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Trial Lawyers in America

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“The Chinese use two brush strokes to write the word ‘crisis.’
One brush stroke stands for danger; the other for opportunity.
In a crisis, be aware of the danger - but recognize the opportunity.”
Offshore Risk Management
For those who are concerned about going offshore, it may be helpful to remember that risk is always relative. Jumping out of a second story window is certainly high on the risk scale, but if the building is on fire and you can’t get out any other way, the two-story jump is a lot less risky than staying where you are.
I’m putting the finishing touches on the second edition to Offshore Living and Investing, which is basically an entirely new book about dealing with the offshore world. The new edition will hopefully be available by U.S. Labor Day. Today’s newsletter are a few, small snippets from those pages, as we look briefly at some of the reasons - and risks - why an increasing number of people from high-tax jurisdictions are diversifying at least some of their assets offshore.

Avoiding the risk of the litigation lottery
One important reason for placing some funds outside of your home country is the ongoing litigation epidemic. This first started in the U.S., most notably during the 1980s, and worsened during the 1990s. Litigation continues at unprecedented levels today even though Americans are sick of lawsuits. I wrote at length about the U.S. litigation problem and strategies for asset protection in How to Legally Protect Your Assets. The book grew out of years of litigation experience where I witnessed firsthand asset protection plans that worked, and others that failed, as a former judge and American National Trial Lawyer’s Association named Top 100 Trial Lawyer.
For years, a significant reason for the flight of large amounts of assets moving offshore has been the worsening, crazy, litigious attitude, and obnoxious awards granted by juries and judges. The U.S. permits lawyers to work on a contingent fee basis and to collect huge fees from punitive damage awards, a significant contribution to the problem. I can attest to the ridiculous claims and results that too frequently arise within the U.S. judicial system. It is broken, and I see little hope or opportunity to fix it while the present system exists.
It is well-known that the U.S. courts and juries have become the most generous in the world in awarding damages to plaintiffs. The judges and juries are often sympathetic to the claims of the plaintiff and look for someone to pay for the damages. And even liability insurance cover has limited benefits, since the insurance companies often badger their insured to settle to avoid a trial, even with the most frivolous of lawsuits. This is well-known to plaintiff lawyers and only serves to encourage them and their clients seeking never-ending creative ways to sue anyone with any assets, particularly when covered by insurance.
We have become a financially cannibalistic society where we compete in the legal and political arenas for the power to impose our wills and policies on others. Those who mind their own business, put their nose to the grindstone and are thrifty, too often find themselves unexpectedly on the short end of the deal. The hard-working individuals in our culture who have accumulated some assets, or who have become financially independent, need to set aside at least a small nest-egg offshore, where it will be safe from the litigation parasites and politically-connected vultures in our society. If a threat later rears its ugly head, then more assets can be added to the offshore nest-egg.
Government confiscation of property where no crime occurs
There is also an ongoing hot debate, especially in America, between those who believe there is ‘no place like home,’ and those who believe their homeland is increasingly at risk of becoming a police state in which traditional liberties are being circumvented by a host of draconian laws.
By way of example, at one time the U.S. offered many economic and personal benefits not readily available around the world. For a few more years, the U.S. continues to retain bragging rights as the world’s largest economy providing opportunities to work towards economic independence. There is generally freedom of movement within American borders for its citizens. There is not a burden of multiplicity of languages as exists in Europe. And for the most part, it is still possible to write and publish information critical of the government and its policies. Case in point is that I can still publish these least for now.
However, there is a growing cancer in the body politics of America that many fear is irreversible. First it was the need for an increase in more taxes to pay for entitlements and government foreign policies. Then came the ‘war on drugs’ that led to the creation of a curious felony known as money laundering. While this law, and others that followed, were created on the pretext that it would hurt drug dealers and other wrong doers, they became legal traps for innocent people diversifying assets inside and outside the U.S. who had no ties to any form of criminal activity.
Another casualty to American liberties and freedoms is the right to be secure in the possession of property, which is supposedly protected by the Fourth Amendment to the U.S. Constitution. In addition to the border and currency controls detailed in the new book, today, nearly any U.S. government agent or police officer can merely accuse you of a crime, confiscate your property even if only remotely connected to an alleged crime, decide not to prosecute - or an alleged offender is acquitted at trial - and then still keep the property.
Abuses of asset forfeiture laws are becoming legendary in America. In many federal, state, county, and city agencies, revenues today from forfeitures have become a substitute for allotted funds to pay for law enforcement activities. Law enforcement personnel are left to their own devices to create opportunities for forfeitures to meet their budgets.
As a result, U.S. government forfeitures of personal property is becoming a horrendous violation of personal freedom and privacy. It is reported that in more than 80% of forfeiture cases of cash and personal property, individuals are never charged with a crime. In other words, forfeiture laws allow the government agencies to take your property when they merely suspect wrongful activity, and then later decide if and when they want to charge you with a crime. Mere suspicion has become an automatic license for the police to cease your property. As many already know, this occurs daily throughout the U.S. to even innocent and honest law-abiding citizens.
There is legal recourse through the court system, but because the government knows there will be huge legal costs in retrieving the assets, they know they can - and do - frequently get away with this confiscation of property.
When I first wrote about the above disturbing trend during the late 1990s, most didn’t believe that the problem, or the trend, was really much to worry about. But in fact the problem has continued to worsen, and has spread outside U.S. borders to other countries around the globe. Since it is not the poor that own assets, the targets of asset seizures are those that own assets. Rest assured, asset seizures occur at all net worth levels. Those who have assets, particularly those who are financially successful, can no longer be safe or secure with their possessions.
Already in America, the top 10% of the income earners pay more than 70% of the total individual income tax. The bottom 50% pays virtually no income taxes. The U.S. increasingly penalizes those that take risks, create jobs, earn wealth, and re-invest or save. In spite of increasing social entitlements to the under-achievers, the mass media and politicians continue to rally against the high producers and earners, denying them the benefits of what they earn and save.
Accused does not necessarily mean guilty
To be clear, I support stripping the fruits and liberties of one’s illegal activities from convicted criminals. Once upon a time there used to be a presumption of innocence until allegations were proven and a conviction was entered. But what’s happening to the disregard of due process of law, and the rights of innocently accused individuals - including those never charged with a crime, or assets wrongfully obtained during an illegal search, is sickening. 
The fact is that today there are many roadblocks and laws that place at risk your assets, privacy and free movement across borders. Forfeiture laws are just one more example. And these laws are stacked against you with sweeping police powers, and the government’s enactment of property seizures.
