The First Amendment Guarantees ALL Freedoms, including a Truthful Press
‘The Government Can Destroy Anyone’: How An IRS-Led Global Alliance Ruined An Innocent American Banker
Even so, after the media publicized the J5 investigation, the damage was done. In the months afterward, half of Euro Pacific's customers fled, as did key business partners who cited "reputational risk." Even Schiff's personal bank account was shut down.
The day after the media pieces ran, Puerto Rico's Office of the Commissioner of Financial Institutions (OCIF) began an audit. The next year, it issued a "consent order" saying that the bank did not have enough capital, and gave it 30 days to come up with a plan. Though Schiff disagreed that ratios of extra cash designed for banks that loaned out their money made sense for a 100% reserve bank, he said he would have happily put some more in. But he became convinced that the publicity stemming from the leaked criminal probe meant that the bank had a shadow over it as long as he was in charge, and he resigned himself to selling it.
On November 10, 2021, Schiff met with OCIF's commissioner, a young lawyer named Natalia Zequeira, alongside executives from a precious metals trading firm called Qenta, and laid out a deal to sell the bank to Qenta for about $5 million in gold and cash, plus Schiff getting a 4% stake in Qenta. A plan sent by Euro Pacific to OCIF said that Qenta was a key part of its capital plan. Schiff said Zequiera was supportive of the sale and that he asked if he should put in extra money in the meantime to address the capital issue, but that Zequira said there was no need since the sale would result in an infusion of capital. The only thing Euro Pacific Bank needed to do, she said, was wait for OCIF to approve the sale.
Seven months later, on the morning of June 30, 2022, Schiff received an email from New York Times reporter Matt Goldstein asking for comment because "the J5 has said it is holding a press conference today to announce an action stemming from its Project Atlantis investigation which will include the suspending of operation for a Puerto Rico bank. It's believed that this action is being taken against Euro Pacific Bank." Schiff forwarded it to the bank's lawyer, who said that was impossible.
One hour before the 2 p.m. press conference, OCIF sent EPB a letter, saying it was critically insolvent and was being turned over to a "receiver," a Puerto Rican attorney. It also blocked the sale to Qenta, saying OCIF had just learned that the deal would include a stock component which would give Schiff a 4% share, which was a problem "in light of a number of negative press articles at the international level about the sole shareholder of Euro Pacific."
The press conference seemed like a full-court press by the IRS to give the impression that its signature effort, Operation Atlantis, was a success instead of an embarrassing failure. IRS Chief of Criminal Investigations Jim Lee-a top official at the agency overseeing thousands of agents-flew to Puerto Rico and took the podium. His Australian and British counterparts joined virtually.
"In January of 2020, each of the J5 countries participated in a global coordinated day of action to put a stop to the suspected facilitation of offshore tax evasion and money laundering by a suspected bank in Puerto Rico," Lee said. "This day of action included intelligence gathering, information gathering, search warrants, interviews, production orders, and subpoenas being issued around the globe. The operation from the J5 was dubbed Operation Atlantis, and the bank was Euro Pacific Bank."
"This action really touches on a massive undertaking by many partners to secure the financial system, shut down fraudulent entities," he added.
But it soon became clear that the shutdown actually had nothing to do with crimes. "Was EUP helping its clients commit money laundering and tax evasion?" a reporter asked.
"That is a conclusion that has not been made," Zequeira said. "The action is not based on claims of money laundering or other financial crimes."
A reporter asked Lee to address the question, seemingly wondering what he was doing there. Lee acknowledged that OCIF "independently made the decision" and "we did not work this investigation together in a traditional sense." He then immediately implied otherwise, saying "The fact that I'm standing here today along with two of my international chiefs on the screen, standing next to the OCIF Commissioner here, should suggest that our partnership and collaboration is incredibly strong. The fact that we are partnering and collaborating internationally makes the world a much smaller place for people to use banks to help shield or facilitate tax or other financial crime."
A reporter asked: "Is Peter Schiff being investigated?"
Despite previously saying that Euro Pacific was being investigated, Lee said, "I'm not at liberty to disclose who's being investigated."
The innuendo had its intended effect. Headlines read: "Peter Schiff's Bank Closed Over Alleged Tax Evasion." "IRS helps shut down bank for tax evasion, money laundering." "Puerto Rico bank suspended in tax evasion probe."
If the bank wasn't being shuttered for breaking the law, why was it being closed? Zequeira said at the press conference that it was because "OCIF determined today that the institution is critically insolvent."
