Articles Tagged with corruption

IMG_0081-300x193In his book, Moneyland, Oliver Bullough details how wealthy individuals and large companies take advantage of a long list of loopholes to hide profits and leverage their control over the world. With a combination of geography and demography, Bullough takes readers on a journey of the corrupt practices followed by some of the most influential entities in the world.

Tax havens and lenient laws are part of what makes such an extreme level of corruption possible, and seemingly legal. Known tax havens like the Cayman Islands, Bermuda, and Switzerland have been used by corporations and individuals around the world to hide profits and reduce tax fees for decades. With little to no taxes owed on profits in these locations, tax havens are extremely inviting to the greedy. But how does it work?

The idea is quite simple. For example, a company in the United States merely has to open a subsidiary located in a tax haven to reroute profits and enjoy the more lenient practices of that area. This practice is only made safer for the individuals involved due to the fact that most tax havens have little to no legislation preventing or criminalizing such acts.

Adidas-300x200Jim Gatto, the former head of basketball marketing at Adidas, was sentenced to nine months in federal prison following allegations that he committed wire fraud to lure amateur basketball players to Adidas-sponsored programs at numerous universities. Also sentenced were co-defendants, Merl Code and Christian Dawkins, who both must serve six months in federal prison for their participation in the scheme.

The conviction took place in October after it was found that Gatto, Code, and Dawkins, sent payments to amateur basketball players and their families to push them to enroll in Adidas-sponsored programs around the country, including at the University of Kansas, University of Miami, and University of Louisville. Code was a former Adidas consultant, while Dawkins was an aspiring sports agent. In driving amateur players to these universities, it was alleged that the defendants hoped to one day secure their services upon entry into the NBA.

During the trial, the families of each of the defendants were present in the courtroom as the defense presented Gatto, Code, and Dawkins as “family men”.

Government-contractor-300x199The United States Department of Justice pressed a civil forfeiture case involving wrongfully acquired assets retained by Hikmatullah Shadman, a government contractor in Afghanistan. The DOJ settled the case with forfeiture of $25 million to the United States as recompense for the unlawful acquisition of United States assets for himself.

Hikmatullah Shadman is an Afghan national operating multiple companies serving as delivery suppliers for U.S. service members located throughout Afghanistan. One was Hikmat Shadman Logistics Services Company (HSLSC). From November 2010 to March 2012, it charged more than $77 million to the United States for delivering supplies as a government contractor in Afghanistan.

The investigation revealed that charges were disproportionate to what was transported. The prices for such transportation services were also inflated. In addition to the civil forfeiture and False Claims Allegations Act Resolutions, HSLSC will also be charged criminally by the U.S. Attorney’s Office in the Eastern District of North Carolina. This company has pleaded guilty on Jan 3rd to two accounts of paying gratuities to U.S. service members in Afghanistan, as well as one act of conspiracy to do the same. The sentence for this criminal case resulted in HSLSC paying an $810,000 fine and a forfeit of $190,000 to the United States. They will be on probation for five years from seeking any business with the United States.

Foreign Soil SEC Corruption Cases Are Now Up Against a Ticking Clock

SEC corruptionA Supreme Court ruling, this summer, has put the U.S. Securities and Exchange Commission against the clock to wrap up foreign corruption cases.  According to an article by the Wall Street Journal, the recent ruling may impact SEC corruption cases when it comes to international anti-bribery laws.

The Ruling