Tax Evaders, The Keibler Elf And the Alpine Gnomes

February 25, 2008

Elaine Meinel Supkis

Well, it seems that Der Spiegel of Germany has many more details about the shadowy man who spilled the Leichtensteiner beans! He is Mr. Kieber. A computer expert with a criminal past! This cutie pie really did sell these tax evader's records to the US government after all! And the past of this guy makes one wonder: do they find these people under rocks? As well as the diplomatic problems concerning tax evaders, the places that host them and how the major democracies must deal with top people at home refusing to pay taxes and instead, cheating. All very relevant issues.

Tax Whistleblower Sold Data to the US

The identity of the informant from Liechtenstein is now known, or at least his past identity is. He used to be 42-year-old Heinrich Kieber. He now has a new name, courtesy of the German government. And he lives somewhere else, in an undisclosed location -- wealthy, but alone.

Evidently, if one reads the entire article, this guy was a criminal looking for some sort of hook or crook he could cook. He finally hit pay dirt but the pay back may put him under 6 feet of dirt. It seems that some of the people whose records he managed to filch are money laundering accounts of Russian Mafioso. The guys who have elaborate murder techniques. Kieber better avoid tea shops. And vodka drinking contests. And tall, slender prostitutes. He can't drive flashy cars or flash any bling, either. It must be hell to be a rich man and unable to appear in public or spend it in a way that draws attention. It is a Midas curse.

This guy also dabbled in real estate swindles as well as shady characters in the blackmail world which is why he was able to play the blackmail game with the biggest powers on earth. Unlike the sorcerer's apprentice, Evil Kerviel, Keiber has a slightly different name. Which I think is rather funny, actually. Both men worked at the bottom levels of the banking systems. But often, this is where the goodies are. The levers of power. The place where the guys at top are the most clueless. Especially in the computer era. Many guys get to the top by doing virtually nothing useful. They often have laughable skills. One thing they know is how to schmooze. Going to the right parties, agreeing with the right bosses, stabbing the right backs and backing the right goons, this gets one to the top.

Knowing how to enter data, use computers to find data and shifting data around: that is for drones like the Kiebler elf or the daring young apprentice. To think the world's biggest banking systems are being held hostage by a bunch of people who know data entry is amusing and dreadful at the same time. All these years, I have been convinced that the detachment of the top tiers from the bottom has become nearly total. In ancient times such as in my own youth, anyone wishing to climb the ladder at banks had to go to college, get a degree and then start at the bottom, managing or working in a local branch bank. Then they can move upwards and gain the top when a ripe age of over 55 years. Today, we have two groups: the Wunderhunden who are the three headed computer data dogs who can create massive, weird programs designed to separate an investor from their funds without them figuring out how they got shafted. These guys move to the top by the age of about 30 where they then do really stupid things and everything then explodes and everyone loses all their money.

Or they go to school and daddy or mommy gives them all the contacts they need and they stroll into their allotted corner upper floor offices and begin to ask the secretary what they are supposed to do and the secretaries then do all the work. They also go bankrupt but a tad slower. About every 50 years or so, the whole banking system collapses and they profess wonder and amazement. 'My secretary never said this would cause a panic and a depression!' they sigh.

Back to the Kiebler elf:

Kieber knew that he had been convicted of fraud in Spain and was wanted by the police there. The pressure was probably what prompted him to make a copy of the LGT data. In January 2003, after resigning and going into hiding, he used the stolen data in an attempt to blackmail Liechtenstein authorities. According to Liechtenstein state prosecutor Robert Wallner, in return for being assured of free passage and given two forged passports, Kieber agreed that he would not turn over the stolen client data to "foreign media and authorities."

But the Liechtenstein authorities turned down the offer. Nevertheless, Kieber turned himself in -- and got off lightly. For the Spanish fraud charges, his attorney Müller negotiated a penalty of one year in prison, reduced to three years' probation, which would not be entered into his police record in Liechtenstein. He was not convicted of data theft and, on Jan. 7, 2004, Liechtenstein authorities closed the Kieber case. The bank and the judges were convinced that Kieber had learned his lesson and, out of remorse, would return all of the client data unused.

Kieber must have begun his final mission shortly after the court issued its decision. He negotiated with the Americans first, then with the British. He obviously came to some agreement with the Americans, because US tax investigators have apparently hit pay dirt in 50 cases since the summer of 2007.

This is funny. The Liechtensteiners let him go but didn't check out his digs for stolen data? Shows how people can't cope with modern technology. I am glad the US went after this data, by the way. I had some harsh words about that at first but I am also certain this business is due to the guys at the bottom of the ladder here. There are many good, honest people working for the US government. They do many good things and get little reward or recognition. For example, the people who compile information are a great bunch who then see their work either buried or mauled by the guys in the top story corner offices. Thank you for doing a necessary job, guys!