But the liquidation plan signed by Zequeira a few weeks later on August 8, 2022, acknowledged that "As reviewed by the Trustee, as of June 30, 2022... the Net Cash Available, including proprietary precious metals to be monetized, is $68,109,302 USD. As of the same date, clients deposits totaled the amount of $66,747,758. Therefore, as of June 30, 2022, Euro Pacific had an excess cash position to cover all deposits." In other words, Schiff's bank was solvent-far more so than the typical bank.
The letter also said that Euro Pacific had been operating without a license. But documents show that it submitted an application for renewal and paid the fee in January 2022. Schiff said despite the bank being in constant contact with OCIF, no one from OCIF ever told it that it had denied the application-even as it was preparing for Qenta to purchase the bank, which would include its license.
Though OCIF said it blocked Schiff from selling to Qenta because Schiff would own 4% of the company, documents reviewed by The Daily Wire show that both companies prominently disclosed the stake at the top of a plan submitted to the agency, and that Zequiera replied that her agency had "no comments" on the plan. If she had flagged it as an issue, the deal could have simply been restructured.
Zequiera did not respond to questions from The Daily Wire and denied a public records request for emails between her and the IRS.
"You either come with an indictment or you shut your mouth," Schiff's brother said. "Because otherwise the government can destroy anyone they want."
Lee said at the press conference that there were more than 100 open civil and criminal investigations related to EUP customers around the world. In the year since, only two arrests-unnamed men arrested in England-have been publicly reported.
Prior to the press conference, Schiff had filed a defamation suit in Australian federal court against 60 Minutes Australia, and in September 2022, he won. The media outlet, in its defense, leaned heavily on Schiff's political opinions as evidence that he was a criminal. But Judge Ian McNeil Jackman-the brother of actor Hugh Jackman-wrote that "Whether Mr Schiff has expressed political views antipathetic to taxation does not support an assertion that he in fact endorses, permits and condones the illegal avoidance of tax in practice."
"The particulars do not identify a single instance in which a customer of the Bank actually used his or her EuroPacific account to engage in tax evasion or tax fraud, let alone to Mr Schiff's knowledge," he wrote in April 2023, as the suit proceeded to the damages phase. In its defense, 60 Minutes asserted that one unknown person had been arrested in the Netherlands on unknown charges.
After blocking Schiff from selling the bank to Qenta, the trustee allowed Qenta to buy EPB's assets out of receivership for pennies on the dollar. But the trustee, Wigberto Lugo Mender, has repeatedly postponed the return of customers' money-more than $65 million-even while collecting fees that eat into the bank's reserves. Lugo Mender did not return a request for comment.
One of the attorneys who represented Schiff before OCIF was Lanny Davis, the Democrat powerhouse who previously represented Bill Clinton.
"Leaking grand jury subpoenas is a criminal violation," he said. "I know that from the Kenneth Starr and Bill Clinton days. If you whisper in the ear of a reporter, 'Hey, there's a grand jury subpoena,' that's a crime."
He said that authorities leaking the existence of an investigation, coming up empty, then citing publicity based on their leaks to punish the subject is a "circular, self-fulfilling prophecy." The Puerto Rico regulator "allowed innuendo without facts to imply guilt by the bank and Mr. Schiff personally, when no such guilt was even close to being proven. Indeed, events have strongly suggested innocence," he told The Daily Wire.
Davis said Lee, the IRS chief, should be investigated by Congress, the inspector general, and the Department of Justice.
"The IRS agent should at the very least be suspended pending a complete investigation and maybe fired," Davis said.
Investigators "have no role whatsoever in the public arena under federal regulations and due process rules," he added. "If they choose to speak out publicly, they better have authority from the IRS Commissioner himself and the attorney general. If they do not, they're liable for wrongdoing and potential damages to the individual or company whose rights they have violated."
Malcolm Segal, a California lawyer who represented the bank in its dealings with the California grand jury, said prosecutors refused to explain why the Sacramento U.S. Attorney's office had any authority over a Puerto Rico-based bank that had no customers or vendors in Sacramento.
"That in itself is somewhat unusual in federal law enforcement," he said. "The grand jury, like the court, is expected to have some basis for venue."
He said the subpoena requested all bank records of all customers, along with all compliance records, and it wasn't surprising to him that the bank was not ultimately charged because "having reviewed all of the records supplied to the IRS and the U.S. Attorney during a period of over a year, I didn't see a single instance where the bank wasn't in full compliance," he told The Daily Wire.
But he was troubled by the fact that IRS and foreign agents appeared at a Puerto Rico press conference to take credit for closing a bank despite their investigation finding nothing.
"I was a federal and state prosecutor for 13 years and I don't think I've ever seen anything like that," he said.
"The regulator is permitted to say why they closed the bank, but no one else who participated from law enforcement could have, within the requirements of [the Rules of Criminal Procedure rule] 6E, disclosed the existence of an investigation which utilized a grand jury," he said. "Anyone who intentionally discloses may be considered to have obstructed justice."
