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Quatloos! > Investment Fraud > Offshore Planning > EXHIBIT: Marc Harris

EXHIBIT: Marc Harris

Anatomy of an Offshore Service Provider Gone Bad:

Marc Harric v. David Marchant and Commetns by OBNR

Marc Harric Indictment

Marc Harric Arresting in Nicaragua and deported the the United States

Offshore Trust Operator Convicted in Tax and
Money Laundering Schemes


The Marc Harris Organization It Could Happen To You

A Special Report courtesy of Jay D. Adkisson, Esq., Editor of The Adkisson Analysis, a highly-popular asset protection website and newsletter.

So you want to know what might happen to your assets when you send them offshore? Consider those persons who chose to do business with the Marc Harris Organization. Few people had ever heard of the Marc Harris Organization prior to the spring of 1997. It was at that time that the very well-dressed and well-manner Marc Harris began showing up at offshore seminars pitching the use of his full-service Panamanian offshore service provider.

At prices which were probably 1/3 to 1/2 of the going rate, the Marc Harris Organization provided everything from trust services and company formations, to offshore mutual funds and annuities, to offshore insurance company and bank formations. They also offered tax services, and through a variety of tactics detailed in the "Harris Matrix" (essentially, a list of strategies) could create enormous bogus paper losses for U.S. companies, while actually moving millions of dollars offshore to be controlled by the tax-evading business owner.

The Marc Harris Organization was an immediate success, and they were soon -- in total numbers of employees (~150) -- one of the largest, if not the largest offshore service provider in the world. Very quickly, the Marc Harris Organization made arrangements to "back office" many other offshore service providers, and had offices in most of the major offshore jurisdictions.

Marc Harris himself was an American-born, American-educated CPA, with impressive academic credentials and a flair for creating grandiose-sounding tax strategies on the spur of the moment. He brought with him to seminars a fairly impressive entourage of U.S. tax and financial professionals, who by strict order were always immaculately dressed as Marc himself was. To meet and work with Marc and his group you felt like you were with the highest of the high in the financial world.

The Marc Harris Organization were always on the prowl for U.S. planners too, to be conduits to send them business. Many highly-credentialed and respected practitioners made the pilgrimage to Panama to meet with Marc and his staff at their impressive offices, and listened to stories about all the good they could do for their mutual clients.

In December of 1997, I traveled to London to attend the Shorex convention, in part to meet Marc and hear him speak. The Marc Harris Organization was at that time going full blast, and they had sent me a bunch of information on their services. For reasons which at that time were unknown to me, the Shorex folks would not allow Marc to speak at their seminar, and instead he had rented a very large conference room just off of the main exhibition hallway. Shorex had a disappointing turnout generally, and Marc had only about 15 listeners in a room which seated 200. Marc gave an excellent speech about the offshore industry in general, and how the other offshore service providers were "dinosaurs" by not providing certain services demanded by clients (there is a lot of truth in there).

During his speech, Marc went through his "Octopus" structure, whereby clients would own many businesses, but moneys would eventually be funneled to a Panamanian Foundation (Panama's version of the Lichtenstein Anstalt). While I had seen this structure before, I was thunderstruck at how much Marc was charging for several trusts, IBCs, an insurance company, a bank, and several other structures -- about US$9,000 for a structure that any other legitimate service provider would have charged more like $50,000 for. I recall speaking with Oklahoma City attorney Mike Johnston and San Diego attorney Mike Potter shortly after Marc's speech, and the three of us concluded that it was unlikely that he could really offer such a large and complex structure that cheap, even with cheap Panamanian labor -- so he was probably dipping into his clients' assets.

This conclusion caused all three of us to forego doing business with the Marc Harris Organization (the "MHO"), although a couple of months later I did get to watch Marc's presentation for a second time in Nassau at a seminar given by an offshore service provider there. Marc at that time was at his peak, and I had a lot of time to socialize with some of his other planners. They were uniformly upbeat about the future and talked about how quickly the MHO was growing, although in response to specific queries they didn't seem to be at all familiar with even some of the most basic principals of offshore planning for U.S. citizens.

Little did I know that within six months the massive Marc Harris Organization would be reduced to, well, pretty much just Marc himself and a few hangers-on.

