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Shell Companies and Fraud: An Investigative Primer by Kelly Carr
Shell Companies and Fraud: An Investigative Primer by Kelly Carr
Shell Companies and Fraud: An Investigative Primer by Kelly Carr
Shell Companies and Fraud: An Investigative Primer by Kelly Carr
Shell Companies and Fraud: An Investigative Primer by Kelly Carr
Shell Companies and Fraud: An Investigative Primer by Kelly Carr
Shell Companies and Fraud: An Investigative Primer by Kelly Carr
Shell Companies and Fraud: An Investigative Primer by Kelly Carr
Shell Companies and Fraud: An Investigative Primer by Kelly Carr
Shell Companies and Fraud: An Investigative Primer by Kelly Carr
Shell Companies and Fraud: An Investigative Primer by Kelly Carr
Shell Companies and Fraud: An Investigative Primer by Kelly Carr
Shell Companies and Fraud: An Investigative Primer by Kelly Carr
Shell Companies and Fraud: An Investigative Primer by Kelly Carr
Shell Companies and Fraud: An Investigative Primer by Kelly Carr
Shell Companies and Fraud: An Investigative Primer by Kelly Carr
Shell Companies and Fraud: An Investigative Primer by Kelly Carr
Shell Companies and Fraud: An Investigative Primer by Kelly Carr
Shell Companies and Fraud: An Investigative Primer by Kelly Carr
Shell Companies and Fraud: An Investigative Primer by Kelly Carr
Shell Companies and Fraud: An Investigative Primer by Kelly Carr
Shell Companies and Fraud: An Investigative Primer by Kelly Carr
Shell Companies and Fraud: An Investigative Primer by Kelly Carr
Shell Companies and Fraud: An Investigative Primer by Kelly Carr
Shell Companies and Fraud: An Investigative Primer by Kelly Carr
Shell Companies and Fraud: An Investigative Primer by Kelly Carr
Shell Companies and Fraud: An Investigative Primer by Kelly Carr
Shell Companies and Fraud: An Investigative Primer by Kelly Carr
Shell Companies and Fraud: An Investigative Primer by Kelly Carr
Shell Companies and Fraud: An Investigative Primer by Kelly Carr
Shell Companies and Fraud: An Investigative Primer by Kelly Carr
Shell Companies and Fraud: An Investigative Primer by Kelly Carr
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Shell Companies and Fraud: An Investigative Primer by Kelly Carr

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Award-winning investigative journalist Kelly Carr presents "Shell Companies and Fraud: An Investigative Primer," a free webinar hosted by the Donald W. Reynolds National Center for Business …

Award-winning investigative journalist Kelly Carr presents "Shell Companies and Fraud: An Investigative Primer," a free webinar hosted by the Donald W. Reynolds National Center for Business Journalism.

For more information about free training for business journalists, please visit businessjournalism.org.

