Asset Protection BLOG - Mark Nestmann

An Autopsy of a Phony Offshore Bank

It couldn't have happened to a more deserving group.

Earlier this week, a U.S. District Court in Oregon sentenced four officers of the now-defunct First International Bank of Grenada to prison terms up to eight years. 

While it was in business from 1997-2000, FIBG promised "guaranteed" annual returns up to 300% for funds invested with it.  To assure depositors that their investments were safe, FIBG claimed that an independent deposit insurance company insured them fully.  However, when FIBG went belly-up in 2001, the company supposedly insuring these deposits never made good on them.  Depositors lost nearly US$500 million in all. 

The FIBG scam began when one Gilbert Allen Ziegler came to Grenada from Oregon, after declaring bankruptcy in 1994.  With no banking experience, no identifiable assets, and a passport issued by a non-existent country (the so-called "Dominion of Melchizedek"), Ziegler obtained a banking license in Grenada with the aid of corrupt local officials. 

Grenadian banking regulators permitted Ziegler to capitalize the bank on the strength of a jeweler's supposed US$17 million appraisal of a single ruby.  Ziegler possessed only a photograph of the ruby and wasn't able to prove that he owned it. 

---

Radical New Approach to Asset Protection & Privacy

In 2006, more than nine million Americans had their identity stolen and approximately 1.8 million were sued. And laws like the USA PATRIOT Act greatly expand warrantless searches and permit government property seizures without proof of wrongdoing.

Big Business and Big Brother want to keep you and your wealth in plain sight, to be profitably tracked and conveniently seized. However, you can still legally create international 'lifeboats' of wealth and privacy that are practically invulnerable to snooping or confiscation.

Click here to learn more.

---

Unfortunately, Ziegler wasn't around to receive his just desserts in the Oregon courtroom earlier this week.  He died in 2005 of a heart attack.  But four of his associates will now be serving time after their convictions on multiple counts of mail fraud, wire fraud, conspiracy, and money laundering. 

The lesson of FIBG is simple: if something sounds too good to be true, it probably isn't true.  Unfortunately, this lesson has yet to be learned by many investors. 

No matter where you invest or do business, onshore or offshore, appearances can be deceiving.  There is no substitute for due diligence.  And while in FIBG's case due diligence was difficult because of the connivance of corrupt government officials with Ziegler and his co-conspirators, anyone promising of a 300% "guaranteed" return can't be taken seriously. 

Further, even a cursory review of Ziegler's background would have demonstrated that he had zero experience in the banking industry.  How realistic to expect that someone with no background in banking could somehow stumble upon a miraculous investment that provides a 300% guaranteed annual return? 

When investing offshore, the first rule is "hang on to your wallet."  Because there are many offshore scam artists ready, willing, and able to separate you from your hard-earned money. 

Copyright © 2007 by Mark Nestmann

Could Hackers "Kidnap" Your Data?

For years, I've pleaded with my clients and anyone else who'll listen to encrypt their confidential e-mails and computer files.  But now, a new breed of hacker has emerged—one who surreptitiously encrypts your PC files and then demands money to decrypt them. 

The idea of "ransomware" has been discussed among computer techies for over 20 years.  But the first ransomware attacks occurred only a few years ago.  In the last few months, though, they've been skyrocketing.  The security firm Secure Science Corp. estimates that in the past eight months 152,000 victims have been infected.

If you've been a victim of a ransomware attack, the first thing you'll probably notice is that your PC runs much more slowly than it does normally—like "molasses in January," one victim called it.  Next, you'll see text files appear on your desktop or in the "My Documents" folder.  They're usually entitled "README.TXT" or something similar. 

When you open the file, it will say something like this:

""Hello, your files are now securely encrypted using an unbreakable 4096-bit algorithm.  If you try to decrypt them, they will be automatically wiped.  The only way to decrypt them and avoid their destruction is to purchase our decryption key.  The price is US$1,000.  To make payment arrangements send an email message to hackerdude@netmail.ru."

As scary as ransomware sounds, it will probably never be as large a problem as "Trojan Horse" programs that silently take over your computer and steal your data without informing you of the intrusion.  In addition, given the sophistication of global anti-money-laundering efforts, it would be difficult for ransomware programmers to receive ransom payments in an untraceable manner, especially over a period of weeks or months. 

The most important precaution to dealing with ransomware is to back up your data daily.  Also, since lazy ransomware programmers sometimes encrypt only the data on your desktop or My Documents files, it's a sensible precaution not to keep sensitive documents in these directories.

Ransomware typically arrives in files attached to e-mail messages, embedded into the messages themselves, or is downloaded using insecure instant messaging or peer-to-peer applications.  To avoid being infected with ransomware (or other "malware"), beware clicking on links (or even opening) messages that look like spam (although many files containing malware have unsuspicious names or headers). 

Also, while anti-virus software can't decrypt files that have been encrypted with ransomware, it can detect a Trojan Horse programs or other malware that may contain ransomware.   So keep your anti-virus protection up-to-date and use a good firewall program such as Comodo to protect yourself.

Copyright © 2007 by Mark Nestmann

"Minority Report" Coming to U.S. Border Crossings

Remember "Minority Report?" 

This movie is set in Washington, D.C. in 2054.  The city hasn't experienced a single murder in more than six years, thanks to laws that permit police to arrest individuals predisposed to commit homicides, along with mandatory retinal implants in all citizens that make it possible to track citizens wherever they travel. 