The Investigation Begins

Remember that I told you the Marc Harris Organization aggressively recruited U.S. planners to send them clients? One of these U.S. planners was Dallas attorney Jim Bennett, a street-smart Texas business planner who has been in some tough litigation and lived to tell about it. You can find Jim at http://www.jim-bennett.com

Jim met Marc Harris in London at the same Shorex which I attended. Harris later convinced Jim to travel to Panama to visit their offices. However, Jim decided to do something the rest of us had not thought to do, and that was hire a professional investigator to verify that the Marc Harris Organization was what it said that it was, and was doing business as a good business should.

And, thus, enters the picture one David Marchant, an investigative reporter who writes the monthly OffshoreAlert newsletter, which reports on offshore scams. David was (and is) an excellent investigator, and had years earlier unveiled a scandal in Bermuda which was so pervasive that eventually he was ordered off the island by those whom he had exposed.

On the instructions of Jim Bennett, David started digging into the affairs of the Marc Harris Organization and, well, the rest is history. Eventually, David published his findings in his excellent monthly newsletter. Instead of having $1 billion under management, the Harris Organization had more like $40 million under management -- an embarrassingly paltry sum for an organization of 150 employees. And while Marc's entourage was seemingly impressive, the real "behind the scenes" decision-makers in the Harris Organization included such questionable personages as Larry Abraham, Alan McAloon, as well as No. 2 man Larry Gandolfi, the latter being "permanently dressed as if he's going to a beach party". Marc Harris himself turned out to have only had his CPA license for three or four years before it was suspended, and had apparently fled the U.S. because of events in Florida that we may never know the full truth about (he wouldn't return to the U.S. to testify at the trial, which tells you about everything you really need to know).

And his client's money? Well, for that you will have to read on. Marchant's findings, and how they were ultimately proven to the satisfaction of a U.S. District Judge, are set forth below.

The point to be made in all of this is that there are people offshore who will appear to be extremely competent and flashy, but are really just putting up a front to embezzle your money. You cannot rely on appearances to protect you, and you cannot count on the offshore authorities to make everything right (although the Marc Harris Organization operated in many jurisdictions, few took any action). Instead, you should find competent U.S. counsel responsible to you, who by their experience have over the years located and actually worked with competent offshore professionals over a long period of time and can recommend someone good to you. Because if you do it yourself, or if you rely on someone whose experience is limited, then you are just about as likely to lose your assets as anything else happening.

As set forth above, the Marc Harris Organization appeared to:

  • Be led by an impressive American, who had impressive academic credentials from impressive American Universities, and was licensed as a CPA

  • Have other impressively-credentialed Americans in the most important planning positions

  • Have over $1 billion in client funds under management

  • Had excellent references from many other offshore service providers

  • Had a large and modern office complex in Panama and a large staff

  • Had beautiful marketing materials and exuded success

In other words, the Marc Harris Organization had many things going for it to convince U.S. persons to use Marc's services and to place their assets for safekeeping with his group. The truth, however, was something else entirely, as you will read below.

The Marc Harris Organization finally obtained the level of fame Marc Harris sought among the offshore community. Unfortunately, this fame comes in the form of notoriety, as the Marc Harris Organization now uniquely stands in the worldwide offshore community as a shining example of how an offshore service provider should not be operated.

Disclaimer

Up front we warn you that we do NOT have any first-hand information relating to the allegations and controversy which follow, and that we are only repeating what others have said as set forth below. We do NOT make any representations as to the truthfulness or falsity of any of the statements which follow below; nor do we make any editorial comment about the facts as stated by the parties. We are only presenting what follows as an article of possible interest to our readers.

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The 31 March 1998 Offshore Alert Article

Highlights of Offshore Alert's 31 March 1998 article on the Marc Harris Organization include the following:

