1. We know that Robert Allen Stanford received tax breaks from the Virgin Islands Economic Development Authority, these have since been revoked as he is now under investigation for being a fraud.
2. A Virgin Island resident, Kevin Brandt, apparently attended a fundraiser held by Mr. Stanford in the Virgin Islands 25 July 2008. The fundraiser was for Congressman Gregory Meeks (DLC-NY-6) who sits on the finance committee. I suspect, but cannot conclusively prove, that this fundraiser was a part of a campaign by Mr. Stanford to keep financial regulators off his tracks.
3. When I went and looked up the company the Mr. Brandt is a high member of, James River Capital Corporation (hereon JRCC), it turns out that that company was fined the largest fine given by the National Association of Securities Dealers or NASD, for a thing called market timing. Market timing itself is not illegal, it is a strategy for investing in which people sell stocks when they anticipate the market will go down, or buy stocks when they think the market will go up. It is different from the other major strategy called buy and hold, in which you buy stocks and hold them for the long term whether or not the market goes up or down in the short term, because historically the market tends to increase in value over time.
The reason JRCC was fined, is that instead of doing this with stocks, they did it with annuities from insurance companies. They did not inform the insurance companies that they were using 19 limited partnerships to "market time" the various funds that an insurance company invests in to produce the income/principal distribution on a regular interval that is an annuity. I believe I have discovered the reason that they were operating in the Virgin Islands, as a result of more fully understanding their fine from NASD.
Income from annuities is not taxed like income from stocks. The IRS taxes income from annuities like payroll income and not capital gains. The rates for payroll income are higher in every corresponding bracket than the capital gains brackets. JRCC was operating out of the Virgin Islands because the Virgin Islands offer breaks on income taxes, in one story I've found, it says they take a 35% income tax rate and make it 5%. This is actually better than the highest capital gains rate, which if memory serves is 15% due to the Bush tax cuts.
Interestingly enough, people use annuities to defer taxation in the first place! So JRCC appears to be a scheme to avoid paying taxes.
So I've found one guy who was crooked and kept company with another crook, Allen Stanford.
I've also found other people who's donations seem to follow the pattern of fundraisers, who donated along with people from JRCC. They were donating to politicians who sit on the Ways and Means Committee in the House and the Budget Committee in the Senate. Those two committees just happen to have jurisdiction over taxation.
That doesn't look corrupt whatsoever, now does it?
When the IRS changed the regulation applying to the Virgin Islands, namely that to get these massive tax breaks people had to actually be in the Virgin Islands for 183 days per year, the people I believe are in the pockets of the Virgin Islanders, sprang to action trying to get the number of days reduced.
See this article:
http://www.nytimes.com/2006/03/05/national/05taxes.html?_r=1And if you really believe that these traders are in the Virgin Islands because it's becoming a financial center, just take a look at this story:
http://www.virginislandsdailynews.com/index.pl/article?id=15974034"EDC members also heard from the two directors of Capital Instincts USVI Inc. The company's co-directors, Rob Sckalor and Scott Greenberg, said they transferred their business, in which they trade derivatives, options and futures in world markets, to St. Thomas in January.
The pair said that although they are the company's only employees now, they ultimately would like to hire eight Virgin Islands residents. They acknowledged that irregular hours, with a workday that begins as early as 3 a.m. to accommodate the European stock market schedule, would make finding employees challenging.
Although they have experienced frustrating lags and freeze-ups in Internet, satellite and phone service on St. Thomas, Sckalor and Greenberg said they will install a backup system in their office and are committed to remaining in the Virgin Islands.
Per program requirements, Capital Instincts would contribute $50,000 to local charitable causes in its first year, he said."
They're having these kind of troubles, and yet they do business in the Virgin Islands? Well, that makes sense if you're there to try to get the tax breaks. Oh yeah, and donating $50,000 dollars isn't much when you're probably saving millions on your tax bill.
Here's my previous thread on the matter:
http://www.democraticunderground.com/discuss/duboard.php?az=show_mesg&forum=389&topic_id=5102871&mesg_id=5102871
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