Go Back
The day after the media pieces ran, Puerto Rico's Office of the Commissioner of Financial Institutions (OCIF) began an audit. The next year, it issued a "consent order" saying that the bank did not have enough capital, and gave it 30 days to come up with a plan. Though Schiff disagreed that ratios of extra cash designed for banks that loaned out their money made sense for a 100% reserve bank, he said he would have happily put some more in. But he became convinced that the publicity stemming from the leaked criminal probe meant that the bank had a shadow over it as long as he was in charge, and he resigned himself to selling it.
On November 10, 2021, Schiff met with OCIF's commissioner, a young lawyer named Natalia Zequeira, alongside executives from a precious metals trading firm called Qenta, and laid out a deal to sell the bank to Qenta for about $5 million in gold and cash, plus Schiff getting a 4% stake in Qenta. A plan sent by Euro Pacific to OCIF said that Qenta was a key part of its capital plan. Schiff said Zequiera was supportive of the sale and that he asked if he should put in extra money in the meantime to address the capital issue, but that Zequira said there was no need since the sale would result in an infusion of capital. The only thing Euro Pacific Bank needed to do, she said, was wait for OCIF to approve the sale.
Seven months later, on the morning of June 30, 2022, Schiff received an email from New York Times reporter Matt Goldstein asking for comment because "the J5 has said it is holding a press conference today to announce an action stemming from its Project Atlantis investigation which will include the suspending of operation for a Puerto Rico bank. It's believed that this action is being taken against Euro Pacific Bank." Schiff forwarded it to the bank's lawyer, who said that was impossible.
One hour before the 2 p.m. press conference, OCIF sent EPB a letter, saying it was critically insolvent and was being turned over to a "receiver," a Puerto Rican attorney. It also blocked the sale to Qenta, saying OCIF had just learned that the deal would include a stock component which would give Schiff a 4% share, which was a problem "in light of a number of negative press articles at the international level about the sole shareholder of Euro Pacific."
The press conference seemed like a full-court press by the IRS to give the impression that its signature effort, Operation Atlantis, was a success instead of an embarrassing failure. IRS Chief of Criminal Investigations Jim Lee-a top official at the agency overseeing thousands of agents-flew to Puerto Rico and took the podium. His Australian and British counterparts joined virtually.
"In January of 2020, each of the J5 countries participated in a global coordinated day of action to put a stop to the suspected facilitation of offshore tax evasion and money laundering by a suspected bank in Puerto Rico," Lee said. "This day of action included intelligence gathering, information gathering, search warrants, interviews, production orders, and subpoenas being issued around the globe. The operation from the J5 was dubbed Operation Atlantis, and the bank was Euro Pacific Bank."
"This action really touches on a massive undertaking by many partners to secure the financial system, shut down fraudulent entities," he added.
But it soon became clear that the shutdown actually had nothing to do with crimes. "Was EUP helping its clients commit money laundering and tax evasion?" a reporter asked.
"That is a conclusion that has not been made," Zequeira said. "The action is not based on claims of money laundering or other financial crimes."
A reporter asked Lee to address the question, seemingly wondering what he was doing there. Lee acknowledged that OCIF "independently made the decision" and "we did not work this investigation together in a traditional sense." He then immediately implied otherwise, saying "The fact that I'm standing here today along with two of my international chiefs on the screen, standing next to the OCIF Commissioner here, should suggest that our partnership and collaboration is incredibly strong. The fact that we are partnering and collaborating internationally makes the world a much smaller place for people to use banks to help shield or facilitate tax or other financial crime."
A reporter asked: "Is Peter Schiff being investigated?"
Despite previously saying that Euro Pacific was being investigated, Lee said, "I'm not at liberty to disclose who's being investigated."
The innuendo had its intended effect. Headlines read: "Peter Schiff's Bank Closed Over Alleged Tax Evasion." "IRS helps shut down bank for tax evasion, money laundering." "Puerto Rico bank suspended in tax evasion probe."
If the bank wasn't being shuttered for breaking the law, why was it being closed? Zequeira said at the press conference that it was because "OCIF determined today that the institution is critically insolvent."
But the liquidation plan signed by Zequeira a few weeks later on August 8, 2022, acknowledged that "As reviewed by the Trustee, as of June 30, 2022... the Net Cash Available, including proprietary precious metals to be monetized, is $68,109,302 USD. As of the same date, clients deposits totaled the amount of $66,747,758. Therefore, as of June 30, 2022, Euro Pacific had an excess cash position to cover all deposits." In other words, Schiff's bank was solvent-far more so than the typical bank.