  • Offshore Alert reported that the Harris Organization is "one of the biggest offshore scams of all time" and "is being run as a massive Ponzi scheme in which clients are being defrauded out of millions of dollars."
  • Offshore Alert reported that the "situation is so serious that The Harris Organization . . . is hopelessly insolvent, with net liabilities of at least $25 million, according to sources knowledgeable of the group's financial affairs."
  • Offshore Alert reported that "most of the funds invested by clients for . . . services have been stripped out of the company by the group's 33-year-old boss, American-born Marc Matthew Harris, and his associates in the form of massive salaries and bonsuses, immoral commissions and high expenses".
  • Offshore Alert reported that it had "evidence that the group may be laundering the proceeds of crime, including drug trafficking."
  • Offshore Alert reported that "[m]any" of the "[w]ell-known financial institutions that have done business with the group" have "closed down their accounts with The Harris Organization over the last 12 months because of concerns that the group was ripping off clients and that the manner in which the accounts were being used breached anti-money laundering guidelines."
  • Offshore Alert reported that the "Harris Organization has escaped full exposure of its activities until now because of all of its accounting is done in-house and withdrawals have been paid by new money coming in, which is the defining feature of a Ponzi scheme."
  • Offshore Alert reported that "One insider said: 'There's a huge black hole where the money has been taken out. Once the new money stops coming in, the group will collapse like a house of cards' and that a $25 million shortfall was found".
  • Offshore Alert reported that "Harris is no stranger to defrauding clients [and he] was involved with Fidelity Overseas Bank, which was one of the many banks in Montserrat that were closed down by British police in 1991 because they were being run fraudulently [and that he] had an association with Jerome Schneider, who helped form several Montserrat banks that were closed."
  • Offshore Alert reported that "Harris' CPA license was suspended in Florida in 1990 . . . for 'negligence and misconduct' in relation to MMH Equity Fund, Inc."
  • Offshore Alert reported that its "investigation uncovered widespread mis-management of clients' funds, including [b]orrowing clients' funds without permission and without compensation [; b]illing out Harris' services to clients at a rate of $5,000 per hour [; m]aking junk investments and raking off massive commissions [; m]arking up assets to absurdly high levels to balance the books [and that] Harris is said to simply guess the value of assets [; i]ssuing $20 million of worthless preference shares in a Nevis subsidiary so they would appear as 'assets' on the books of the group's 87 mutual funds [; and s]ending clients' misleading reports showing how their investments are performing.
  • Offshore Alert reported that Marc Harris' "schemes have included investing $500,000 of clients' money in a venture in Chile to manufacture exercise bicycles called 'Infra-fit" [but i]nsiders doubt that a single machine was ever made or sold and suspect it was a sham so Harris could move money to Chile, where he lives.
  • Offshore Alert reported that "long-time Harris business associate Robin Baily and Derek Sambrook, a former chief regulator of the Turks & Caicos Islands . . . discovered that Harris had been effectively stealing clients' funds [and] accused The Harris Organization of 'co-mingling of client funds and unauthorized use of funds.'"
  • Offshore Alert reported that "[t]wo of the group's clients . . . are currently in prison in California on charges of possessing and conspiring to manufacture and distribute cocaine [and that a]nother client . . . was known to have had a conviction in the U.S. for cocaine dealing before being accepted as a client . . . and has been running up to $1 million a month from the proceeds of a multi-level marketing scheme involving sales of South African diamonds through the Harris group".

The 30 April 1998 Offshore Alert Article

Highlights of Offshore Alert's 30 April 1998 article on the Marc Harris Organization include the following:

  • Offshore Alert reported that it had been sued by companies of The Harris Organization for $30 million for alleged libel & slander.
  • Offshore Alert reported that "La Prensa, which is the main newspaper in Panama, has already run several articles, including one which compared The Harris Organization to The Titantic in that it appeared to be a sinking ship since so many officers had left or were on the verge of leaving."
  • Offshore Alert reported that "Banco de Brazil has closed down bank accounts it operated for The Harris Organization".
  • Offshore Alert reported that it "is aware of at least two individuals or entities who have invested funds with The Harris Organization who have been trying for over a month to get all or some of their funds out without any luck."
  • Offshore Alert reported that "on June 1, 1998, the [U.S.] Comptroller of the Currency . . . made an official complaint about Harris to the ethics committee of the American Institute of Certified Public Accountants because of [Harris'] involvement with Montserrat banks."
  • Offshore Alert reported that Harris "has a team of bodyguards to protect him who are trained by a former member of the British SAS".

The Lawsuit

Several of Marc Harris' companies (but notably not Marc Harris, who refused to return to the United States) sued David Marchant and Offshore Business News & Research, Inc., for libel and slander in the U.S. District Court for the Southern District of Florida, Miami Division, civil case no. 98-761-CIV. The case was assigned to the Hon. K. Michael Moore, U.S. District Judge, who tried the case without a jury from July 6-8 and July 28-30, 1999, and then rendered judgment.

