Blaze
04-08-2011, 08:51 PM
Mexico City – Catch a criminal, keep his wallet.
In short, that's Mexico's newest plan to crack down on the annual flow of billions of dollars into the hands of drug gangs.
The attorney general's office announced the new initiative against money laundering this week, the latest in a series of government efforts to curtail the flow of money that finances drug gangs. Mexicans who tip off investigators to money launderers will receive up to one-quarter of the illegal funds seized.
But not everyone is enthusiastic about the new initiative, with some analysts cautioning that it shifts the burden of intelligence-gathering to the individual and is a risky gamble in a battle where revenge seems to know no limits.
“You have to take your chances,” says Enrique Cárdenas Sánchez, executive director of the Centro de Estudios Espinosa Yglesias, a public policy think tank in Mexico City that analyzes government laws. He supports the program but has reservations. “The risk involved is very high.”
And what if the new program unwittingly leads to more unsavory behavior? Drug gangs might use the program to undermine commercial rivals, for example, or it might give rise to insurance fraud-type schemes.
“I do not know to what extent it will provoke other sorts of behavior … or entail vendettas,” says Mr. Cárdenas.
Unrealistic risk for citizens?Under the new reward plan, those who report crimes of suspected money laundering – by phone, e-mail, or face-to-face – could receive up to 25 percent of the value of whatever is seized, be it money or land or goods. The exact amount would be determined by a special committee.
Some say that it, like the money laundering law, places citizens in charge of functions that the police or prosecutors should be carrying out.
“This moves the burden to the individual,” says Arturo Pueblita Fernandez, a professor of law at the Iberamerican University in Mexico City. “It is not a frontal attack on money launderers.”
Some politicians have criticized the reward plan as too high-stakes. Legislator Raymundo Saldaña Ramírez told the local press in the increasingly violent state of Veracruz that the plan puts citizens at risk.
“We cannot as citizens denounce [money launderers] and expose our families,” he said.
An unwillingness to reach out to police and other authorities – as citizens fear they are either incompetent or corrupt – is a long-standing problem in Mexico, where the impunity rate is estimated at 98 percent. Only a quarter of Mexicans are believed to report crime in the first place – though that number might inch up if a cash reward is involved.
Calderón targets illicit fundsAll agree that something must be done. Every year between $19 billion and $29 billion flow from the US to Mexico to fuel drug trafficking organizations, according to a recent US-Mexico investigation (pdf). Gangs then use the money to purchase arms, bribe politicians, buy off entire police forces, and intimidate anyone else who might stand in their way.
Some have criticized Mexican President Felipe Calderón for sending thousands of troops and federal police out to the streets to combat organized crime without simultaneously targeting the gangs' cash supplies.
But Cárdenas says the new program, along with several other proposals, has set the government looking in the right direction. Last June, Mexico began limiting anyone without Mexican bank accounts to exchanging a maximum of $1,500 in US dollars per month. President Calderón also proposed a law in August that includes a ban on any cash purchases exceeding $7,700. That proposal also requires businesses such as jewelers to report their largest sales.
By Sara Miller Llana – Wed Apr 6, 5:13 pm ET
If Mexico would open this program up to forensic accountants across the world. Mexico would get the cha-ching back. Gaaaruuunnnteeed~
And on a side note.
APNewsBreak: IRS awards $4.5M to whistleblower
By MARYCLAIRE DALE, Associated Press – 1 hr 40 mins ago
PHILADELPHIA – An accountant who tipped off the IRS that his employer was skimping on taxes has received $4.5 million in the first IRS whistleblower award.
The accountant's tip netted the IRS $20 million in taxes and interest from the errant financial-services firm.
The award represents a 22 percent cut of the taxes recovered. The program, designed to encourage tips in large-scale cases, mandates awards of 15 to 30 percent of the amount recouped.
"It ought to encourage a lot of other people to squeal," Sen. Charles Grassley told The Associated Press. The Iowa Republican helped get the IRS Whistleblower Office authorized in 2006.
The IRS mailed the accountant's lawyer a $3.24 million check that arrived in suburban Philadelphia by first-class mail Thursday. The sum represents the award minus a 28 percent tax hit.
The lawyer, Eric L. Young of Blue Bell, won't release the name of his client or the firm because his client remains a small-town accountant, and hopes to continue to work in his field.
"It's a win-win for both the government and taxpayers. These are dollars that are being returned to the Treasury that otherwise wouldn't be," Young said.