Published in: Business, Economy & Finance
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  • 1. Shell Companies and Fraud!an investigative primer !Kelly Carr | Senior Online Producer Donald W. Reynolds National Center for Business Journalism May 21, 2013
  • 2. What definition best describes a shell company?—  A company incorporatedhaving no significant assetsor operations.—  A company formed to act asa trustee or to deal withtrusts.—  A flexible form of enterprisethat blends elements ofpartnership and corporatestructures.
  • 3. What exactly is a shell company?A company incorporatedhaving no significant assetsor operations.¡  Exist mainly on paper.¡  Most have no “true” physicalpresence.¡  Little to no economic value.
  • 4. Why form a shell company?A few legitimate reasons:¡  To protect trade secrets.¡  For ease in asset transfers.¡  To serve as a holding company.¡  Corporate mergers.¡  To hold property or other assets.¡  A business set up but no official action has been taken.
  • 5. Why form a shell company?Shells can play a vital role in the undergroundeconomy. Here’s how:¡  Money laundering¡  Tax evasion¡  Market manipulation: Pump and dump stock schemes¡  Fraudulent services scams¡  Fraudulent invoicing¡  Financing terrorism
  • 6. Why should we care?Viktor Bout “TheMerchant of Death” usedat least 12 shell companiesin Delaware, Texas andFlorida as part of a globalscheme that involvedselling weapons to aterrorist organization.Source – Willebois, Emile van der Does de, Halter, Emily M., Harrison, Robert A. Park, Ji Won, Sharman, J.C. (2011).The Puppet Masters.
  • 7. Why should we care?The son of thepresident ofEquatorialGuinea used aseries ofCaliforniashellcompanies tomove morethan a $110million insuspectedfunds.
  • 8. Why should we care?Anthony S. Seminerio, aformer New York StateAssemblyman, used a shellcompany called “MarcConsultants” to lobbylegislative colleagues andgovernment officials,which resulted inhundreds of thousands ofdollars in payments.Source:: http://cityroom.blogs.nytimes.com/2010/02/04/seminero-sentenced-to-six-years/ From political corruption to terrorism, illicit use of shell companies has serious consequences. 2
  • 9. Text!Shell?!Shell!Shell?!Shell?!Source: United Nations Office on Drugs and Crime, http://www.unodc.org/unodc/en/money-laundering/laundrycycle.html
  • 10. èèè
  • 11. Which country ranked No. 1 in theworld for shell companies used bycorrupt officials, according to a 2011World Bank study? Type your answer in the chat box below…
  • 12. Onshore havens: Secrecy U.S.A.
  • 13. “Shell Games”—  Six part series on theimpact of U.S. corporatesecrecy.—  Lax U.S. incorporationlaws enable corporationsto operate secretly.—  Some states offer similar(or more enhanced)secrecy selling points aswell- known offshore taxhavens.
  • 14. Onshore havens: Secrecy U.S.A.— Rules for corporate formation vary by state.— Some states allow additional perks that can aida veil of secrecy.— Most states do not require beneficialownership information (aka the name of thetrue owners of a company).— There is no licensing for corporate serviceproviders who incorporate mass numbers ofentities.
  • 15. What states havebeen consistentlydubbed as secrecyhavens by regulators?—  Check all that apply:—  Florida—  Delaware—  California—  Wyoming—  NevadaOnshore havens: Secrecy U.S.A.
  • 16. “In the U.S.,businessincorporationis completelyunregulated.Somalia hasslightly higherstandards thanWyoming andNevada.” – JasonSharman, a professor atGriffin University inAustralia.Source: Carr, Kelly, Grow, Brian. (2011) “A Little House of Secrets on the Great Plains.” Reuters.
  • 17. To addressbeneficial-ownershipdisclosure andchallengesstemming fromthe allowance ofcertain perks,such as nomineeofficers, Sen. CarlLevin proposed:“The Incorporation Transparencyand Law Enforcement AssistanceAct”
  • 18. Corporate service providers
  • 19. Corporate service providers—  Lawyers—  Accountants—  Entrepreneurs—  Anyone!Who are they?
  • 20. Corporate service providers—  Company formation—  Document upkeep—  Registered agent services—  Other various servicesWhat services do they offer?
  • 21. Corporate service providers—  Nominee officers/ directors—  Help setting up bankaccounts—  Virtual office services—  Shelf salesSome offer perks like….
  • 22. ShelfCorporation:A company withno significantassets oroperation that’sincorporated andthen placed onthe shelf to age.
  • 23. Text!Shell?!Shell!Shell?!Shell?!Shell?!
  • 24. Finding stories involving shells—  Consumer scams—  Pump and dumps: (Often penny stocks)—  Reverse mergers: (Existing public “shell” takes over aprivate company.)—  Government contractors—  Political donations/expenditures—  Real estate transactions—  Hidden within a corporate structure—  Incorporators/Mail drops
  • 25. Tools for digging: Business registries—  Secretary of state entity search:www.BusinessJournalism.org/registration/llc—  European Business Registry: www.ebr.org
  • 26. Tools for digging: Online intelligence
  • 27. Tools for digging: CorporationWiki
  • 28. Tools for digging: Open Corporates
  • 29. Questions?—  Email: Kelly.Carr@BusinessJournalism.org—  Twitter: @KellyCarrBiz—  BusinessJournalism.orgWhere to find me:!*** Don’t forget to stick around for the evaluation. !

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