Is the loss of privacy and the detention of individuals who haven't committed any offense worth a possible reduction in crime?  That's the question Minority Report sets out to address, and it's particularly relevant to a new initiative from the Department of Homeland Security (DHS) designed to predict which of the 400 million people who enter the US every year have "current or future hostile intentions".

Here's the plan: When you approach a border-crossing checkpoint, you will be examined by a battery of lasers, closed circuit TV cameras, eye movement tracking devices, and microphones.  The intent is to compile a database of your body itself, with the goal of predicting your future intentions. 

If this sounds a little far fetched, it is.  But the DHS has now issued a "request for information" in which it asked security companies and U.S. government labs to propose ways to implement this goal.  It hopes to deploy the technologies at all U.S. border crossings points by 2012.

The sort of Minority Report type mass screening envisioned in these initiatives is more than a mass invasion of privacy.  It's also a mass waste of time and money.  That's because only a tiny number of the 400 million people who cross U.S. borders have any hostile intentions against the United States.  Screening all 400 million is a waste of valuable resources and, based on similar data mining efforts conducted by DHS, such as the No-Fly List, is certain to result in thousands or even hundreds of thousands of individuals being unnecessarily detained or even turned away from crossing the border.

Is there a better way to accomplish this same objective?  Absolutely, and the technology is here, right now.  It's to train immigration and border patrol agent to focus on the same speech patterns, eye movements, etc., that the automated system is designed to track.  This would not only save billions of dollars and avoid unnecessarily intrusions of hundreds of millions of travelers, but could deployed in a matter of months—not years.

Since Sept. 11, 2001, it's become difficult to travel without subjecting yourself to intrusive surveillance. However, it's still possible to travel privately, and in some cases, virtually anonymously.  Click here to learn how. 

Copyright © 2007 by Mark Nestmann

Wealth Protection for Joe Six-Pack

Are you, or do you know, Joe—or Jane—Six-Pack? 

Joe's an average American guy.  He and his wife Jane live in a three-bedroom tract home in the suburbs with a couple of children. Joe has a solidly middle-class occupation.  So does Jane—they both have to work to pay the bills. 

Joe and Jane don't worry much about asset protection, privacy, and have never invested a dime outside the United States.  But one day, they read an article stating that more than 50,000 lawsuits are filed every day in the United States.  But they ignore it, because they "know" that there's nothing "average people" can do to protect themselves.

Fortunately, that's a misconception.  Joe and Jane, and almost every other "average American," can benefit from an integrated program of wealth protection, and protect their privacy to boot.  And they don't need to spend a fortune to enjoy these benefits—either domestically or offshore.

"Free" Asset Protection in the United States

While the United States is a very "creditor-friendly" country, there are numerous opportunities for wealth preservation, particularly at the state level.  These laws vary from state-to-state as to what assets are protected and under what conditions.  If you live in a state with strong asset protection laws, they may provide an important first line of defense to protect your wealth.  Here's a brief summary of what's available:

---

Radical New Approach to Asset Protection & Privacy

In 2006, more than nine million Americans had their identity stolen and approximately 1.8 million were sued. And laws like the USA PATRIOT Act greatly expand warrantless searches and permit government property seizures without proof of wrongdoing.

Big Business and Big Brother want to keep you and your wealth in plain sight, to be profitably tracked and conveniently seized. However, you can still legally create international 'lifeboats' of wealth and privacy that are practically invulnerable to snooping or confiscation.

Click here to learn more.

---

Liability insurance.  Your first line of defense is to purchase liability insurance for their home and especially, your vehicles.  Don’t stop at the minimum limits, either.  If you can purchase an "umbrella" policy with limits of US$1 million or more, do so. 

However, liability insurance will not protect against libel, slander or harassment; punitive damages; damages resulting from you violation of any law or regulation; or injuries resulting from your intoxication or your use of any illegal drug. 

Homestead laws. If your state has such a homestead law, you won't lose your home, up to whatever dollar limits are in effect, even if you lose a judgment or declare bankruptcy.  Homestead limits are very low in most states with only $5,000 or $10,000 protected.  But a few states, such as Texas and Florida, protect your home from the claims of creditors, with no limit to total value.

There are important limitations to homestead laws.  Mortgages are exempt, and in many states, so are criminal fines, punitive damages awards, and certain intentional wrongs such as deceit, fraud or libel.  State homestead laws also don't protect against federal civil or criminal forfeiture proceedings, claims by the IRS or claims under federal bankruptcy provisions that make alimony, maintenance and child support non-dischargeable.  In addition, the 2005 Bankruptcy Reform Law limits the value of any state homestead exemption to $125,000 if you have owned the residence for fewer than 1,215 days (three years and four months) before filing for bankruptcy. 

Life Insurance and Annuities.  Almost every state protects the death benefit of a life insurance policy from creditors where a spouse or child is the beneficiary.  However, the cash value of a life insurance policy may or may not be exempt.  Similarly, stocks or other investments purchased through life insurance policies may or may not be protected from creditors. 

Annuity payments are protected by most states, but the proceeds must generally be payable to someone other than the contract owner; e.g., your spouse or partner.  Again, there are limitations.  The protection may not extend to alimony or child support, criminal fines, punitive damages, or federal tax claims, among other possible exemptions.

Pension and Retirement Plans.  Federal bankruptcy law exempts pensions, employer-sponsored retirement plans, Social Security and other benefits tied to age, illness, or disability from attachment by creditors—but the protection exists only if you declare bankruptcy.  There is no limit on the amount that can be protected, except that IRAs are limited to US$1 million. 