The government of then Prime Minister Tony Blair, on the other hand, refused to pay Kieber until it had collected on its tax claims. The Germans would probably never have found out about the Liechtenstein goldmine if British tax authorities hadn't taken so long to recover the money owed to them. Kieber became impatient, cancelled his negotiations with the British and contacted the BND instead.

On June 21, 2006, Kieber gave the BND a sample of the ultimate prize -- 14 sets of data from the Liechtenstein bank. At first, he would only allow the German agents to read the data on a laptop screen, but eventually he gave them excerpts. On July 10, 2006, tax investigators in the western German city of Wuppertal, who were working with the BND, confirmed that what Kieber had delivered was "important material." It was a signal for the BND to request another meeting with the man from Liechtenstein.

Evidently the loot from the US wasn't enough. Thus the further shopping by Kieber. The Germans are physically a lot closer to this than the US and it looks like people at the very top were playing this tax evasion game including banks.

The tax investigators with the German task force (known as EK Liechtenstein II) set up to investigate the Liechtenstein accounts have their work cut out for them, because it involves examining the entire accounts of suspicious companies. The Liechtenstein establishments can also be used to bring money back into Germany relatively unnoticed.

More than half of the investors and about 3,100 foundations and establishments on the DVDs are from abroad. Some are part of organized crime in the Balkans and in Russia, including both well-known and relatively unknown companies. This represents another, less high-profile element of this affair, and it is also the reason that German authorities believe that the informant's life is in danger. The DVDs he sold to the BND have provided the agency with a mountain of details about the international flow of money, so much information, in fact, that the agency would be hard-pressed to process it all on its own.

This explains why Germany's Federal Office of Criminal Investigation (BKA) was asked to help out. Its officers are looking into the possibility of launching investigations into money laundering, although the BKA has already said in advance that money laundering lies outside its jurisdiction.

This is going to cause a lot of chaos in the illicit drugs/sex and bribery departments of more than one bank! From the beginning of banking, there has been this darker side. The earliest bank in Austria was founded on money received from the ransom of King Richard the Lionhearted. The Vatican's banking was launched on the sales of time cut off of Purgatory and a quicker ascent to Heaven. The Knights Templar dealt with money that transited from Muslim to Christian hands. They got in trouble when they refused to use some of this to ransom the King of France when his crusade in Egypt fell apart.

The Bundeskriminalamt or the BKA tangled with Atta, by the way.

1995: Germans Investigate Atta for Petty Drug Crimes
According to a book (citing federal law enforcement sources) by Jurgen Roth, described by Newsday as “one of Germany’s top investigative reporters,” in this year the BKA (the German Federal Office for criminal investigations) investigates Mohamed Atta for petty drug crimes and falsifying phone cards whilst he is a student at the Technical University at Hamburg-Harburg. While he isn’t charged, a record of the investigation will prevent him from getting a security job with Lufthansa Airlines in early 2001 . [ROTH, 2001, PP. 9F; NEWSDAY, 1/24/2002]

That is rather chilling. Like Kieber, Atta slipped in and out of the grip of the law more than once. Kieber now has a new name and ID. I doubt he will stop acting like a criminal. It isn't money they want, it is often an itch to do other things. They can't sit at home, watching TV. Maybe we can have them all go on the Judge Judy show. Look at Donald Trump! If ever there was a con man in need of isolation on some distant, very small island about to be drowned by global warming, he is it.

Der Spiegel:

The affair strongly reminds veteran investigators of the "bank cases" in the late 1990s, which led to thousands of investigations after a series of spectacular raids of German banks. Prior to the raids, bank advisors had recommended to their clients that they move their assets to accounts with the banks' subsidiaries in Luxembourg, so as to circumvent a capital gains tax which was introduced in Germany in 1993.

For the banks, this meant that they could retain their clients' accounts, and in some cases could even earn a little additional revenue in transfer fees for moving the money to the Luxembourg accounts. But according to one former investigator who was deeply involved in the 1990s bank investigations, some German banks apparently preferred models that allowed them to keep the funds in-house.

Under this model, assets already deposited in Germany would be transferred abroad using a series of transactions intended to camouflage the flow of money, and would then be transferred back to the same bank, but into a new account. The only difference was that, after making its accounting excursion to Liechtenstein, the money in this new account no longer formally belonged to a bank client liable for German tax. Instead, the assets had become the property of a Liechtenstein foundation, establishment or similar fiduciary entity under Liechtenstein law. The real owners of the assets were known to only a handful of insiders in the Alpine principality -- and possibly to an account advisor at the German bank.