"It's very difficult to be a whistleblower," said Young, who has represented more than a dozen such tipsters, including one in a $2 billion Pfizer case involving off-label drug marketing.
"Most people would be inclined to turn a blind eye to it. The process can be time-consuming, arduous and stressful, from both a personal and professional standpoint," he said.
The accountant filed a complaint with the IRS in 2007, just as the IRS Whistleblower Office opened, but heard nothing for two years. Frustrated, he hired Young to help push the issue.
"We were able to help him get it back on track," Young said.
In the accountant's case, the IRS did not deem the issues he raised complex. But the agency said the information he shared pointed out new questions for a routine IRS audit that was already under way.
The Whistleblower Office received nearly 1,000 tips involving more than 3,000 taxpayers in fiscal years 2008 and 2009, according to its annual reports to Congress. Hundreds of them alleged tax underpayments of more than $10 million, and dozens more underpayments of $100 million or more.
The accountant's case is the first in the program to reach fruition.
"Quite frankly, I'm shocked that they finally got around to using it," said Grassley. He has been discouraged by the program's slow start, which some blame on ambivalence about whether tipsters should receive potentially huge windfalls. The IRS may also fear embarrassment, the senator said.
"When you got a whistleblower that's saying somebody didn't pay $20 million in taxes, that that's an embarrassment to the full-time employees of the IRS," he said.
Neither Stephen Whitlock, director of the Whistleblower Office, nor the agency's public affairs office returned messages about the program late Thursday.
However, the annual reports note a new policy of waiting to pay awards until the two-year window for taxpayers to appeal their payments has expired. Young's case might therefore be the first in a series of awards that are ripe for payment.
The office has about 17 employees, who refer complaints to IRS agents and investigators around the country to pursue. Before 2006, the IRS could choose to reward tipsters, but were under no obligation to pay them a share of the taxes recovered. Many of the tips involved mom-and-pop operations or ex-spouses.
The whistleblower program only promises awards for returns of $2 million or more.
"This law is not designed to snag the guppies, but to harpoon the whales," said Patrick Burns, a spokesman for Taxpayers Against Fraud, a Washington, D.C.-based nonprofit whose members include many lawyers for whistleblowers.
"Whistleblower programs have been incredibly successful in the arena of health care and defense spending, and now they are being tried as a weapon against tax cheats and Wall Street scoundrels," Burns said.
In short, that's Mexico's newest plan to crack down on the annual flow of billions of dollars into the hands of drug gangs.
The attorney general's office announced the new initiative against money laundering this week, the latest in a series of government efforts to curtail the flow of money that finances drug gangs. Mexicans who tip off investigators to money launderers will receive up to one-quarter of the illegal funds seized.
But not everyone is enthusiastic about the new initiative, with some analysts cautioning that it shifts the burden of intelligence-gathering to the individual and is a risky gamble in a battle where revenge seems to know no limits.
“You have to take your chances,” says Enrique Cárdenas Sánchez, executive director of the Centro de Estudios Espinosa Yglesias, a public policy think tank in Mexico City that analyzes government laws. He supports the program but has reservations. “The risk involved is very high.”
And what if the new program unwittingly leads to more unsavory behavior? Drug gangs might use the program to undermine commercial rivals, for example, or it might give rise to insurance fraud-type schemes.
“I do not know to what extent it will provoke other sorts of behavior … or entail vendettas,” says Mr. Cárdenas.
Unrealistic risk for citizens?Under the new reward plan, those who report crimes of suspected money laundering – by phone, e-mail, or face-to-face – could receive up to 25 percent of the value of whatever is seized, be it money or land or goods. The exact amount would be determined by a special committee.
Some say that it, like the money laundering law, places citizens in charge of functions that the police or prosecutors should be carrying out.
“This moves the burden to the individual,” says Arturo Pueblita Fernandez, a professor of law at the Iberamerican University in Mexico City. “It is not a frontal attack on money launderers.”
Some politicians have criticized the reward plan as too high-stakes. Legislator Raymundo Saldaña Ramírez told the local press in the increasingly violent state of Veracruz that the plan puts citizens at risk.
“We cannot as citizens denounce [money launderers] and expose our families,” he said.
An unwillingness to reach out to police and other authorities – as citizens fear they are either incompetent or corrupt – is a long-standing problem in Mexico, where the impunity rate is estimated at 98 percent. Only a quarter of Mexicans are believed to report crime in the first place – though that number might inch up if a cash reward is involved.