There are important limits to this protection.  Only funds "reasonably necessary" for your support and that of your dependents are protected, so protection for plans much larger than US$1 million may largely be illusory.  Further, spousal and child support claims are not exempted; nor are claims from the IRS.  IRAs may also be seized in criminal forfeiture cases.   

Domestic trusts. An irrevocable domestic trust can provide significant asset protection.  The greatest protection is in a properly drafted irrevocable spendthrift discretionary trust, in which you're not named as a beneficiary.  So long as the assets remain in trust, creditors of trust beneficiaries can't reach them. 

State legislators have created various exceptions to the spendthrift trust rule.  Both the states and federal government may be able to attach a beneficiary's interest in a spendthrift trust to satisfy that beneficiary's tax obligations.  Many states also provide exceptions for alimony or child support payments. 

Domestic Limited Partnerships and Limited Liability Companies.  Limited partnerships consist of limited partners with their liability limited to the amount invested in the partnership and at least one general partner who assumes unlimited liability for the partnership's activities.  Limited liability companies (LLCs) give all owners (members) limited liability, regardless of their management participation.

To prevent the disruption of an ongoing business partnership or LLC by creditors, the charging order concept has evolved to permit creditors of individual partners or members the right to attach future distributions due the partner.  But, the creditors may not force the business to liquidate or to make a distribution. 

Unfortunately, many limited partnerships and LLCs are marketed as a means of protecting an investment portfolio or even a personal residence, with no business purpose.  This structure may deter some lawsuits, but a determined creditor will try to demonstrate to a court that there is no business to protect and that the charging order concept therefore shouldn't apply.  These entities are also vulnerable if there is only a single partner or member, in which case, there are no non-liable owners to protect.

Avoid Fraudulent Conveyance

Creditors can challenge transfers of assets to a trust, partnership, insurance policy, etc. under state or federal fraudulent conveyance statutes.  In a fraudulent conveyance suit, the burden of proof is on the creditor to demonstrate that the purpose of the transfer was to "hinder, delay, or defraud" its collection of an existing or known future obligation. 

If you can't demonstrate a legitimate reason for the transfer, other than spiriting your assets away from your creditors, a court may set aside the transfer and order you to pay the money owed a creditor.  The court order may be reinforced with fines, foreclosures, seizure of substitute property, and occasionally, even civil contempt citations; i.e., pay the creditor or go to jail. 

It's critical that you obtain the advice of a qualified professional when transferring personal assets into any of the structures discussed in this article!

Joe Six Pack Goes Offshore

Many countries have enacted laws and regulations that are much more protective of privacy and wealth than the United States.  Each offshore jurisdiction is unique, but in general, they:

• Protect financial privacy much more than the United States.  Financial information enjoys far more protection in most other countries than the United States.  Even if there are no "bank secrecy" laws in effect, taking your wealth offshore will take otherwise-visible assets off the radar screen of domestic financial investigators. 
• Lack U.S.-style "civil forfeiture" laws.  Most countries view being deprived of your property as a punishment that can only be imposed in a criminal proceeding.  That means, unlike the United States, you and your property are presumed innocent.  In most of these countries, you can only be deprived of your property after you've been convicted of a crime. 
• Have procedural rules that discourage frivolous lawsuits. Unlike the United States, Most foreign legal systems discourage or prohibit lawsuits brought on contingency; i.e., where the attorney bringing the lawsuit is rewarded with a percentage of the assets awarded by the court.  They also often have a "loser pays" rule in civil litigation and prohibit the awarding of punitive damages without a criminal conviction. 
• Have set up laws and regulations that are designed to protect wealth.  Some foreign jurisdictions have enacted trust laws that make it very difficult to prevail in any claim against the assets conveyed to a properly structured trust.  Others accomplish the same objective through insurance contracts.  In virtually all cases, assets are better protected, and less visible, than in the United States.
• Facilitate access to non-dollar-denominated investments.  It's possible (although not always easy) to purchase foreign currency CDs and securities denominated in foreign currencies from a U.S. bank or broker.  However, numerous restrictions apply, a consequence of laws enforced by the Securities and Exchange Commission, the Internal Revenue Service and other government agencies.  Outside the United States, most of these restrictions don't exist, or are less onerous.

Here are some ideas for small investors:

Offshore bank accounts. It's still possible to open small accounts in a handful of offshore jurisdictions.  While an account of, say, US$20,000 may not be large enough to provide access to the full range of the bank's services, it will generally be sufficient to fund investments in savings accounts and foreign currency CDs.  Most of these accounts are available at commercial banks, and you shouldn't expect personalized treatments. 

Offshore safekeeping arrangements. It's also possible to use safekeeping arrangements to hold precious metals or other valuables offshore.  There is no minimum investment to qualify for such services, as they are strictly fee-based.  These arrangements may be legally non-reportable to the IRS or U.S. Treasury, unless the holdings are sold for a profit.  However, persons with less than $20,000 to protect may find the expense involved in transporting valuables abroad and paying the annual safekeeping fees too high to be practical.

Offshore variable annuities. If you're looking for an easy way to provide asset protection, currency diversification, and tax-deferred growth, an offshore variable annuity is worth considering.  With a minimum investment of around US$50,000, they don't cost a fortune, either.   Several offshore jurisdictions provide statutory asset protection for the death benefit and investments held by an insurance policy.  It's also much more expensive for a creditor or disgruntled family member to bring a claim before a foreign court than a domestic court. 

