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."

FATCA: Why New Tax Haven Laws are a Disaster in the Making

by Robert Morris

Here's a guest post with some further insight on a controversial piece of legislation called FATCA. Robert Morris explains why this law on tax havens is a really really bad idea. 

First off, I would like to thank Nomad Politics for bringing up this issue, and also for reaching out to seek an opposing viewpoint to its FATCA coverage. This is the kind of open-mindedness that we could all use more of.

In that spirit, let's start by laying out a positive aspect of FATCA, the Foreign Account Tax Compliance Act.

Some Facts about FATCA

This US law was largely introduced in response to a Swiss banking scandal. A significant number of Swiss banks were revealed to have been colluding with US citizens to hide their earnings from the US government. FATCA has, in fact, severely disrupted the Swiss banking industry. Switzerland’s “too big too fail” banks, like UBS, have settled with the US government for sums that are eye-watering, but will not severely disrupt their business. Medium-size and smaller Swiss banks are being forced to pay proportionally much larger sums, whether or not they knew their clients were from the US. Many are going out of business. The small Swiss banks that survive this reckoning will certainly think twice before they ever deal with US clients again.

Judging from the fact that my anti-FATCA video has been viewed by about a 50th of the entire population of the Cayman Islands, the legislation has been having the desired effect in other tax haven jurisdictions as well. We should admit that in this one respect, FATCA has been having the desired consequence. Tax avoidance by Americans has become more difficult, and that is a good thing.

This one positive result, however should not distract the public from FATCA’s truly mind-boggling scope. FATCA is a sledgehammer that is being used where a toothpick was necessary. FATCA does not just go after Switzerland and Cayman. It fundamentally re-orders the business of banking for every country, and in every country.