Now we get down to the real nitty gritty: how banks do things. They hire a zillion Kiebler elves to use computers and other tools to play money moving games. These elves slice and dice and hammer and haw for the gnomes in the upper floor corner offices. They make CDOs and AMTs and ABXes as well as SIVs and monolines. They then move them hither and yon and pass them back and forth and in between, various apprentices and hell hounds toy with this and the gnomes at the top are filled with joy as they see their numbers climb and climb and they then give themselves big bonuses. Banks have sticky fingers. It took years of pressure to force them to honor money deposits. They would pretend they had to mail everything when they really used computers to transfer data. This would give them several days to use the funds for themselves. Even as we type in data and then send it across the planet in seconds, they still pretend there is this turtle they must use if your money is in their hands. It crawls around, visiting odd places before dropping off your payments or giving you credit for money due.

Bankers tell us we must trust them. We say, you guys must earn our trust.

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Comments

[calvino]

Elaine, your blog is becoming a must read for me. I have been pounding the table on the yen/jpy cross completely controlling our markets. The incredibly weird credit swap arrangement that was foisted upon us by the FED, the ECB and the Swiss Bank in December is the instrument for washing the yen into dollars. I do not think the Japanese are willing to back the dollar directly anymore, and what do the Europeans have to lose? They have so much buying power with their currency that they can not deploy for the fear of setting off every commodity market up a pole. So far, I think one person has gotten it, and that's from the financial blogs! Of course you get it, but I don't think too many people can keep up with you, or in the least they lack the attention span. I am only saying this because I do not see any comments on what I would judge to be two outstanding essays. For entertainment I run the DIA and the eur/jpy on the same graph in the morning - it's like two ugly twins complicit in crime. How utterly pathetic. The Japanese are destroying every lurch towards integrity in our markets. We can do nothing but watch, corruption has permeated every level of power completely. Sine moribus leges vanae.

[Elaine Meinel Supkis]

Calvino, over the years I have noticed that what I consider to be the most important articles are usually commentless. Yet they do penetrate into minds.

When you see me post a long line of data and many charts and graphs, it is because I am learning something new and am amazed and often, infuriated by the new information. When I visit either the Fed, the Treasury or the central banks of other nations, this happens. I once wrote three pieces about the Basel II Accords which are the TRIGGER for the banking collapse, before the banking collapse, no one understood the significance.

This is why I said well before the August collase, it would happen. The Basel II deadline for reporting the true mark to market value of CDOs was in September so of course, the banks panicked in August.

The most boring international reports are stuffed with vital information. Note how our government and press are both happy to blame the mess today on people not paying their mortgages! Talk about a swindle. This is one of the biggest.

This is why I keep trying to prove this is all a systematic failure at the top, not the bottom of society.

[Ed-M]

Karl Marx was right! Capitalism ALWAYS sows the seeds of its own destruction.

Unfortunately, because of the mind-set of the people in this country in favor of "free enterprise" and the brainwashing of them to the point of conviction that the present corrupt system actually IS "free enterprise," we'll never see any kind of socialism or actual free enterprise in this country. And if China or any other country corners the corrupt capitalists demanding of them repayments for debts owed that country, those rotten pigs will sell us up the river... into slavery!

[Elaine Meinel Supkis]

And Ed, the nastiest, most hard-nosed capitalists are always former communists. Isn't that a hoot?

[CK]

America practices corporate socialism or klepitalism; it does not practice "free enterprise", laissez-faire, or capitalism.
While there do exist some mostly unregulated markets for some goods and services in the US. Those markets are fewer and farther between every year.
In football there is the Rozelle Rule. The requirement that each year's replacement crop of performers be allocated in reverse order of team performance. The worst each year get to chose the best of the new crop.
In economics there is no Rozelle rule, winners one year have a leg up the next. eventually all competetive markets degenerate into a ranked heirarchy. Without much work, most industries fall into a pareto type of distribution of market share or power. 80% of the business flows to 20% of the firms in the industry. Since loser firms and owners outnumber winner firms and owners, losers then run to the government to give to them what they could not earn in competetion. The final glorious stage is of course the ability of firms to privatize their profits and socialize their losses. This is the year the banks and financial industry go once again to the well to socialize their losses.

[Elaine Meinel Supkis]

I read a lot of history. Banks have been doing this since....the very beginning! Since the Tulip Mania! Since the South Sea Bubble! It NEVER changes.

All rulers must save all banks. They try to avoid irritating the peasants to death which is why they do other horrible things which often involves attacking somebody who has gold.

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