One disadvantage of an offshore annuity is that you're not allowed to manage the investments within it yourself.  If you do, you lose tax deferral.  However, you can usually make a non-binding request to the insurance company to purchase particular types of investments or name an outside investment manager.
Invest offshore through your IRA. Offshore investments through a self-directed retirement plan are another option.  You can purchase offshore stocks and bonds, offshore funds, even offshore real estate through your retirement plan.  Unfortunately, most retirement plan custodians won't permit you to place offshore investments in your IRA, but there are a few exceptions.  The minimum investment to make this a viable strategy is approximately US$100,000.

If you decide to proceed offshore, remember that for U.S. investors, offshore income or gain is generally not tax-deferred, other than the exceptions I've already mentioned.  Extensive tax reporting requirements also exist for many types of offshore investments and contractual relationships.

Finally: no matter what options you choose for your offshore asset protection plan, please don't proceed until after you've consulted with a qualified professional.

Copyright © 2007 by Mark Nestmann

How to Stay Out of Jail for Protecting Your Assets

Back in the 1990s, in the go-go days of the Internet stock boom, Stephan Lawrence was a day trader who made millions using other people's money.  But, the market turned against him, and in 1999, he found himself staring at a US$20 million margin call from Bear-Stearns.

Lawrence didn't have the money to pay up, so Bear-Stearns won an arbitration judgment for US$20 million dollars. 

However, Lawrence thought he had a plan to protect himself.  Shortly before the judgment was rendered, he transferred most of his wealth to an offshore trust, and then declared bankruptcy. 

Not surprisingly, the bankruptcy judge wasn’t amused.  He ordered Lawrence to repatriate the assets in his offshore trust.  When Lawrence failed to do so, in 2000, the judge incarcerated him for "civil contempt" of the court order.

Lawrence apparently tried to get the foreign trustee of his trust to repatriate the assets so he could get out of jail.  But the trustee wouldn't cooperate.  After numerous appeals, based on the argument that he didn't have the ability to repatriate the assets in the trust, he finally was released from jail last month—SEVEN YEARS LATER.

Offshore trust promoters once claimed that anyone ordered to repatriate the assets in an offshore trust could plead an "impossibility" defense to stay out of jail.  In Lawrence's case, you could say that the impossibility defense "worked," but again, only after seven years in jail.

The problem in Lawrence's case was that the bankruptcy judge found that Lawrence had created the impossibility that made him unable to comply with the court order.  What Lawrence did wrong was to wait until the eleventh hour to try to protect his assets.  He knew that a judgment against him was about to be rendered.  By making his assets unavailable to Bear-Sterns, thereby hindering collection of its judgment, he engaged in what the law calls a "fraudulent conveyance." 

However, those assets were—and apparently remain—protected.  Lawrence placed at least US$6 million in his offshore trust, perhaps more.  Even earning only 5% interest, those assets are now worth at least US$8 million.  Looking at it another way, Lawrence was paid very well for staying in jail.

It's not common to have to go to jail to protect your assets, but it can happen, particularly if you thumb your knows at a pissed-off bankruptcy judge like Lawrence did.  To make sure that you don't follow his example, make certain that your asset protection plan doesn’t "hinder, delay or defraud" known or reasonably foreseeable creditors.  As I've said before, this determination is best made after consultation with an experienced attorney.

Even if you do engage in a fraudulent conveyance, your assets may remain protected, as Lawrence's did.  But for most people, seven years in jail is a terrible price to pay for asset protection.

Learn how to legally protect your assets, both domestically and offshore—click here.

Copyright © by Mark Nestmann

Mail Order Tribal Membership Scam Targets Illegal Immigrants

Finding and publicizing opportunities for investing, living, and doing business outside the United States is the raison d'etre of The Sovereign Society.

But the number of U.S. persons looking for opportunities outside the United States pales in comparison to the number of non-U.S. persons looking for opportunities in the United States. 

Nowhere is this more obvious than in the staggering number of immigrants illegally living in the United States—somewhere between 12 million and 20 million persons, depending on whose statistics you believe.

An ongoing crackdown against illegal immigrants has led to a number of "creative" solutions purported to allow these individuals to legally remain in the United States.  Among the most "creative" are offers from two Native American tribes offering tribal membership to anyone for prices starting at US$50.  Become a member of the tribe, so goes the pitch, and you can stay in the United States as long as you want, regardless of your immigration status.

The pitch is pure hokum.   Immigration authorities insist becoming a tribe member gives no protection against being deported.  Even if it did, neither the U.S. government nor the National Congress of American Indians officially recognizes the tribes offering membership. 

But that hasn't stopped thousands of illegal immigrants from snapping up tribal membership, and subsequently trying to achieve legal immigration status.  Two Mexicans have already been indicted for allegedly trying to get U.S. passports and Social Security cards by claiming to be mail order native Americans. 

While almost every country in the world welcomes qualified immigrants, applicants must go through an extensive legal process to determine their eligibility for residence status.  Immigrants who are healthy, wealthy, and highly educated are most welcome, particularly if they don't need to work in their adopted country. 

A handful of countries even offer citizenship and passport to qualified individuals who are willing to make substantial investments.  The Commonwealth of Dominica and the Federation of St. Kitts & Nevis are the two best-known programs.  Austria has an economic citizenship program as well, but it much more expensive than the programs in Dominica and St. Kitts & Nevis.  The Austrian program is also politically controversial and it's increasingly difficult to obtain citizenship under this option. 

