The Wolf of Wall Street

“Of course, my friend; now we are getting to the heart of matters. Each of those corporations is a bearer corporation, meaning that there is no actual paperwork stating who the owner is. In theory, whoever possesses the actual stock certificates—the so-called bearer—is deemed the rightful owner. There are two ways to secure your ownership in a corporation such as this. The first is take personal possession of the stock certificates—to be the physical bearer of them. In that case, it would be your responsibility to find a safe place to keep them, perhaps in a safe-deposit box in the United States or something like that. The second way would be to open a numbered safe-deposit box in Switzerland and keep the certificates there. You alone would have access to this box. And unlike a Swiss bank account, a safe-deposit box is truly numbered; there will be no name attached to it.

“If you choose that route, then I would suggest that you lease a box for a term of fifty years and pay the entire fee up front. Under those circumstances there would be no way for any government to gain access to that box. Only you—and perhaps your wife, if you so desire—would be aware of its existence. And if I could offer you a piece of advice, I would recommend that you do not inform your wife. Instead, provide me with instructions on how to contact her—heaven forbid anything should ever happen to you. You have my express word that she will be notified immediately.

“But, please, my friend, do not take my statement as any indication that I question your wife’s trustworthiness. I’m sure she is a fine young lady, and from what I hear, very beautiful as well. It’s just that it would not be the first time a disgruntled wife led an eager IRS agent to a place he were better not led.”

I took a moment to consider his statement, and it sounded awfully reminiscent of the ghosts of six million slaughtered Jews roaming the streets of Zurich and Geneva, trying to find their Swiss bankers. Although, I had to admit, Roland seemed to be the sort who would stand up and do the right thing. But how could I be sure of that? As the ultimate Wolf in Sheep’s Clothing, who should know better than me that appearances could be deceiving? Perhaps I would tell my father or, better still, hand him a sealed envelope with the explicit instructions that it should be opened only in case of my untimely demise—which, given my penchant for flying stoned and scuba diving during blackouts, seemed like a distinct possibility.

I chose to keep all those stray thoughts to myself. “I prefer the second option—for many different reasons. And in spite of the fact that I’ve never received a subpoena from the Justice Department, it still makes sense to keep all my documents outside their jurisdiction. As you’re probably aware, all my legal problems are civil in nature, not criminal, which is exactly the way it should be. I’m a legitimate businessman, Roland. I want you to know that. First and foremost, I always try to do things right. But hard as I try, the simple fact is that many of the U.S. securities laws are entirely ambiguous, with no absolute right or absolute wrong. I tell you the truth, Roland: In many cases—most cases, actually—what violates the law is more a matter of opinion than anything else.” What a crock of shit! But it sounded awfully good. “So, occasionally, something that I thought was perfectly legal ended up biting me in the butt. It’s kind of unfair, but that’s the way it is. Anyway, I would say that most of my problems are directly related to poorly written securities laws, laws that are designed for selective enforcement against individuals the government feels like persecuting.”

Roland laughed raucously. “Oh, my friend, you are too much! What a wonderful way to look at things. I don’t think I have ever heard someone state their outlook in such a compelling manner. Most excellent that was—most excellent!”

I chuckled and said, “Well, from a man like you I take that as a great compliment. I won’t deny that from time to time, like any businessman, I step over the line and take a risk or two. But they’re always calculated risks—heavily calculated, I might add. And every risk I take is always supported by an airtight paper trail, which supports a notion of plausible deniability. You’re familiar with the term, I assume?”

Roland nodded his head slowly, obviously enthralled with my ability to rationalize the breaking of every securities law ever invented. What he wasn’t aware of was that the SEC was in the process of inventing new ones to try to stop me.

I soldiered on: “I figured you’d be. Anyway, when I opened up my brokerage firm five years ago, a very smart man gave me some very smart advice. He said, ‘If you want to survive in this crazy business of ours, then you have to operate under the assumption that every one of your transactions will eventually be scrutinized by a three-lettered government agency. And when that day comes, you’d better be damn sure that you have an explanation as to why the transaction doesn’t violate any securities laws or, for that matter, any laws.’

“Now, that being said, Roland, I’ll tell you that ninety-nine percent of what I do is on the up and up. The only problem is that the other one percent kills you every time. Perhaps it would be wise to put as much distance between myself and that one percent as humanly possible. I assume you’d be the trustee of each of these corporations, correct?”

“Yes, my friend. Pursuant to Swiss law, I will be empowered to sign documents on the corporation’s behalf and to enter into any contracts that I believe are in the best interest of the corporation or its beneficiaries. Of course, the only transactions that I will deem appropriate will be the ones you recommend. For example, if you were to tell me that you thought I should invest my money in a certain new issue or in a parcel of real estate—or anything, for that matter—then I would be obliged to follow your advice.

