Wednesday, March 9, 2016

Rising and Falling Fortunes: Rothschild Empire Faces Criminal Investigation in US and France

by Nomad

It might be a name long associated with fabulous wealth and enormous political influence, but the Rothschild Empire has been had its share of humiliations of late.

Hard Times for Billionaire Dynasty

As pioneers of international banking (as well as probably the wealthiest family in the history of the world,) the Rothschilds have been the subject of many a conspiracy theory. The exact amount of their family fortune is undisclosed, but by one conservative estimate, the Rothschild family controls assets worth more than $350 billion when each of their personal fortunes is combined.

The Rothschild dynasty is the el supreme of all family dynasties and went thing go bad there are plenty of people to gloat and plenty more to send their condolences. Ah, the way of the world is such like. 
The family business has apparently been hit hard by the worldwide economic slump. That's not all the problems they have been facing. 

In June of last year, Baron David de Rothschild, chairman of the Rothschild Financial Services Group since 2003, was indicted by French police for his role in a fraud case. The independent investment banking organization which offers financial services to governments, corporations, and individuals worldwide. was charged with "falsely advertising an equity release loan scheme, bought into by more than 130 pensioners between 2005 and 2008."
More than 20 British pensioners in Spain took up legal action against Rothschild’s company after losing their dream properties and thousands of euros.
French investigators claimed that Rothschild’s product, the Credit Select Series Mortgage Loan, was sold to retirees as a legal tax haven, specifically as a mean to reduce the apparent value of their homes for inheritance tax mitigation purposes.

The problem is that it wasn't as legal as Rothschild executives had claimed. The French tax agency ruled that such a scheme was a nothing more than fraud and that Rothschild should be held accountable. Said one of the French prosecutors:
“In short, independently of what happened to the investment, Rothschild advertised a loan aimed at reducing inheritance tax, which is a breach of tax law."
The victims who now stand to lose their homes told the courts that they felt confident of the financial packages, having put their faith in the Rothschild name. In its defense, the investment banking company pointed out that its involvement was limited. It had only provided the loan, and "was not involved in the investment side of the deal, which was carried out by financial intermediaries based in Spain, most of whom were British."

Another source also noted that the borrowers were advised to seek outside legal advice before committing to the loans. In addition, 
“All the loans were signed in the presence of a notary public to make sure that the signatories understood the contract. Rothschild did not provide advice. Rothschild believes that it met its legal and regulatory obligations at all times.”
Apparently the French authorities did not agree. Here's a link to the story with more details.

Rothschild Bank Now Under Criminal Investigation After Baron David De Rothschild Idictment

Last year, Baron David de Rothschild was indicted by the French government after he was accused of fraud in a scheme that allegedly embezzled large sums of money from British pensioners. It has taken many years to bring this case against Rothschild and his company the Rothschild Financial Services Group, which trapped hundreds of pensioners in a bogus loan scheme between the years of 2005 and 2008.

An Empire under Scrutiny?

While nobody in their right minds would claim that this is the Fall of the Rothschilds. The family business has apparently been hit hard and according to at least one source, the Rothschild group saw profits fall by almost half in the year to the end of March 2009.  If nothing else, the negative publicity of being accused of common fraud has been a glove-slap in the face of its long reputation.

Last year brought other unwelcome news for the Rothschilds.
At around the same time, the US Justice Department charged that the Zurich-based private bank of the Rothschild financial dynasty, Rothschild Bank AG had used shell companies and banking secrecy to conceal undeclared assets.
At a mere $11.5 million, the penalty was hardly crushing. In fact, the Rothschild bank and the Justice Department agreed to settle in order to share information on how vast fortunes were being secreted in offshore financial institutions.

This Justice Department probe included other Swiss financial institutions, among them UBS Group AG and Credit Suisse Group AG. Both were fined billions in penalties.
Others institutions like as Julius Baer Group Ltd. and the Swiss unit of HSBC Holdings Plc are still facing separate criminal investigation which could see stiff fines.

