A beneficial owner will sometimes use a nominee (i.e. representative) to hide money with complete anonymity in a bank account. As the website of www.offshoresimple.com explains, a beneficial owner may hire a
nominee incorporation service to supply a bank signatory. This suggests that a beneficial owner can use a nominee to circumvent the
know your customer / customer identification procedures at a bank. For example, through
the bank signatory service offered by www.offshoresimple.com, a beneficial owner can use a nominee to:
- Open / manage an offshore bank account.
- Act as an account's bank signatory.
- Supply a bank with the necessary customer identification documents.
- Execute the incorporation documents needed to form an offshore corporation.
The above-described use of nominee incorporation services is widespread. As page 64 of
the 2007 National Money Laundering Strategy mentions, nominee incorporation services that arrange U.S. bank accounts and
shell companies are believed to annually launder as much as $36 billion just from the former Soviet Union.
Instead of retaining a nominee incorporation service, some beneficial owners hide assets by using friends or relatives as nominees. According to his twenty-one count forty-four page
July 26, 2005 indictment, Mr. Edwards for example, had stolen insurance premiums and then concealed them in nominee financial accounts in the names of his wife and two shell companies. Mr. Edwards had also used his wife as the nominee purchaser of his mountain chalet and a "palatial" home-- both of which were bought with stolen insurance premiums.
All of the foregoing had been part of Mr. Edward's insurance and tax fraud scheme which lasted from about January, 1999 through April 30, 2001. Via his indictment, Mr. Edwards was charged with: mail fraud (
18 U.S.C. § 1341 &
18 U.S.C. § 1342); wire fraud (
18 U.S.C. § 1343); making false statements to a financial institution (
18 U.S.C. § 1014); theft from a health care benefit program (
18 U.S.C. § 669); money laundering (
18 U.S.C.§ 1957 [a] & [b]); and tax evasion (
26 U.S.C. § 7201).
Mr. Edwards was specifically accused of collecting insurance premiums from various employers while unlicensed to do so. Instead of providing thousands of employees with workers' compensation insurance, he converted their insurance premiums for his own use. Between January 1, 2000 and April 30, 2001 Mr. Edwards also allegedly stole $2.5 million from his company Fidelity Group, Inc., which was a health care benefit group as mentioned by
18 U.S.C. § 24 (b). Furthermore, when Mr. Edwards actually did apply for some workers' compensation insurance coverage, he allegedly understated payroll and the type / number of employees to fraudulently secure lower insurance premiums.
When Mr. Edwards administered an employer's self-insured health insurance plan, he also had allegedly delayed or denied medical benefits the employees were entitled to. Mr. Edwards indictment also alleged that he had filed a false joint Income tax return for 1999, by underreporting taxable income. In 2000, Mr. Edwards also supposedly filed a false joint tax return by underreporting taxable income and paying just $724 in taxes. He was additionally accused of failing to file any tax return for 2001, as was required.
As the Court's
June 26, 2006 Judgment demonstrates, Mr. Edwards ultimately pleaded guilty to four of the twenty-one counts mentioned by his indictment: two counts of mail fraud; one count of theft from a health care benefit program; and one count of tax fraud. Pursuant to his plea agreement, Mr. Edwards was sentenced to serve 150 months in prison and ordered to pay fines, make restitution, etc. As Mr. Edwards'
motion executed on August 13, 2007 however indicates, he seeks to vacate his guilty plea / sentence pursuant to
28 U.S.C. § 2255 by alleging ineffective assistance of counsel among other things.
Copyright 2007 Fred L. Abrams