Finally, despite claims on the Internet to the contrary, no country offers legal status by mail, with no due diligence necessary.  You should assume that all such offers are fraudulent, as they are in virtually every case. 

The Nestmann Group, Ltd. can provide assistance to qualified individuals seeking second citizenship and alternative residence.  Please contact us for more information at assetpro@nestmann.com. 

Copyright © 2007 by Mark Nestmann

Protect Your Privacy: Ask Your Doctor for a Handwriting Sample

It may sound a bit bizarre, but if you learn to write as illegibly as most doctors do, you just might protect yourself from unwanted surveillance.

As you already know from my previous blog postings (see here and here), your e-mail messages, Internet browsing records, and just about anything else you send or receive electronically is automatically swept up by the National Security Administration and analyzed in their supercomputers.  Such surveillance in many cases no longer requires a search warrant, and is accomplished by placing taps on the giant switches used by U.S. telecom companies. 

Since much of the world’s electronic “traffic” passes through these switches, even persons living outside the United States, sending messages to persons also outside the United States, may have their communications pass through these switches.

Your telephone traffic data—records of who you call, who calls you, and how long you talk, are similarly monitored, again without a warrant.  Sophisticated voice recognition software listens for “trigger words” in your conversations that might be of interest for further review by a human analyst. 

Any fax messages you send or receive similar treatment.  Naturally, no warrant is required.  Optical character recognition (OCR) software is used to review faxes for trigger words that might merit further analysis. 

And here’s where your doctor’s illegible handwriting might prove useful.  Handwritten messages, especially those written in script (i.e., cursive writing, where the letters are connected) is difficult for automated OCR systems to monitor.  Unless you’re a specific target, this precaution will pass you through the electronic OCR dragnet.

It may not be convenient to take the time to handwrite a fax message, but if you want to communicate privately, without taking additional precautions such as encrypting your e-mail messages, it’s one of the easiest ways to do so. 

Perhaps the Bush administration’s next initiative in the War on Terror will be to require handwritten faxes to be created in block lettering to facilitate OCR surveillance.  Or to ban them altogether since handwritten faxes might potentially facilitate terrorist communications. 

If that happens, you may need to do what I did as a child to converse with the boy next door: connect two tin cans with a spool of wire.  I don’t think even the NSA could listen in on those conversations.

Copyright © 2007 by Mark Nestmann

Your Electronic Toll Records…in Divorce Court

Ah, progress.

Throwing coins in a toll collection basket as you drive down the expressway is so 20th century. 

But about a decade ago, as we left the 20th century behind, highway engineers dreamed up a system to allow drivers to travel on toll roads without stopping to pay tolls. 

And so were born "E-Z Pass," "Fast Lane," and similar electronic toll collection systems.  To participate, you open a prepaid account, and then receive special tags for your vehicle's windshield.  When you drive through a suitably equipped toll plaza, your account is automatically debited for the toll. 

No need to stop.  No need to fish for quarters in your pocket.  And no need to roll down the window to confront toll-booth Tammy.  No wonder E-Z Pass is popular! 

But not many people asked about the legal status of the toll records.  Prosecutors and plaintiff's lawyers quickly saw the potential of using these records in civil litigation.  For instance, they might be useful at proving that instead of staying downtown to work late at the office, like you told your spouse, you actually passed through an E-Z Pass toll plaza a stone's throw away from the Cheatin' Heart Motel.   As Jacalyn Barnett, a New York divorce lawyer, says, "E-Z Pass is an E-Z Pass to divorce court, because it's an easy way to show you took the off-ramp to adultery."

Now a few privacy advocates are shocked—yes shocked—that electronic toll records could be used this way.  I'm not sure why they're surprised, though, because in the 1970s, the Supreme Court ruled in a series of cases that you have no "expectation of privacy" with respect to your banking records, your telephone dialing records, or any other record turned over to a third party.  This status can be modified by contract or by law, but no contract or law that I know of creates an "expectation of privacy" for toll records. 

In any event, rather than be "shocked" by this invasion of privacy, there's a simple solution if you don't want your toll records turned over to anyone with the legal authority to issue a subpoena.  Stop your car, roll down the window, fish for some quarters, and throw them in the toll basket. 

Just don't miss the basket.  Toll-booth Tammy may not be any more friendly than she was a decade ago.

Click here to learn dozens more ways to protect your privacy, on and off the highway.

Copyright © by Mark Nestmann

What's Worse than a National ID? How About a Global One?

Quietly, the infrastructure for a global identification system is being put in place by a consortium of commercial entities, and government agencies, and non-profit organizations.

A nearly-invisible organization called the Federation for Identity and Cross-Credentialing Systems (http://www.fixs.org) has created what it calls the first "worldwide, interoperable identity and cross-credentialing network." Now installed at numerous U.S. military installations and government offices, the FIXS network is now ready for global deployment.

What might bring about the adoption of a global identification system? The threat of terrorism, naturally. Jim Williams, former director of the US VISIT program within the U.S. Department of Homeland Security, says a global ID would help fight terrorism, and also cut wait times, reduce government fees for travelers, and deter illegal immigration.

Progress in other countries promises to make a global ID system a reality sooner, rather than later. In the EU, the European Health Insurance Card sets up a framework by which travelers from one EU country who fall ill in another EU country can obtain health care there. The final phase of this effort will add a "smart chip" containing a range of data, including health files and records of treatment received. It's hardly a stretch to imagine that this card could evolve into a EU-wide identification card.

