Posted on 12/03/2002 5:34:47 PM PST by Action-America
A Glimmer of Hope
Dear A-Letter Reader:
In the April 17, 2002 A-Letter, I wrote about an obscure type of treaty called a "MLAT," or Mutual Legal Assistance Treaty.
MLATs give governments the right to gather evidence and seize assets without a judicial hearing and in some cases, with no right of appeal to any court. The treaties essentially override all confidentiality laws that might otherwise apply. And their one-sidedness is an invitation to serious abuse.
The US has more than 50 MLATs in effect, more than any other country. Since the first MLAT came into effect in 1977, they have been used to gather evidence in hundreds of cases and to seize billions of dollars in alleged criminal assets.
But thanks to a mostly-overlooked decision by the Supreme Court of British Columbia, abuses by US agents using MLATs may be severely curtailed.
In this case, Chief Justice Bruce COHEN, writing for the court, denied a request for information via the US-Canada MLAT due to a finding of "abuse of process" by the IRS in connection with efforts to obtain records relating to alleged tax offenses. It ordered that records seized by the IRS in a search of the Vancouver offices of offshore promoter Jerome SCHNEIDER be returned to Schneider's possession.
This is an important case, and not only due of the notoriety of Schneider, who for more than 20 years has promoted the use of private banks in offshore jurisdictions to supposedly shelter income from tax. According to international tax attorney Bruce ZAGARIS, it is a setback to the United States, because, "The case shows the ability of targeted persons to raise constitutional and other legal issues, even though new US- MLATs expressly state that MLATs are between the treaty states only and do not give rise to any rights of the investigated, defendants or third parties." (International Enforcement Law Reporter, October 2002).
This decision is a glimmer of hope for anyone concerned about the proliferation of unconstitutional treaties between the US and other countries that purport to eliminate the constitutional rights of investigative targets...
And for that, we ironically must give credit to another country. Thank you, Judge Cohen.
That's the way that it looks from here.
Mark Nestmann
BTW, I just bought Nestman's report on MLAT's and to say that it is an interesting read would be putting it mildly. It lists all current US- MLATs (the original version only listed about 30, but the new version lists over 50) and analyzes their impact on offshore investors. When you read it, you will find that in many cases, the IRS or other US agency can use a MLAT to seize your offshore assets and you have no legal recourse in either the foreign country or in US courts. They use the MLAT to completely circumvent our protections under the Constitution.
But, to make matters worse, the US government splits the take with the cooperating foreign government, which fosters a bounty hunter mentality. It's basically boils down to, "You sign this treaty and we'll give you half of everything we get." For many less than honorable governments, that's all the enticement that they need.
If an MLAT is in effect, the IRS or other government agency can go on "fishing expeditions" that are expressley prohibited in the United States. In many cases, even if you aren't engaged in anything that even remotely resembles an illegal activity, they can seize your assets and you have no legal recourse in either the foreign jurisdiction or in US courts. Furthermore, even if you manage to get your case heard in a US court and you somehow manage to win, the most that you can get back, is the portion kept by the US agency.
Fortunately, ther are still quite a number of nations that still refuse to sign MLAT's with the US, that would have the effect of circumventing due process.
It's interesting that this ruling in the favor of the rights of investors should have come out of such a socialist leaning nation as Canada. This, of course, gives rise to the question, "If a socialist leaning nation like Canada had to stand up for our rights, what does that say about our own government?"
If you are interested in getting Nestmann's MLAT report, there is a link where you can order it at the end of the original article, but I left it out here, because it might be construed as an advertisement.
Now, before any of you start going off on Schneider, I want to state that I personally think that his advise is far too borderline to be depended on. I have read a lot of his works and researched the applicable laws and I find that, although what he advises is probably legal in the strictest sense, it is very close to the edge. As a result, if you follow his advice, a jury could easily come down on the wrong side. At the very least, you will need to spend tons of money on good attorneys, to make certain that doesn't happen.
But, as the article pointed out, it is not the individual involved, that makes this such an important case, but the fact that it demonstrates the right of targeted persons to raise constitutional and other legal issues, even though the wording of the new US-MLAT's is specifically designed to deny the right of legal redress to the investigated, citizens or third parties.
This MLAT?
"101st Congress
1st Session
October 24, 1989, 5:15 p.m.
Page S-13889 Temp. Record
Vote No. 267
MLAT TREATY WITH CANADA/Ratification
...By unanimous consent, two amendments of understanding would be included in each of the MLAT resolutions of ratification. The first amendment would add that nothing in the treaty requires or authorizes legislation or other action by the United States that is prohibited by the U.S. Constitution... "
MLAT TREATY WITH CANADA/Ratification
"...nothing in the treaty requires or authorizes legislation or other action by the United States that is prohibited by the U.S. Constitution... "
Actually, you will find language like that in most MLAT's between major nations. That's because neither nation can strong arm the other. The real problems are the MLAT's that the US has intimidated or bribed many smaller nations into signing. By offering a small tax haven nation half of everything that they turn over to US authorities and threatening sanctions against them if they don't, the US authorities often force/entice the smaller nations to sign very one-sided MLAT's.
Remember that there are currently over 50 MLAT's in force between the US and other countries. Only a handful of those are with other large nations, that can stand up to the bullying tactics, that the US has become known for in recent years.
Only a small percentage of Americans try to legally shelter their assets in Canada. That's because it's much easier to recognize legal tax savings in a dozen or so Caribbean nations. Those are the ones that I would worry about. The fact is, that every MLAT is different. Some are not bad at all. But, most have one or more serious flaws and even those have different flaws. It isn't the 10 or so fairly reasonable MLAT's that are the problem. It's the 40 or so one-sided MLAT's between the US and the small nations most favored for legal tax shelters and privacy that should be of major concern.
I must agree with taxcontrol on the idea of an amendment that would specifically limit what treaties can be signed and what provisions of existing treaties might be ruled invalid, based upon the Constitution.
I am not well versed enough to comment on the MLAT treaties and thank you for your information. However, I do know that under the current Constitution, treaties are afforded "law of the land" standing. Meaning, in essence, that they have simular weight as amendments to the constitution but don't actually modify the constitution.
I had an internation law professor explain it to me once. It was all rather confusing but the thing I learned was that treaties have equal weight as amendments. In my mind that is wrong.
It also represents a threat to the rights recognized under the bill of rights as it would be possible in theory to sign a treaty that prohibits the sale of small arms ammunition. This would directly infringe on the 2nd and could then be used by the liberal groups to force their agenda. In fact, just about any treaty could be structured to do so.
So, my point is to preempt such action by proposing a change to the constitution while control of the Congress is in conservative hands.
I also think that this has the chance of being a "sleeper" issue with the voters. It will give a chance to show that Republicans are pro-Constitution, and if the Dems oppose, show that they are anti-Constitution. The effect will be to motivate the conservative base to get out the vote. Very useful to winning an election.
If given enough attention, might even take the Dem talking points off the table and out of the election.
I can hope cant I?
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