IRS Data Theft and Russia’s Red Notice

Financial FAQs

It has to be more than a coincidence that the recent cyber theft of IRS tax data has been traced to Russian criminals. IRS investigators believe the identity thieves who stole the personal tax information of more than 100,000 taxpayers from an IRS website are part of a sophisticated criminal operation based in Russia, two officials told the Associated Press.

In fact, the connection between fraudulent tax refunds and actual officials of the Russian government has been well-documented by former Russian Hedge Fund Manager Bill Browder in his new book, Red Notice, which provides evidence of how Russian government officials were able to steal back $280,000,000 in taxes paid by his hedge fund, Hermitage Capital, which managed $4.5 billion in assets at the time.

“The information was stolen as part of an elaborate scheme to claim fraudulent tax refunds, IRS Commissioner John Koskinen told reporters. Koskinen declined to say where the crime originated,” said the AP report.

But this has happened in Russia. Russian officials have even stolen from their own government. It was Russia’s FSB Secret Police, successor to their KGB, that did the dirty deed in 1993, according to Browder. They had raided his Russian offices, and literally stole the corporate seals and legal documents of the corporations he managed that had paid $280 million in taxes the year before President Putin kicked him out of Russian.

When Russian officials found they couldn’t confiscate his assets—he had been able to sell all his Russian assets—they literally changed the ownership of his corporations and re-filed fraudulent tax returns. The refiled returns then reported sufficient losses that they could claim a refund for all of the $280 million in taxes his companies had paid to the Russian government.

This was so blatant a financial fraud that we can be sure our IRS must be aware of Russian government complicity. How? Because Browder was able to document the fraud, which resulted in a new U.S. law, the Sergei Magnitsky Act, which named the actual perpetrators of the tax theft —some 35 Russian government officials at last count—from ever entering the U.S. and freezing their assets.

Yet it seems even the IRS can be fooled. “In 2012, the IRS sent a total of 655 tax refunds to a single address in Lithuania, and 343 refunds went to a lone address in Shanghai, according to a report by the agency's inspector general. The IRS has since added safeguards to prevent similar schemes, but the criminals are innovating as well,” said the AP report.

The amount of rampant criminal fraud in Russia cannot have happened without Putin’s knowledge or assent. We know this because the very same perpetrators of the Browder-Hermitage Capital tax fraud were awarded medals by Putin for their ‘heroism’ in the scheme, believe it or not.

The Russian government then charged Bill Browder with the theft, which resulted in a call for his arrest by Interpol, and the resulting Red Notice—a notice the Russian government put out to Interpol for his arrest. They have put out a Red Notice 3 times to date, and 3 times Interpol has rejected their request because of the overwhelming evidence that the Russian government was behind the theft.

This shows the lengths corrupt officials have gone to cover up their thefts. That’s why we should have no illusion about the IRS tax return thefts. It’s a new cold war, of sorts. They want to continue stealing tax refunds from US taxpayers as they have done in Russia.

We also know this because Sergei Magnitsky, Bill Browder’s Russian attorney, was imprisoned and beaten to death by the same perpetrators for his refusal to recant the evidence of theft that defrauded the very same Russian people.

Harlan Green © 2015

Follow Harlan Green on Twitter: https://twitter.com/HarlanGreen

A Ted Cruz Presidency?

Financial FAQs

Texas Senator Ted Cruz is about to announce his candidacy for the 2016 presidential campaign. What would his presidency look like, if he were elected? “Mr. Cruz has also begun championing a message of economic populism,” said the NYTimes on his announcement of candidacy, “denouncing income inequality and borrowing the “two Americas” metaphor used most famously by former Senator John Edwards in two unsuccessful campaigns for the Democratic presidential nomination.”

Let’s start with his silliest proposal to abolish the IRS. It tells us how he really views income inequality. There would then be no means to collect the taxes that pay his Senator salary. So he would have to work for nothing. Is that how he will tackle the scourge of income inequality afflicting those Americans that work for little or nothing?

We also know what his presidency might look like from another far right Tea Party favorite and potential candidate’s agenda; Wisconsin Governor Scott Walker. Walker’s first priority has been to downgrade union organizing and education funding in Wisconsin, in order to deprive Democrats of union support, as well as dumb down his own electorate. The result has been the lowest job creation and growth rates of all neighboring states.

Senator Cruz’s programs would have a similar result—would in fact increase income inequality—as he has opposed every economic program that would better ordinary Americans’ lives, including raising the minimum wage. “If you raise the minimum wage, the inevitable effect will be, number one, young people will lose their jobs or not be able to get their first jobs,” he said in 2013 in reaction to President Obama’s inauguration speech that included a call to raise the national minimum wage to $9 per hour.

But history has shown just the opposite effect. Where ever the minimum wage has been raised—such as in Seattle, Washington where it is $15/hr., or the state of Minnesota, where it will be $9.50/hour for large employers in 2016, employment is thriving. Seattle’s unemployment rate is now under 5 percent, and Minnesota’s unemployment rate has dropped to 3.6 percent, the lowest in 13 years.

He also opposes any climate change legislation that would reduce our dependence on carbon-creating fossil fuels, including his support of the Keystone XL Pipeline, and more offshore oil drilling. Yet even the Pentagon has documented the extreme economic costs, including future wars, of ignoring the effects of Global Warming.

And how about his call for greater liberty? He also opposes all forms of amnesty for Illegals, or ‘undocumented’ immigrants, though he’s the son of a Cuban-born immigrant. This would greatly restrict the freedom of those immigrants to become American citizens, of course.

Cruz has particularly stressed his opposition to President Obama’s executive actions on immigration, said the PBS Newshour. The Texas senator filed a bill blocking the president’s actions, which allow more undocumented residents to gain legal status, including the administration’s waivers for young people brought to the U.S. as children. Cruz argues that those actions encouraged increased illegal immigration.

And how about his call to dissolve the Affordable Care Act? Killing Obamacare would increase the poverty of the poorest and sickest among US that cannot afford, or would be ineligible for private health care insurance.

No, Senator Cruz’s presidency would neither create more liberty, nor better the lives of the poorest that suffer most from income inequality. Those liberties have been under steady assault by Tea Party members, in particular, with their no compromise positions on even the most basic poverty alleviating programs.

So his words don’t match his actions. Isn’t that called pandering, when a politician will say anything to win votes?

Harlan Green © 2015

Follow Harlan Green on Twitter: https://twitter.com/HarlanGreen