parliamentary Standards Authority (Ipsa) – comes after all MPs already received a 1.3 per cent increase to their basic salary in April and a 10 per cent pay rise last July.

The increase of £15,025 on top of a basic wage of £79,000 goes to members of a committee of senior MPs called the Panel of Chairs which has 39 members.

However, the pay rise only affects 16 of the MPs because 20 members already receive the money for serving on the panel for more than five years while another three are chairs of select committees in the House and as a result also already receive the supplement.

Members on the Panel of Chairs are selected by the Speaker of the Commons, John Bercow, and chair public bill committees, other general committees, and debates in Westminster Hall.

Ipsa chair Sir Ian Kennedy said: “Our decision reflects our conclusion that MPs who act as Chairs of all Committees should be remunerated at the same rate for the work that they do in Parliament.”

Source: Senior MPs pay rise will cost the taxpayer an extra £130k | Politics | News | Daily Express

Members of an international crime syndicate are suspected of stealing more than 1.4bn yen (US$12.7m) from cash machines in Japan in the space of less than three hours, in an audacious heist that involved thousands of coordinated withdrawals.

Police believe that as many as 100 people, none of whom have been apprehended, worked together using forged credit cards containing account details illegally obtained from a bank in South Africa.

The culprits used the fake cards at 1,400 convenience store automated teller machines on the morning of 15 May, according to police. Each made a single withdrawal of 100,000 yen – the maximum allowed by the cash machines.

The thieves targeted cash machines in the capital Tokyo and 16 other prefectures, according to Kyodo News.

Japanese police have asked the authorities in South Africa, via Interpol, to establish how the credit card information was obtained.

Transaction data retrieved from the cash machines suggests that the criminals used information for 1,600 credit cards issued by the South African bank, which has not been named.

The Yomiuri Shimbun reported that the withdrawals began just after 5am last Sunday, with the last one made just before 8am the same day.

Reports suggest that members of the gang may no longer be in Japan. By using cards that were issued in a different country from the one in which the fraud took place – and on a day of the week when banks were closed – they were probably able to buy themselves enough time to leave the country before their crime was discovered.

Japan is the latest victim of a string of ATM heists using credit cards forged using leaked data. In one case, thieves withdrew 4.5bn yen in 26 countries , including Japan, in 2012 and 2013, the Yomiuri said.

Source: 100 thieves steal $13m in three hours from cash machines across Japan | World news | The Guardian

Shortly after 7 p.m. on January 12, 2015, a message from a secure computer terminal at Banco del Austro (BDA) in Ecuador instructed San Francisco-based Wells Fargo to transfer money to bank accounts in Hong Kong.

Wells Fargo complied. Over 10 days, Wells approved a total of at least 12 transfers of BDA funds requested over the secure SWIFT system.

The SWIFT network – which allows banks to process billions of dollars in transfers each day – is considered the backbone of international banking. In all, Wells Fargo transferred $12 million of BDA’s money to accounts across the globe.

Both banks now believe those funds were stolen by unidentified hackers, according to documents in a BDA lawsuit filed against Wells Fargo in New York this year.

BDA declined comment. Wells Fargo, which also initially declined comment on the lawsuit, said in a statement to Reuters on Friday that it “properly processed the wire instructions received via authenticated SWIFT messages” and was not responsible for BDA’s losses.

BDA is suing Wells Fargo on the basis that the U.S. bank should have flagged the transactions as suspicious.

Wells Fargo has countered that security lapses in BDA’s own operations caused the Ecuadorean bank’s losses. Hackers had secured a BDA employee’s SWIFT logon credentials, Wells Fargo said in a February court filing.

SWIFT, an acronym for the Society for Worldwide Interbank Financial Telecommunication, is not a party to the lawsuit.

Neither bank reported the theft to SWIFT, which said it first learned about the cyber attack from a Reuters inquiry.

“We were not aware,” SWIFT said in a statement responding to Reuters inquiries. “We need to be informed by customers of such frauds if they relate to our products and services, so that we can inform and support the wider community. We have been in touch with the bank concerned to get more information, and are reminding customers of their obligations to share such information with us.”