The letter also said that Euro Pacific had been operating without a license. But documents show that it submitted an application for renewal and paid the fee in January 2022. Schiff said despite the bank being in constant contact with OCIF, no one from OCIF ever told it that it had denied the application-even as it was preparing for Qenta to purchase the bank, which would include its license.
Though OCIF said it blocked Schiff from selling to Qenta because Schiff would own 4% of the company, documents reviewed by The Daily Wire show that both companies prominently disclosed the stake at the top of a plan submitted to the agency, and that Zequiera replied that her agency had "no comments" on the plan. If she had flagged it as an issue, the deal could have simply been restructured.
Zequiera did not respond to questions from The Daily Wire and denied a public records request for emails between her and the IRS.
"You either come with an indictment or you shut your mouth," Schiff's brother said. "Because otherwise the government can destroy anyone they want."
Lee said at the press conference that there were more than 100 open civil and criminal investigations related to EUP customers around the world. In the year since, only two arrests-unnamed men arrested in England-have been publicly reported.
Prior to the press conference, Schiff had filed a defamation suit in Australian federal court against 60 Minutes Australia, and in September 2022, he won. The media outlet, in its defense, leaned heavily on Schiff's political opinions as evidence that he was a criminal. But Judge Ian McNeil Jackman-the brother of actor Hugh Jackman-wrote that "Whether Mr Schiff has expressed political views antipathetic to taxation does not support an assertion that he in fact endorses, permits and condones the illegal avoidance of tax in practice."
"The particulars do not identify a single instance in which a customer of the Bank actually used his or her EuroPacific account to engage in tax evasion or tax fraud, let alone to Mr Schiff's knowledge," he wrote in April 2023, as the suit proceeded to the damages phase. In its defense, 60 Minutes asserted that one unknown person had been arrested in the Netherlands on unknown charges.
After blocking Schiff from selling the bank to Qenta, the trustee allowed Qenta to buy EPB's assets out of receivership for pennies on the dollar. But the trustee, Wigberto Lugo Mender, has repeatedly postponed the return of customers' money-more than $65 million-even while collecting fees that eat into the bank's reserves. Lugo Mender did not return a request for comment.
One of the attorneys who represented Schiff before OCIF was Lanny Davis, the Democrat powerhouse who previously represented Bill Clinton.
"Leaking grand jury subpoenas is a criminal violation," he said. "I know that from the Kenneth Starr and Bill Clinton days. If you whisper in the ear of a reporter, 'Hey, there's a grand jury subpoena,' that's a crime."
He said that authorities leaking the existence of an investigation, coming up empty, then citing publicity based on their leaks to punish the subject is a "circular, self-fulfilling prophecy." The Puerto Rico regulator "allowed innuendo without facts to imply guilt by the bank and Mr. Schiff personally, when no such guilt was even close to being proven. Indeed, events have strongly suggested innocence," he told The Daily Wire.
Davis said Lee, the IRS chief, should be investigated by Congress, the inspector general, and the Department of Justice.
"The IRS agent should at the very least be suspended pending a complete investigation and maybe fired," Davis said.
Investigators "have no role whatsoever in the public arena under federal regulations and due process rules," he added. "If they choose to speak out publicly, they better have authority from the IRS Commissioner himself and the attorney general. If they do not, they're liable for wrongdoing and potential damages to the individual or company whose rights they have violated."
Malcolm Segal, a California lawyer who represented the bank in its dealings with the California grand jury, said prosecutors refused to explain why the Sacramento U.S. Attorney's office had any authority over a Puerto Rico-based bank that had no customers or vendors in Sacramento.
"That in itself is somewhat unusual in federal law enforcement," he said. "The grand jury, like the court, is expected to have some basis for venue."
He said the subpoena requested all bank records of all customers, along with all compliance records, and it wasn't surprising to him that the bank was not ultimately charged because "having reviewed all of the records supplied to the IRS and the U.S. Attorney during a period of over a year, I didn't see a single instance where the bank wasn't in full compliance," he told The Daily Wire.
But he was troubled by the fact that IRS and foreign agents appeared at a Puerto Rico press conference to take credit for closing a bank despite their investigation finding nothing.
"I was a federal and state prosecutor for 13 years and I don't think I've ever seen anything like that," he said.
"The regulator is permitted to say why they closed the bank, but no one else who participated from law enforcement could have, within the requirements of [the Rules of Criminal Procedure rule] 6E, disclosed the existence of an investigation which utilized a grand jury," he said. "Anyone who intentionally discloses may be considered to have obstructed justice."
Home
Contact
About
Service Rates
Privacy Policy
Follow on Facebook
Subscribe to Newsletters
Rss Feed
Keywords
Eastern NC Now & ENC NOW © Copyright 1998-2024 All Rights Reserved.