On another front, the International Civil Aviation Organization (ICAO) has issued a series of "best practice" standards for biometric passports and the transfer of airline passenger data. Resolutions adopted by ICAO's governing council of government representatives require all members to begin issuing machine-readable passports by 2010. Another ICAO standard requires the new high-tech passports to contain sufficient spare memory to house a "biometric identifier" such as face recognition (the initial standard) or fingerprinting. Again, it's easy to imagine how this information could be woven into a global travel database that is an integral part of a future global identification scheme.

However, national ID cards, much less a global ID system, won't bring the promised benefits. As Bruce Schneier, founder and chief technical officer of BT-Counterpane, an Internet security company, observes:

"ID cards will not reduce crime, fraud or illegal immigration. Instead, ID cards encourage criminals to attempt forgeries, potentially exacerbating crime rather than reducing it. As you make a credential more valuable, there is more impetus to forge it. And even if we could guarantee that everyone who issued national ID cards couldn't be bribed, initial cardholder identity would be determined by other identity documents ... all of which can be forged.

"But the main problem with any ID system is that it requires the existence of a database. In this case it would have to be an immense database of private and sensitive information on every citizen—one widely and instantaneously accessible from airline check-in stations, police cars, schools, and so on. And when the inevitable worms, viruses, or random failures happen and the database goes down, what then? Is the whole country [Nestmann note—or world] supposed to shut down until it's restored?"

What a global ID system will be effective in doing is to bring the world one step closer to global totalitarianism, with law-abiding citizens forbidden to work, travel, open bank accounts, or conduct the most basic life activities without approval from faceless bureaucrats.

Perhaps that's why, according to FIXS, the primary obstacle for a global ID system is political, not technical. "The cultural gap with the public in general is still too wide," says Dr. Mike Mestrovich, president of FIXS. "I think there would have to be a public consensus to move us in that direction and I don't see that happening until at least 2009 or beyond."

However, that public consensus isn't as far away as you might think. For instance, an opinion poll last month in Canada revealed that 72% of respondents would have "no problem" with the introduction of a national identification card which would include a person’s photograph and fingerprint.

Clearly, if we are to stop a global ID system, much less national ID systems, we must develop a global consensus against the idea. The Canadian opinion poll reveals we have a long way to go.

High-tech passports, no-fly lists, and other privacy intrusions have made private travel much more difficult than it once was. But it's still possible to travel privately—click here for more information.

Copyright © by Mark Nestmann

Moving Money Privately

It's no longer risk-free to move large quantities of money, undetected, across international borders, are over.

It's true that drug cartels and others still smuggle cash across the U.S.-Mexican border and other international frontiers.  But, they take considerable legal risks doing so, including fines, imprisonment, and of course, forfeiture of the cash.

It's perfectly legal to transport cash across the U.S. border, and most other international borders—you just have to make a declaration of that fact to your national authorities.  When you transport more than US$10,000 in cash or cash equivalents across a U.S. border, for instance, you must file FinCEN Form 105.

However, when you get your cash to your offshore bank or other offshore service provider, you may find that it's not willing to accept it, especially if you don't already have an existing relationship.  That's a consequence of money laundering laws now in effect in virtually every country in the world. 

It was once possible to fund international investments with money orders.  That's still possible in some situations, but international financial institutions are increasingly reluctant to accept funds that originate in any "unconventional" form.  Before you assume you can fund an international investment with money orders, check with it in advance. 

Also be aware that when you purchase money orders with cash, the bank or other service provider that sells them to you will probably be required to verify your identity.  For instance, under U.S. law, if you purchase bank checks, cashier’s checks, money orders, or traveler’s checks, in amounts between US$3,000 and US$10,000, the issuer must verify your identity and retain a record of the transaction for five years.  If the purchase is for more than US$10,000, a record of the transaction must be sent to the U.S. Treasury.   

That leaves funding offshore investment with a check or a wire transfer as the most realistic option for most persons.  Both options leave a paper trail, so I generally recommend that clients simply wire the proceeds directly to their intended recipient, since it avoids the necessity of waiting for a check to clear.  It may be possible to wire funds to an offshore bank's U.S. correspondent account for further credit to a foreign account.  This may be a slightly lower profile way to fund the investment than wiring it directly overseas. 

However you fund your offshore investment, make certain to comply with the reporting requirements for offshore investments.  U.S. persons must file Form TD F 90-22.1 annually for foreign "bank, financial, or 'other' financial accounts" they hold with an aggregate value of US$10,000 or more.  They must also disclose the existing of the account(s) on Schedule B of their tax return. 

Other reporting requirements may apply as well, depending on the type of investments you make, as well as whether you choose to make them through some kind of offshore entity such as an offshore trust or offshore company.

Learn more about the reporting requirements for international funds transfers, offshore investments—and the investments you can legally avoid reporting—by clicking here.

Copyright © 2007 by Mark Nestmann

Turn In Your Friends, Neighbors and Family Members …and Earn Generous Informant Commissions

Want to earn some extra cash?

It's easy…just participate in one of the many "paid informant" program run by various U.S. government agencies.

Think your neighbor…or that brother-in-law you don't like—is a tax cheat?  Call the IRS to report the violation, then download IRS Form 211 to claim your reward—up to 15% of the "additional taxes, penalties, and fines collected as a result of the informant’s information."

Not satisfied with 15%?  If information you provide to the Drug Enforcement Administration or other government agency leads to a property forfeiture, you're eligible for a commission up to 25% of the amount recovered.