SWIFT says it requires customer to notify SWIFT of problems that can affect the “confidentiality, integrity, or availability of SWIFT service.”

SWIFT, however, has no rule specifically requiring client banks to report hacking thefts. Banks often do not report such attacks out of concern they make the institution appear vulnerable, former SWIFT employees and cyber security experts told Reuters.

The Ecuador case illuminates a central problem with preventing such fraudulent transfers: Neither SWIFT nor its client banks have a full picture of the frequency or the details of cyber thefts made through the network, according to more than dozen former SWIFT executives, users and cyber security experts interviewed by Reuters.

The case – details of which have not been previously reported – raises new questions about the oversight of the SWIFT network and its communications with member banks about cyber thefts and risks. The network has faced intense scrutiny since cyber thieves stole $81 million (£56 million) in February from a Bangladesh central bank account at the Federal Reserve Bank of New York.

It’s unclear what SWIFT tells its member banks when it does find out about cyber thefts, which are typically first discovered by the bank that has been defrauded. SWIFT spokeswoman Natasha de Terán said that the organisation “was transparent with its users” but declined to elaborate. SWIFT declined to answer specific questions about its policies for disclosing breaches.

On Friday, following the publication of this Reuters story, SWIFT urged all of its users to notify the network of cyber attacks.

“It is essential that you share critical security information related to SWIFT with us,” SWIFT said in a communication to users.

Reuters was unable to determine the number or frequency of cyber attacks involving the SWIFT system, or how often the banks report them to SWIFT officials.

The lack of disclosure may foster overconfidence in SWIFT network security by banks, which routinely approve transfer requests made through the messaging network without additional verification, former SWIFT employees and cyber security experts said.

The criminals behind such heists are exploiting banks’ willingness to approve SWIFT requests at face value, rather than making additional manual or automated checks, said John Doyle, who held a variety of senior roles at SWIFT between 1980 and 2005.

“SWIFT doesn’t replace prudent banking practice” he said, noting that banks should verify the authenticity of withdrawal or transfer requests, as they would for money transfers outside the SWIFT system.

SWIFT commits to checking the codes on messages sent into its system, to ensure the message has originated from a client’s terminal, and to send it to the intended recipient quickly and securely, former SWIFT executives and cyber security experts said. But once cyber-thieves obtain legitimate codes and credentials, they said, SWIFT has no way of knowing they are not the true account holders.

The Bank for International Settlements, a trade body for central banks, said in a November report that increased information sharing on cyber attacks is crucial to helping financial institutions manage the risk.

“The more they share the better,” said Leo Taddeo, chief security officer at Cryptzone and a former special agent in charge with the FBI’s cyber crime division in New York.


SWIFT, a cooperative owned and governed by representatives of the banks it serves, was founded in 1973 and operates a secure messaging network that has been considered reliable for four decades. But recent attacks involving the Belgium-based cooperative have underscored how the network’s central role in global finance also presents systemic risk.

SWIFT is not regulated, but a group of ten central banks from developed nations, led by the National Bank of Belgium, oversee the organisation. Among its stated guidelines is a requirement to provide clients with enough information to enable them “to manage adequately the risks related to their use of SWIFT.”

However, some former SWIFT employees said that the cooperative struggles to keep banks informed on risks of cyber fraud because of a lack of cooperation from the banks themselves. SWIFT’s 25-member board of directors is filled with representatives of larger banks.

“The banks are not going to tell us too much,” said Doyle, the former SWIFT executive. “They wouldn’t like to destabilise confidence in their institution.”

Banks also fear notifying SWIFT or law enforcement of security breaches because that could lead to regulatory investigations that highlight failures of risk management or compliance that could embarrass top managers, said Hugh Cumberland, a former SWIFT marketing executive who is now a senior associate with cyber security firm Post-Quantum.