A Bloomberg article  cited Acting Assistant Attorney General Caroline Ciraolo as saying:
“More and more information is flowing to the IRS agents and Justice Department prosecutors going after illegally concealed offshore accounts and the financial professionals who help U.S. taxpayers hide assets abroad.”
Rothschild wisely struck a deal with the authorities and voluntarily closed about 296 U.S.-taxpayer accounts between Aug. 1, 2008, and Dec. 31, 2013. It also encouraged customers to voluntarily disclose undeclared assets to the Internal Revenue Service.
Bloomberg noted that according to the Justice Department, Rothschild also "obtained waivers from some former U.S. clients in order to circumvent Swiss secrecy laws that normally prohibit banks from giving client names to foreign authorities.  

Clearly this information provided by the Rothschilds will allow investigators to track the trillions of hidden wealth tucked away by the 1%. The legislative framework for pursuing this hidden wealth came into effect last year under FATCA. (It's a subject we have talked about in depth in the past.)

Rothschild Connections

The Rothschild's substantial political influence has long been based on its ability to keep the secrets of the super wealthy while at the same time, using its own fortunes to influence the economies of friendly nations. Among the conspiracy speculators, (especially of the anti-Semitic variety,) the Rothschild's Empire has long been a gold mine.

Whenever people of incredible wealth come together and make a private business arrangement, it naturally smacks of conspiracy. Whether anything criminal or immoral is taking place, well, that's another story. 

Back in 2012, for example, we looked at a shale oil company, Genie Energy, which operated fields in both Wyoming and Israel. 
Lord (Jacob) Rothschild and Rupert Murdoch both purchased equity stocks in the company and both men sat on the company's Strategic Advisory Board. 

As we all know, Murdoch is also the owner of the News Corp, parent company of Fox News and Wall Street Journal. With its worldwide reach of magazines, newspapers, news channels and publishing companies, News Corp is cetainly a useful tool for manipulating public opinion. Could this connection account for News Corp's climate change denial? This anti-science bias is not the figment of activists' imagination. Not according to one study:
New research out of the US has provided evidence of the “misleading” reporting of climate change by News Corporation. The report, Is News Corp. Failing Science, written by the Union of Concerned Scientists, looked into representations of climate change at Fox News and The Wall Street Journalover a period of six and 12 months respectively.
Media figures at Fox have a long record of repeating scientific inaccuracies on air and allowing fringe figures to perpetuate widely debunked claims
Could this explain why an anti-fracking interview on Fox was abruptly closed down? Can this business connection account for the general endorsement of fracking at Fox News? Perhaps or perhaps not. Is this a coincidence or a manipulation of the public? If the connection are calculated and if the manipulation is purposeful, then is actually illegal or merely deceptive, greedy and for our life on the planet, foolishly dangerous?

A History of Calculated Power

As one Israeli media outlet explains how the dynasty maintained its political power over the 200 years.
States and monarchs turned to the Rothschild bank to raise capital or to receive loans, usually by means of the new instrument of government bonds. The Rothschilds issued, sold and disseminated the bonds of kings and governments in European capitals, often investing the family's own capital in them. Without the financial backing of the Rothschilds, kings found it difficult to go to war.
Of course, the opposite is also true. With the backing of the Rothschilds, autocrats of all species could buy the armaments for war.

The Rothschild Empire- probably the first privately-own multi-national- has owed its survival over the last two centuries by not allowing it to be controlled by one member of the family. For this reason, keeping up with the Rothschilds would definitely require a family chart. 