Calderón targets illicit fundsAll agree that something must be done. Every year between $19 billion and $29 billion flow from the US to Mexico to fuel drug trafficking organizations, according to a recent US-Mexico investigation (pdf). Gangs then use the money to purchase arms, bribe politicians, buy off entire police forces, and intimidate anyone else who might stand in their way.
Some have criticized Mexican President Felipe Calderón for sending thousands of troops and federal police out to the streets to combat organized crime without simultaneously targeting the gangs' cash supplies.
But Cárdenas says the new program, along with several other proposals, has set the government looking in the right direction. Last June, Mexico began limiting anyone without Mexican bank accounts to exchanging a maximum of $1,500 in US dollars per month. President Calderón also proposed a law in August that includes a ban on any cash purchases exceeding $7,700. That proposal also requires businesses such as jewelers to report their largest sales.
By Sara Miller Llana – Wed Apr 6, 5:13 pm ET
If Mexico would open this program up to forensic accountants across the world. Mexico would get the cha-ching back. Gaaaruuunnnteeed~
And on a side note.
APNewsBreak: IRS awards $4.5M to whistleblower
By MARYCLAIRE DALE, Associated Press – 1 hr 40 mins ago
PHILADELPHIA – An accountant who tipped off the IRS that his employer was skimping on taxes has received $4.5 million in the first IRS whistleblower award.
The accountant's tip netted the IRS $20 million in taxes and interest from the errant financial-services firm.
The award represents a 22 percent cut of the taxes recovered. The program, designed to encourage tips in large-scale cases, mandates awards of 15 to 30 percent of the amount recouped.
"It ought to encourage a lot of other people to squeal," Sen. Charles Grassley told The Associated Press. The Iowa Republican helped get the IRS Whistleblower Office authorized in 2006.
The IRS mailed the accountant's lawyer a $3.24 million check that arrived in suburban Philadelphia by first-class mail Thursday. The sum represents the award minus a 28 percent tax hit.
The lawyer, Eric L. Young of Blue Bell, won't release the name of his client or the firm because his client remains a small-town accountant, and hopes to continue to work in his field.
"It's a win-win for both the government and taxpayers. These are dollars that are being returned to the Treasury that otherwise wouldn't be," Young said.
"It's very difficult to be a whistleblower," said Young, who has represented more than a dozen such tipsters, including one in a $2 billion Pfizer case involving off-label drug marketing.
"Most people would be inclined to turn a blind eye to it. The process can be time-consuming, arduous and stressful, from both a personal and professional standpoint," he said.
The accountant filed a complaint with the IRS in 2007, just as the IRS Whistleblower Office opened, but heard nothing for two years. Frustrated, he hired Young to help push the issue.
"We were able to help him get it back on track," Young said.
In the accountant's case, the IRS did not deem the issues he raised complex. But the agency said the information he shared pointed out new questions for a routine IRS audit that was already under way.
The Whistleblower Office received nearly 1,000 tips involving more than 3,000 taxpayers in fiscal years 2008 and 2009, according to its annual reports to Congress. Hundreds of them alleged tax underpayments of more than $10 million, and dozens more underpayments of $100 million or more.
The accountant's case is the first in the program to reach fruition.
"Quite frankly, I'm shocked that they finally got around to using it," said Grassley. He has been discouraged by the program's slow start, which some blame on ambivalence about whether tipsters should receive potentially huge windfalls. The IRS may also fear embarrassment, the senator said.
"When you got a whistleblower that's saying somebody didn't pay $20 million in taxes, that that's an embarrassment to the full-time employees of the IRS," he said.
Neither Stephen Whitlock, director of the Whistleblower Office, nor the agency's public affairs office returned messages about the program late Thursday.
However, the annual reports note a new policy of waiting to pay awards until the two-year window for taxpayers to appeal their payments has expired. Young's case might therefore be the first in a series of awards that are ripe for payment.
The office has about 17 employees, who refer complaints to IRS agents and investigators around the country to pursue. Before 2006, the IRS could choose to reward tipsters, but were under no obligation to pay them a share of the taxes recovered. Many of the tips involved mom-and-pop operations or ex-spouses.
The whistleblower program only promises awards for returns of $2 million or more.
"This law is not designed to snag the guppies, but to harpoon the whales," said Patrick Burns, a spokesman for Taxpayers Against Fraud, a Washington, D.C.-based nonprofit whose members include many lawyers for whistleblowers.
"Whistleblower programs have been incredibly successful in the arena of health care and defense spending, and now they are being tried as a weapon against tax cheats and Wall Street scoundrels," Burns said.