The Result

Marc Harris lost in a spectacular fashion, the Court essentially holding that OffshoreAlert had proven that it had substantial proof that all of its allegations were true. Some highlights from the judgment:

Actual Excerpts from the Court's Finding of Facts:

12. Marchant learned from Shockey [Mr. John Shockey, former head of the United States Department of the Treasury's Comptroller of the Currency office in Florida] that Marc M. Harris ("Harris"), the founder and de facto head of The Harris Organization, had operated several offshore shell banks in Montserrat in the 1980s. These banks were subsequently closed down in 1988 by British banking authorities for conducting "illegal and fraudulent activities." According to Shockey, these banks exhibited numerous financial and fiduciary improprieties. One of the banks, the Fidelity Overseas Bank, took fees from clients even though it never performed any services for them. Another bank, the First City Bank, doctored its financial statements. Finally, a third bank, the Allied Reserve Bank, was issued cease-and-desist orders for operating in the United States without authorization.

17. Marchant learned from Dilley [Mr. Carl Dilley "the equivalent of the Chief Operating Officer of The Harris Organization [and] was therefore in a position to have intimate knowledge of the financial status of The Harris Organization, as well as its various operations and financial flows"] that financial record-keeping at The Harris Organization was in a state of extreme disorganization, and was not subject to any form of independent or objective oversight, such as through regular independent auditing of financial records. This conclusion was verified by internal memos provided by Dilley which described the accounting system at The Harris Organization as "completely chaotic." Important documents went missing, and accounting procedures were haphazard, including arbitrary adjustments to financial records without any authorizing documentation. This state of affairs led one internal observer to remark as late as March 1997 that "[a] first-year accounting student from a US university would have known better than to make these entries," and "[c]learly the definition of 'CPA' does not carry the validity in [Panama] as it does in the USA."

19. Marchant was given additional evidence which revealed that the apparent chaos in the accounting system at The Harris Organization was deliberate, and not the innovative product of Harris's accounting genius, or even charitably, incompetence. Specifically, there was a serious on-going dispute within The Harris Organization between Harris and several officers and managers, including Dilley and Messrs. Derek Sambrook and Robin Bailey, the President and Vice-President, respectively, of Trust Services S.A., a Harris Organization entity. In numerous memos, they aired their concerns regarding the commingling and unauthorized use of clients' trust funds and the susceptibility of The Harris Organization's accounting system to abuse.

20. Marchant learned from Dilley that according to financial records available to him, including The Harris Organization's "Consolidated Financial Statements" and the "Trustco Balance Sheet," The Harris Organization had a net equity deficit of at least $25 million as of November 1996.

21. Marchant learned from Dilley the mechanism by which The Harris Organization commingled the funds and assets in clients' trust accounts. Funds in client accounts were held in a common "pool account" called the Third World Trust Company ("Trustco"), along with funds from entities and persons affiliated with The Harris Organization, including Harris, the founder and majority shareholder of Marc M. Harris et Cie, S.A., and Larry Abraham ("Abraham"), a minority shareholder. It appeared to Marchant from an examination of the documents and discussions with Dilley that entities and persons affiliated within Trustco without disclosing these credits or transactions to clients. In sum, persons and entities affiliated with The Harris Organization were "borrowing" client funds that should have been kept in segregated accounts, using those funds without paying interest to clients, and exposing those clients to the risk of liquidity.

22. Marchant learned from Dilley that entities and persons affiliated with The Harris Organization were billing each other, and ultimately clients, so-called administrative and management fees that were not in fact correlated in any meaningful way with actual services rendered.

23. Marchant learned from Dilley that approximately $500,000 in clients' money had been transferred to accounts in Chile belonging to Harris and Abraham. This was done by simply crediting Harris's and Abraham's accounts within Trusco, and then transferring the funds to bank accounts in Chile that were purportedly for investment in the "Infra-fit" project. The Infra-fit project was supposed to develop and produce exercise bicycles in Chile, but apparently failed without even having produced a single bicycle. The funds were never recovered.

24. Marchant learned from Dilley that principals in The Harris Organization, including Harris and Abraham, purchased land in Argentina, and then promptly turned around and sold the land at an arbitrarily inflated price to Latin American Real Estate ("L.A.R.E.") fund, an Organization-affiliated entity, in an interested transaction without disclosing their prior interest to investors.

25. Marchant also learned from Dilley that the value of the land owned by L.A.R.E. was subsequently marked up on its financial statements, even though no substantial improvements had been made on the land, there were squatters on the properties who needed to be removed and otherwise presented a threat of possible claims on the property, and the land -- essentially arid scrubland -- had little apparent potential for generating positive returns.

26. Marchant learned from Dilley that The Harris Organization had issued $20 million in preferred shares that were not supported by corresponding contributions of capital. Dilley's information was supported by internal memoranda which showed that managers within The Harris Organization had refused to cooperate in the issuance of these preferred shares because Organization-affiliated assets that were being transferred in exchange for the shares were overvalued.