In spite of the recent battering, the core banking business is now in the hands of the seventh generation. It is, for the most part, still owned and operated by descendants of the empire-building Mayer Amschel Rothschild.  
The Frankfurt-born founder of the empire was certainly a shrewd calculator.  He built that empire on one universal truth: wars are expensive and the aftermaths are even more expensive.
At the beginning of the 19th century, Mayer Amschel dispatched his 5 sons to various European financial centers. Their mission was to set up banks in the capitals of, for example, Austria, France, Britain, and Italy.
They issued bonds, traded in gold and currency, managed investments and engaged in commerce and any other financial activity for which there was a demand. They worked in coordination with, but also competed against, each other.
Thus, a family dynasty was born. One aspect of the family that has always sparked controversy was its support for Zionism.
Suffice to say, with the Rothschilds the state of Israel would most likely have never come into existence.
In 1917 Walter Rothschild, 2nd Baron Rothschild was the addressee of the Balfour Declaration to the Zionist Federation, which committed the British government to the establishment in Palestine of a national home for the Jewish people.
According to the Encyclopedia of Zionism and Israel,
Baron Edmond James de Rothschild, James Jacob de Rothschild's youngest son was a patron of the first settlement in Palestine at Rishon-LeZion, and bought from Ottoman landlords parts of the land which now makes up present-day Israel. In 1924, he established the Palestine Jewish Colonization Association (PICA), which acquired more than 125,000 acres (22,36 km²) of land and set up business ventures.
In something of an understatement, Baron Benjamin Rothschild in 2010 said:
"If there is a family that does not have to prove its commitment to Israel, it's ours." 
Whatever the truth, the Rothschild Empire has been successful at avoiding close legal scrutiny or accountability. That's not unusual for such a wealthy family and  bankers by their nature tend to be shy and somewhat secretive. In professional terms, it's called "a low-key public profile."
In other words, it doesn't pay to blab or to boast if you are a Rothschild. 
But then, politics - with all of its fanaticism. misrepresentations, endless ego-speak, and pretend-principles can be as distasteful as cleaning a septic tank in August As a Rothschild said 
"the less I mingle with politicians the better I feel."
That's something- maybe the only thing- we can all sympathize with. 

Sniffing out the Hidden Wealth

One consumer advocacy group explains why tracing these sums has become a top priority for the US government:
Tax haven abusers benefit from our markets, infrastructure, educated workforce, and security, but they pay next to nothing for these benefits. Ultimately, taxpayers must pick up the tab, either in the form of higher taxes, cuts to public spending priorities, or increased national debt.
Corporations and individuals shift earnings to financial institutions in these countries to reduce their U.S. income tax liability. While this has been going on in the gray area of tax law for some time, the federal government estimates that the problem has become much worse as the wealth has been consolidated at the top of the pyramid.

To put that in the proper perspective, Last year at this time, Oxfam had warned that 1% of the world's population would own more wealth than the other 99% by the end of this year. By the use of tax havens, the wealth is essentially kept from government control or reinvestment in the infrastructure.
According to the US government, it loses an estimated $150 billion in lost revenues each year. Other estimates are far higher than that but nobody really knows for sure.
Federal taxpayers are not the only victims of offshore tax havens. Tax havens deprive state governments of billions of dollars in badly needed revenues as well. Based how much income is federally reported in each state, and on state tax rates, it is possible to calculate how much each of the state governments lose as a result of offshore tax dodging.

First, the Bad News...

As if all that wasn't dismal enough, this month, the French authorities have launched another (though possibly related) indictment, this time against the Swiss firm of Edmond de Rothschild, a private banking, and asset management firm. Although this Group is primarily a financial entity, specializing in asset management and private banking, its activities also cover mixed farming, luxury hotels, and yacht racing. The Swiss unit traces its roots to the acquisition of Banque Privee in Geneva in 1965.
The details of the charges are still sketchy at the moment but it is known that the French probe revolves around a former business relationship managed by a former employee. 

Not very helpful information, is it?  We must wait to see how significant (or damaging) the news is. In any event, one thing that can be said without any doubt, this is NOT the fall of the Rothschilds.
Not by a long shot.

Bloomberg noted that Edmond de Rothschild, a separate asset manager and private bank, "oversees about 150 billion euros ($164 billion) and is led today by Baron Benjamin de Rothschild and his wife Ariane." 
The 47-year old Benjamin is a seventh-generation descendant of dynasty founder Mayer Amschel. 
In a rare interview in 2010, he revealed that conservative banking practices (once a common thing in  the Glass-Steagall days) had protected the Rothschild financial empire from the effects of the economic meltdown of 2008. 
"We came through it well, because our investment managers did not want to put money into crazy things."
He added too that for a bank keeping a high reputation was an important ingredient to Rothschild success. 
"The client knows we will not speculate with his money"
Depending on the seriousness and the details of the French allegations, he may be forced to dine on those words. 