Not satisfied with 25%?  In numerous cases, informants have negotiated "sweetheart deals" with government agencies to submit information in return for commissions as high as 50% of the assets seized.

Of course, not all informants act for money.  In Iowa, anonymous tipsters can call a toll-free number to report littering.  In New York, "naughty nannies" can be reported.  In Akron, Ohio, people smoking in no-smoking areas are under the informant's spotlight.  And just about every city in the United States has a "Crimestoppers" number you can call anonymously to report your suspicions that your friends, neighbors, or family members are doing something illegal. 

Sometimes when an informant doesn't exist, police make one up.  Last fall, police burst into the Atlanta home of 92-year-old Kathryn Johnston.  They didn't bother to knock, since U.S. courts have repeatedly declared that "no-knock" raids don't violate the U.S. Constitution.  But when the officers burst in without warning, Johnston fired at them, and they fired back, 39 times in all, killing her instantly.

It turns out that police obtained the warrant to search Johnston's house by falsely declaring that they had confirmed drug dealing at the house through a confidential informant.  After the shooting, the officers involved planted marijuana in Johnston's home to "prove" that she had been involved in drug sales.  They also tried to persuade the informant whose name they used in the warrant to back up their story. 

Naturally, given the "success" of the informant system, the Bush administration wants to expand it.  In 2004, President Bush instructed the FBI to develop a greater "human intelligence capability."  In response, the FBI came up with a plan in late July to recruit 15,000 additional covert informants, at an estimated initial cost of US$22 million.  Their job?  Reporting to FBI officials anybody who is "suspicious." 

If this sounds familiar, it should.  Back in 2002, the Bush administration unveiled its proposed Terrorism Information and Prevention System, or TIPS, in which millions of Americans would be recruited as domestic informants.  Had the program gone into effect, the United States would have had a higher percentage of citizen informants than the former East Germany did through its infamous Stasi secret police.

One consolation, I suppose, is that the FBI's new informant proposal is far less ambitious than TIPS.  A further consolation is that the FBI has decided not to put domestic spies through the same training courses used by the CIA.  That's a good thing, since U.S. intelligence officers abroad can use bribery, extortion, and other illegal acts to coerce informants into working for them.  This is supposedly illegal in the United States, although if the payment of informant commissions isn't tantamount to bribery, I don't know what is.  (No official word on whether commissions will be available in the FBI's new program, but I'm certain they will be, as it's government policy to permit federal agencies to make their own, ad-hoc deals with informants.)

It's also predictable who the informants will tattle on: anyone whose political views or lifestyle they don't approve of.  We can therefore expect reports to pour in to the FBI of the suspicious activities of animal rights activists, fringe religious groups, or anyone else who seems "different." 

Does that make you feel safer from terrorism or other criminal activity?  It shouldn't, any more than the KGB or the Gestapo made citizens of the Soviet Union or Nazi Germany feel safer.

Copyright © 2007 by Mark Nestmann

Congress Legalizes Warrantless Wiretapping

In December 2005, The New York Times exposed what was possibly the largest governmental violation of federal law since the Nixon-era Watergate scandal.  In a series of articles, it detailed how President Bush had secretly authorized the National Security Agency, America's largest spy agency, to engage in domestic wiretapping and data mining of the telephone calls and e-mails of terrorist suspects, bypassing the legal procedures regulating this activity.

A proper congressional response would have been to indict President Bush and his aides for wholesale violations of the Foreign Intelligence Surveillance Act (FISA), violations of which are punishable by a five-year prison sentence. 

But instead, the Bush administration invoked the now familiar "terrorist excuse" to intimidate the U.S. Congress and any federal prosecutor who might have had misgivings about the top-secret program.  Its only concession was to grudgingly agree to submit its requests to the Foreign Intelligence Surveillance Court, a secret court set up under FISA to review intelligence-related surveillance requests.   

But earlier this year, this court apparently rejected an administration request to conduct untargeted and wide-ranging surveillance of e-mails and telephone calls of suspected terrorists that occur overseas, but that pass through U.S.-based data networks.  In response, after a frantic push by the White House, Congress has eviscerated the FISA statute and legalized the Bush warrantless surveillance initiatives.  President Bush signed the new legislation into law on Sunday, August 5.

While billed as essential to fight the "War on Terror," the "Protect America Act" doesn't limit the NSA's domestic spying efforts to terrorist investigations.  Instead, all that's needed is that "foreign intelligence retrieval" be a "significant purpose" of the surveillance.  The new law places the authority for such surveillance in the hands of the attorney general—not the FISA court. From this point forward, the court's only role will be to review surveillance that's already been conducted, and intervene if the procedures set out in the act haven't been followed.

---

Your Life is an Open Book...If

*You've given out your SSN to anyone in the past 6 months...
*You belong to any church or organization...
*You hold 50% or more of your assets in any U.S. bank...

You're an easy target for unjust lawsuits, asset forfeitures and identity theft.

To learn 109 ways to protect your privacy and property rights - and secure your wealth - using the secrets of the United States Witness Protection Program...click here.

---

While "foreign intelligence retrieval" might appear at first glance to be an acceptable rationale for warrantless surveillance, this definition encompasses far more than listening in on suspected terrorists.  For instance, in the past, the NSA has conducted surveillance of foreign companies engaged in high-tech research.  The results of this surveillance have been passed on to politically connected U.S. companies.  Under the Protect America Act, this type of surveillance can now presumably be conducted without a warrant. 