“And this is where my services will become most valuable to you. You see, with each investment we make, I will put together a file filled with research documents and correspondence—coming from various securities analysts or real estate experts or whoever else need be—so I have an independent basis for making my investment. Sometimes I might retain the services of an outside auditor, whose job it would be to furnish me with a report stating that the investment is a sound one. Of course, this auditor will always come to the appropriate conclusion, but not until he has issued a fancy report with bar charts and colored graphs. In the end, it is these things that truly support a notion of plausible deniability. If someone should ever raise a question as to why I made a particular investment, I would simply point to a two-inch-thick file and shrug my shoulders.

“Again, my friend, we are only scratching the surface here. There are many strategies I will share with you that will allow you to go about your business behind a cloak of invisibility. In addition, if there should ever come a time when you wish to repatriate any of this money—to bring it back into the United States, without so much as a trace—this is another area where I can be most helpful.”

Interesting, I thought. This was what I was having the most trouble getting my arms around. I moved forward to the edge of the couch, closing the distance between us to less than three feet. Then I lowered my voice and said, “That’s something I’m very much interested in, Roland. I tell you the truth—I was less than impressed with the scenarios Jean Jacques laid out for me; he outlined two different options, and, to my way of thinking, they were amateurish at best and suicidal at worst.”

“Well,” replied Roland, with a shrug of his shoulders, “that doesn’t really surprise me. Jean Jacques is a banker; his expertise lies in the marshaling of assets, not in the juggling of them. He is an excellent banker, I might add, and he will manage your account well, with the utmost discretion. But he is not well versed in the creation of documents that allow money to flow back and forth between countries without raising eyebrows. That is the function of a trustee”—a Master Forger!—“such as myself. In fact, you will find that Union Bancaire will heavily discourage the movement of money out of the account. Of course, you will always be able to do with your money as you please; they will not actually try to stop you. But do not be surprised if Jean Jacques tries to dissuade you from moving money out of the account, perhaps using the excuse that moving money raises red flags. But this is not something to be held against Jean Jacques. All Swiss bankers operate in that fashion, and it is a self-serving one, I might add. The simple fact, my friend, is that with three trillion dollars a day flowing in and out of the Swiss banking system, there is no amount of activity in your account that could possibly raise a red flag. As smart a man as you can easily see the bank’s motivation for wanting to keep their account balances as elevated as possible.

“Out of curiosity, though, what ways did Jean Jacques suggest to you? I am interested to hear the bank’s latest rhetoric in this area.” With that, Roland leaned back and interlaced his fingers over his belly.

Mirroring his body language, I slid back from the edge of the couch and said, “Well, the first way he recommended was through a debit card. That seemed f**king outlandish to me, if you’ll pardon my f**king French. I mean, running around town with a debit card tied to a foreign account leaves a paper trail a mile wide!” I shook my head and rolled my eyes, to drive my point home.

“And his second recommendation was equally ridiculous: I would use my overseas money to take out a mortgage on my own home, in the United States. Anyway, I trust that none of this will be repeated to Saurel, but I have to admit I was extremely disappointed with this part of his presentation. So tell me, Roland—what am I missing here?”

Roland smiled confidently. “There are many ways to do this, all of which leave no paper trail whatsoever. Or, to be more accurate, they leave a very wide paper trail, but it’s just the sort of trail you would like to see, the sort that supports a position of complete innocence and will stand up to the most intense scrutiny, on both sides of the Atlantic. Are you familiar with the practice of transfer pricing?”

Transfer pricing? Yes, I knew what it was, but how would—all at once a thousand nefarious strategies went flashing through my brain. The possibilities were…limitless! I smiled broadly at my Master Forger and said, “Actually, I do, Master For—I mean, Roland, and it’s a brilliant idea.”

He seemed shocked that I knew about the little-known art of transfer pricing, which was a financial shell game where you would engage a transaction, either underpaying or overpaying for a particular product, depending on which way you wanted your money to flow. The rub lied in the fact that you were actually on both sides of the transaction: You were both the buyer and the seller. Transfer pricing was used mostly as a tax dodge, a strategy employed by billion-dollar multinational corporations—whereby they would alter their internal pricing strategies when selling from one wholly owned subsidiary to another—which resulted in the transfer of profits from countries with heavy corporate income-tax burdens to countries with none. I had read something about it in an obscure economics magazine—an article about Honda Motors, which was overcharging its U.S. factories for automotive parts, thereby minimizing its U.S. profits. For obvious reasons, the IRS was in an uproar.