Reno: The Rothschilds' Newest Venture

However, there's a bit of irony about the Justice Department's investigation that has had Swiss bankers fuming. Last month, it was reported that a new law tax haven had been established by the Rothschilds. This time isn't offshore at all but inside the United States. 

After opening a trust company in Reno, Nevada, Rothschild & Co. -the flagship of the Rothschild banking Group- began "ushering the massive fortunes of the world’s most wealthy individuals out of typical tax havens," like the Bahamas, Switzerland, and the British Virgin Islands.
Let me repeat that: Out of off-shore tax havens and into the U.S. 

The money is put into the Rothschild-run U.S. trusts, which are exempt from the international reporting requirements. Trillions of dollars that have been now stashed in protected tax havens around the world are presumably going to be flowing into the United States.

Reno, once famous for its quickie divorces, legal brothels, and high-stakes gambling, might seem like an unlikely spot for a Rothschild to conduct deals for the uber wealthy.
In fact, Nevada has long been known as a corporate tax haven. The reason for this is that Nevada laws provide strong protections against holding corporation owners responsible for the actions of the corporations. 
Also, Nevada's tax structure is kind to corporations. Outside of some fees, the state has no corporate income tax or personal income tax.
In January Bloomberg provided an insight into the Rothschild Reno operation which- rather surprisingly, given all of America's criticism of untold wealth in Zurich and Geneva vaults- would make the US into the new Switzerland.
After years of lambasting other countries for helping rich Americans hide their money offshore, the U.S. is emerging as a leading tax and secrecy haven for rich foreigners. By resisting new global disclosure standards, the U.S. is creating a hot new market, becoming the go-to place to stash foreign wealth.
In defense of the company, corporate representatives say that  the firm's Reno operation simply "caters to international families attracted to the stability of the U.S." It adds to that everything is quite legal and that its clients must prove that are in compliance with the respective country's tax laws.     
The Bloomberg article quotes Peter A. Cotorceanu, a lawyer at Anaford AG, a Zurich law firm,
“How ironic—no, how perverse—that the USA, which has been so sanctimonious in its condemnation of Swiss banks, has become the banking secrecy jurisdiction du jour. That ‘giant sucking sound’ you hear? It is the sound of money rushing to the USA.”
The Swiss banking giants may be woefully vexed about losing their trade to the US and they may howl about American dishonesty and hypocrisy.
But that's all they can do apparently.
Bloomberg points out:
There’s nothing illegal about banks luring foreigners to put money in the U.S. with promises of confidentiality as long as they are not intentionally helping to evade taxes abroad. Still, the U.S. is one of the few places left where advisers are actively promoting accounts that will remain secret from overseas authorities.
That's a strange twist. Russian media pointed out the hypocrisy:
While the US authorities persist on global standards of banking information disclosure, the country is resisting those same disclosure standards.
Ever since 2009 when President Obama announced a crackdown on offshore tax havens, the Republican leadership has opposed any attempt to collect on the hidden wealth.

At the time, the Government Accountability Office (GAO) issued a report that found that 83 of the 100 largest publicly traded U.S. corporations reported subsidiaries in countries listed as tax havens or "financial privacy jurisdictions." That's a lot of money not being taxed, vast sums which could be put to use rebuilding infrastructure (highways, train lines, river and lake shipping channels, bridges etc.) that these very same corporations make use of every day.
For free.
If that wasn't a disgrace enough, many of those corporations are beneficiaries of billions of taxpayer dollars under the George Bush's bailout, otherwise known as Troubled Asset Relief Program, TARP.  

If the news about the Reno tax haven is true, this money can now be snuggly hidden away right here at home. 
So, once again, in spite of a bumpy road in the last year or two, the political might of the Rothschilds is again on full display.