With the overwhelming and growing number of Federal, State, County, local and municipal laws and regulations, it has reached a point in America - and at the borders - where it is almost impossible to be totally innocent of every kind of crime because of the overly complex rules and laws at every level of government. Today it is very easy to find a violation of some remote law or regulation for the most innocent conduct of even the most honest citizen. This is true at the borders, and across America.
Currency controls go beyond border controls
A risk as serious as border controls is the risk of currency controls as also detailed in the new book. Historically, this has always been an issue, and presently exists today in varying degrees in many countries. Whether you accept the idea, with the stoke of a pen by Executive Order, U.S. currency controls could completely prohibit U.S. citizens from moving assets out of the country. There is an abundance of history that teaches that this difficult lesson is true. Already, the U.S. is firmly entrenched in a global currency war severely devaluing American assets.
We are only left to speculate on the provisions of any future laws on currency controls that may be imposed in the U.S. We can look to history as an example and as a guide of what could happen to our savings. For example, Nazi Germany, South Africa, Russia, China and others are the best (or worse) recent examples of currency controls restricting citizens from leaving the country with local currency. I personally have friends and clients from several countries who are honest, hard working business people that resettled in new countries and have shared their personal nightmares when they tried to expatriate their assets outside of their home country under currency controls. Depressing tales indeed.
What’s more, we have all heard the horror stories from the 1930s and 1940s as people fled Germany and Eastern Europe with what little they had as they desperately tried to save themselves from tyrants. As a good student of history, I take the issue of currency controls very serious and a realistic event that could occur anywhere, at any time, including in the U.S. Therefore, all nationals should have at least a portion of their assets offshore as a good starting point for risk management.
In each of the countries where individuals were forced under restrictive government regimes with currency controls, those folks that had pre-planned strategies holding at least some assets offshore, did not have the concerns of the average person who failed to diversify. If history is our teacher, and if we learn our lessons, I can see no better way to protect assets than titling them in an international trust structure and holding at least some assets outside of your home country.
If you suddenly desire, or need, to move assets across borders but were prohibited, who would pay for your care? Those with money are always more welcome in a host country than the indigent. Even if you don’t have a good reason to leave your homeland today, there is always peace of mind in knowing that you have managed your risks.
Avoiding currency controls begins with offshore diversification
There are other reasons and benefits in having some assets located offshore to mitigate risks. While there may be investment opportunities at home, they may not necessarily be the best for every investor. There are an overwhelming number of choices available outside your backyard, just offshore. Putting all of your eggs in one basket potentially poses great risk for those who fail to actively devote their time to managing their investment portfolio. One solution is diversification, an example of risk management.
Diversification is simply an organized system of managing and mitigating various types and levels of risks. The main investment risk is often not being able to cash in your investments at full value when you need them. Some assets are subject to a loss of purchasing power due to inflation and the income they produce is heavily taxed. While common stocks, real estate, gold and other natural resource investments sometimes provide a better hedge against inflation - and even some tax deferral - they are always subject to risk of illiquidity and a deflationary economy.
There are other types of risk that fall under ‘liquidity risk,’ that is, a risk associated with not being able to gain immediate access to your money or obtain its reasonable value. Therefore, a diversified investment portfolio should include a broad band of assets, in different countries, and best yet, in different currencies. While you might be able to create a diversified investment portfolio in different currencies through a domestic bank, having investments outside a single political jurisdiction is a far superior form of asset diversification from risks associated at home.
Contrary to what your local broker or accountant tells you, there are an overwhelming number of investment opportunities away from home. If you have an interest in doing business, or reaching out to an enhanced number of investment opportunities, this may be all you need to know to go offshore to manage risk.
Do you think that depositing your savings in your hometown bank is safer than offshore? Think again. Many good examples of higher rated banks and safer investments can be found offshore than at home.
By comparison, U.S. banks and financial institutions are far more leveraged than many offshore financial institutions as a result of the government backed insurance programs. Higher leverage generally means higher risk. If the U.S. suffered a run against deposits - as happened in the 1930s (and in small numbers in 2008) - there would be great risk to the entire banking system, which could cause the entire system to fail. It is true that while depositors may be protected in the event of a few isolated failures, there is much greater portfolio risk in covering losses in a highly leveraged banking system, such as the U.S., if all of your eggs are deposited into one banking system basket. Prudent and conservative investors therefore place some funds outside their home banking system to mitigate their risks.
Privacy is not a four letter word 
Another reason for moving part of your cash offshore is the risk of loss of financial privacy at home. Increasingly, we have become a transparent society, particularly in our financial affairs. If you wish to know about someone else’s financial situation, what they own, how much and where, for little more than a few dollars on the Internet you can obtain a wealth of information about anyone who interests you. And the reverse is also true. Your financial privacy is an open book to anyone who bothers to look.
What’s more, state and federal governments already regularly monitor mobile phone transmissions, email, wire transfers and other electronic communications looking for a pattern of messages that might suggest there is some drug, criminal or terrorist activity. Under construction at Camp Williams in Bluffdale, Utah is the largest ever, new 240 acre construction site NSA Data ‘Spy Center’ where literally every email, phone call, online shopping lists, parking tickets, online purchases, and virtually the entire life of all Internet users will be stored and reviewed. It’s due for completion in 2013. William Binney, NSA’s former senior mathematician-gone-whistleblower, using his fingers to make the point, indicated “We are ‘that far’ from a turnkey totalitarian state.”
Don’t think for a minute that the professional criminals aren’t aware of this and take aggressive steps to keep secret what concerns them most. Unfortunately, at risk is often the innocent and unsuspecting individual who gets investigated because of an innocent comment made electronically. And recall how government agencies and the police force use and abuse asset seizure laws to fund their operating budgets.
To be forewarned is to be forearmed
The case for going offshore beyond the maternal apron strings for risk management is stronger today than ever before. Where you go, why and how you go, and what you do, should be up to you. At the end of the day, many search for the life and freedoms of a sovereign individual.
As the barriers at the borders continue to become increasingly restrictive against the free movement of people and property, going offshore provides an opportunity to broaden your horizons and better manage risks. In the newsletters to follow we continue our search for fresh horizons to maintain opportunities for the free movement of people and money across international borders. You can start here for free international planning tips, or contact me to discuss your own planning structure to accomplish your objectives.
Until next time….
David A Tanzer, Esq.
JD, BSc, Ph.D (Hon)