Cases of unauthorised money transfers rarely become public, in part because disagreements are usually settled bilaterally or through arbitration, which is typically private, said Salvatore Scanio, a lawyer at Washington, D.C.-based Ludwig & Robinson. Scanio said he consulted on a dispute involving millions of dollars of stolen funds and the sending of fraudulent SWIFT messages similar to the BDA attack. He declined to name the parties or provide other details.

Theoretically, SWIFT could require its customers, mainly banks, to inform it of any attacks – given that no bank could risk the threat of exclusion from the network, said Lieven Lambrecht, the head of human resources at SWIFT for a year-and-a-half through May 2015.

But such a rule would require the agreement of its board, which is mainly made up of senior executives from the back office divisions of the largest western banks, who would be unlikely to approve such a policy, Lambrecht said.


This week, Vietnam’s Tien Phong Bank said its SWIFT account, too, was used in an attempted hack last year. That effort failed, but it is another sign that cyber-criminals are increasingly targeting the messaging network.

In the Ecuadorean case, Wells Fargo denies any liability for the fraudulent transfers from BDA accounts. Wells Fargo said in court records that it did not verify the authenticity of the BDA transfer requests because they came through SWIFT, which Wells called “among the most widely used and secure” systems for money transfers.

BDA is seeking recovery of the money, plus interest. Wells Fargo is attempting to have the case thrown out.

New York-based Citibank also transferred $1.8 million in response to fraudulent requests made through BDA’s SWIFT terminal, according to the BDA lawsuit against Wells Fargo.

Citibank repaid the $1.8 million to BDA, according to a BDA court filing in April. Citibank declined to comment.

For its part, Wells Fargo refunded to BDA $958,700 out of the $1,486,230 it transferred to an account in the name of a Jose Mariano Castillo at Wells Fargo in Los Angeles, according to the lawsuit. Reuters could not locate Castillo or verify his existence.


The BDA-Wells Fargo case is unusual in that one bank took its correspondent bank to court, thus making the details public, said Scanio, the Washington attorney.

BDA acknowledged in a January court filing that it took more than a week after the first fraudulent transfer request for BDA to discover the missing money.

After obtaining a BDA employee’s SWIFT logon, the thieves then fished out previously cancelled or rejected payment requests that remained in BDA’s SWIFT outbox.

They then altered the amounts and destinations on the transfer requests and reissued them, both banks said in filings.

While Wells Fargo has claimed in court filings that failures of security at BDA are to blame for the breach, BDA has alleged that Wells could easily have spotted and rejected the unusual transfers. BDA noted that the payment requests were made outside of its normal business hours and involved unusually large amounts.

The BDA theft and others underscore the need for banks on both sides of such transactions – often for massive sums – to rely less on SWIFT for security and strengthen their own verification protocols, Cumberland said.

“This image of the SWIFT network and the surrounding ecosystem being secure and impenetrable has encouraged complacency,” he said.

(Additional reporting by Jim Finkle in Boston and Alexandra Valencia in Quito; Editing by David Greising and Brian Thevenot)

Source: Special Report – Cyber thieves exploit banks’ faith in SWIFT transfer network | Reuters

David Cameron has defended a group of notorious British-controlled tax havens – arguing that criticism of their offshore regimes is “unfair”.

The group of territories, which includes the British Virgin Islands – at the centre of the Panama Papers storm – have long been criticised by campaigners for secrecy and sheltering wealthy individuals and companies from tax.

But the Prime Minister said the UK’s assorted Crown Dependencies and Overseas Territories were now being cooperative and praised their pledged adoption of new rules.

Labour leader Jeremy Corbyn criticised Mr Cameron’s approach.

“It’s interesting that the premier of the Cayman Islands Alden McLaughlin is today apparently celebrating his victory over the Prime Minister because he is saying that the information certainly will not be available publicly or available directly by any UK or non-Cayman Islands agency,” the Labour leader said.

“The Prime Minister is supposed to be chasing down tax evasion and tax avoidance, he’s supposed to be bringing it all into the open.”

Source: David Cameron says it is ‘unfair’ to criticise British-controlled tax havens | UK Politics | News | The Independent

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