Nor does the act restrict its application to overseas telephone communications that pass through U.S. data networks.  For instance, if a U.S. person makes or receives a telephone call to London, Zurich, Tokyo, or anywhere else in the world, the NSA can listen in without a warrant if the target of the surveillance is overseas.  Indeed, the wording of the law would appear to legitimize the wholesale data mining of such telephone calls, targeting only those that contain "trigger words" tied to foreign intelligence for review by a human analyst.

That's just the beginning.  U.S. telecommunications companies may be compelled to comply with warrantless instructions to give the NSA or other spy agencies direct access to the fiber optic cables that carry most international phone conversations.  We're supposed to trust the government not to carry out unauthorized surveillance of the conversations carried on these switches.

The only silver lining in this act is that it expires in 180 days.  We can only hope that Congress comes to its senses in the next six months to reinstitute the minimal protections that existed under the old FISA statute, rather than eviscerate it completely.

In the meantime, you should assume that every phone call you make internationally is being monitored, legally or illegally.  If you need privacy in your international communications, use encrypted e-mail—not the telephone.  PGP (http://www.pgp.com) is effective for this purpose. 

Copyright © 2007 by Mark Nestmann

Catch Mike Burnick on CNBC

“U.S. and European Investment banks are saddled with nearly $500 billion in leveraged loans that they can’t peddle to investors…”

To watch Our Global Markets Analyst, Mike Burnick chat up the subject with Maria Bartiromo, click here.

If You Oppose the War in Iraq, You Could Lose Your Property

On July 17, President Bush signed a little-known executive order that gives him the kind of legal authority tyrants like Hitler and Stalin used to keep their populations in utter subjection. It essentially outlaws all opposition to the Bush administration's Iraq war policy.

If you breach this order's draconian provisions, you could lose your property.  All your property: your house, your car, your retirement account, your bank accounts, and anything else the government can get its hands on.  Indeed, the government can render you homeless—all based on a secret determination by the Treasury Department that you have no right to contest in court.

The order authorizes the Treasury Department to confiscate the assets of anyone connected to the Iraq insurgency.  Not just the assets directly connected to the insurgency, but “all property and interests in property.” It also authorizes confiscating the property of anyone who indirectly threatens the peace or stability of Iraq, or who undermines efforts to promote economic reconstruction and political reform.

If you oppose the Iraq war, support an organization opposed to the Iraq war, or oppose any aspect of the reconstruction effort in Iraq, you could lose everything. Even contributing to a charity that is involved in direct relief efforts for Iraqi refugees could trigger forfeiture of your property, because the executive order expressly prohibits donations of "food, clothing, and medicine intended to be used to relieve human suffering."  There is no requirement that you even have to know that your assistance is going to a banned person or group before your assets are confiscated!

Certainly, political protest against the Iraq war could be construed as "threatening peace and stability" in Iraq.  Opposing the corrupt Iraqi operations of companies like Haliburton, which have ripped off U.S. taxpayers for billions of dollars in botched and bloated reconstruction contracts, could undoubtedly be viewed as undermining the country's "economic reconstruction." 

---

58 Wealth-Saving, Money-Making And Life-Changing Reasons To Become A Member Of The Sovereign Society

Reason #6: Make Profits Overseas - free from foreign taxes
Reason #16: Greater real estate investment opportunities throughout the world
Reason #32: Hold as many as 15 different currencies

Click here to learn more...

---

Anti-war groups such as the "Raging Grannies," which are already under FBI surveillance would appear to be squarely in the sights of the order.  So would anyone who contributes to this organization, or who becomes a member of it.  Certainly, any politician who opposes the Bush policy in Iraq could have his or her assets seized.

How can this authority be legal—or constitutional? 

For more than 200 years, U.S. courts have given the president almost unlimited executive authority in wartime.  More recently, this authority has been expanded to encompass times of declared emergencies. 

The United States has been under a declared state of national emergency since shortly after Sept. 11, 2001.  And, under the authority of an obscure law called the International Emergency Economic Powers Act (IEEPA), the president may exercise controls over international economic transactions during any period of declared national emergency.  The law also authorizes property confiscation in what is essentially a supercharged version of civil forfeiture.

In an IEEPA civil forfeiture, such as those that may occur under the new executive order, you have no right to a court hearing.  Instead, to contest the forfeiture, you must appeal to the Treasury Department's Office of Foreign Assets Control (OFAC).  The decisions of OFAC, which can be and are often based on secret evidence that can't be disclosed due to national security concerns, can't be appealed. 

You might think, rightly, that this procedure is unconstitutional.  However, the Supreme Court disagrees.  In 2004, it refused to review a lower court decision upholding this draconian procedure.

Will the Treasury Department begin confiscating the property of the Raging Grannies, the Red Cross—or Barack Obama, for that matter—once this order comes into effect August 17?  Probably not—but it could.  That's a frightening prospect, and one that is almost guaranteed to place a chilling effect on critics of the Bush administration's Iraq policy. 

Now that the government has ended any semblance of obedience to the U.S. Constitution, it's more important than ever to establish your offshore nest egg.  It's unlikely that most foreign countries would cooperate in the enforcement of civil forfeitures under this executive order, particularly if they target otherwise lawful activities or charitable contributions, and occur without any accompanying criminal proceeding.  That means assets you have overseas—particularly in an asset protected form such as an offshore trust or offshore variable annuity—may well survive an IEEPA civil forfeiture order.   

Click here to learn more about "government by emergency"—and how you can protect your privacy and wealth from those who want to take it away—even the government.

Copyright © 2007 by Mark Nestmann