For more information visit or email to David is the author of “How to Legally Protect Your Assets” and “Offshore Living and Investing.”

David A Tanzer & Assoc., PC.

Vail, CO USA:
Tel. (970) 476-6100
Fax (720) 293-2272
Auckland, New Zealand:
Tel. (64) 9 353-1328
Fax (64) 9 353-1328
Brisbane, Australia:
Tel. (61) 7 3319 6999
Fax (61) 7 3319 6999
(Licensed to Practice Law in U.S. States & Federal Courts; Assoc. Member Auckland, N.Z. District Law Society - Foreign Lawyer; & Assoc. Member Queensland Law Society, AU - Foreign Lawyer)
 The comments herein are not intended to constitute a legal or tax opinion regarding any specific legal or tax issue as additional issues may exist; does not reach a conclusion with respect to any specific legal or tax issue addressed herein or any additional issues not included; and cannot be used for the purpose of avoiding legal or tax obligations or penalties with respect to issues in or outside the scope of matters discussed herein.

(c) Copyright by David A. Tanzer & Associates, P.C. All rights reserved. Except as permitted under the United States Copyright Act of 1976, as amended, and pursuant to the laws of all countries, no part hereof may be reproduced or distributed in any form or by any means, or stored in a database or retrieval system, electronic or otherwise, without the prior written permission of David A. Tanzer & Associates, P.C. Reprint in whole or part strictly prohibited unless prior written permission is granted. International Copyright protected under the Berne Convention, Universal Copyright Convention  and laws of all other Copyright protected countries, and consistent with the World Trade Organization TRIPS.
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