27. Marchant learned from Dilley that Messrs. Wallace Stull, James Sommerville, Joseph Vigna . . . were either clients, shareholders, and/or directors of The Harris Organization. Marchant had previously learned from other sources that these individuals had been convicted of various criminal offenses, including drug trafficking.

28. Marchant learned from independent research that The Harris Organization maintained substantial links, either directly or indirectly, with persons and entities known variously as "PT Shamrock," "Peter Trevelian," and "Adam Starchild," that advocated in print and on the Internet offshore mechanisms for evading the payment of taxes, judgments, and other debts in the United States. That is, Marchant had reason to believe that The Harris Organization was both directly and indirectly advertising its services for, in essence, tax evasion and fraudulent conveyance of funds to offshore locations.

29. Marchant also learned from internal materials provided by Dilley that The Harris Organization offered products and services that could reasonably be interpreted as mechanisms for tax evasion and fraudulent conveyances. Specifically, the so-called "Harris Matrix," an internal document discussing the products offered by The Harris Organization, included numerous references to "black holes" in the context of strategies for avoiding payment of taxes to the IRS, or to judgments and other debts in the United States. Dilley told Marchant that a "black hole" was a term used within the Harris Organization to describe dummy offshore corporations that were set up to go out of business, permitting the shareholders to claim bogus capital losses to offset capital gains.

Actual Excerpts from the Court's Conclusions of Law:

8. From the time he published the initial article to the present, Marchant had evidence which provided persuasive support for the truth of each of the allegations at issue. He spoke with numerous inside sources, including Dilley, and outside sources such as Shockey, who appeared credible and knowledgeable about Harris, The Harris Organization, and the financial situation within The Organization. Marchant was privy to internal financial and management documentation which supported the information learned from his sources.

9. At the March 1998 meeting in the Bahamas, Marchant provided Harris and the other senior officers of The Harris Organization with a full and fair opportunity to address the issues raised in his articles. Plaintiffs' representatives failed to take advantage of this opportunity. Plaintiffs' representatives offered no substantive information or explanation to rebut the allegations, apart from unsupported denials and claims of innocence.

10. Marchant was justified in discounting those explanations that Plaintiffs did provide in light of the fact that: (a) Plaintiffs' finances were in a state of complete disorganization during the relevant period; (b) Plaintiffs, though and including the de facto head Marc M. Harris, had been implicated in fraudulent and criminal activity in the past, and had a continuing association with persons and entities that had been involved in or advocated criminal activity; (c) Plaintiffs advertised products and services that were euphemistically referred to as "asset protection", but which could reasonably be interpreted as vehicles for tax evasion and fraudulent conveyances of funds out of the United States; and (d) Plaintiffs never produced any documentation or evidence to support their denials.

Read the full Judgment of the U.S. District Court in favor of Offshore Business News & Research, Inc. and David Marchant against the Marc Harris Organization, in Adobe PDF format, takes about 5 minutes to download -- but worth it!
Click Here to Download Judgment in PDF format

The Adkisson Analysis:

Even if the U.S. District Court had not ruled that OffshoreAlert had proof of its allegations, Marc Harris's infantile and amateurish responses to the allegations were the final, definitive proof that Marc Harris was all flash but had no real talent or abilities. The libel & slander lawsuit was a stupid knee-jerk reaction which was doomed from the outset, which called additional negative press to his Organization, and which had as its result that the real truth about the shoddy accounting practices, improper commingling of funds, missing funds, crazy valuations of property, involvement with drug traffickers, etc., etc., etc., all came out. This lawsuit was a major miscalculation, but apparently it was only the bad icing on the bad cake that was The Harris Organization, and it stands as proof alone as to why no sane person would even consider doing business with them.

Will they make similarly serious miscalculations with your affairs as they have made with their own? Will another offshore organization come along which is similarly flashy but that nobody has exposed yet which will get your money?

Update: 10 October 2000

Harris lost his appeal to the United States Court of Appeals for the 11th Circuit, the court finding "no merit" in Harris' challenges to the District Court's judgment. See Appellate Judgment

Update: 16 July 2000

As of this date, the following URLs were registered by Network Solutions to The Firm of Marc M. Harris, Inc., being:

 

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Articles

Documents about Marc Harris and The Harris Organization

Marc Harris Loses Appeal -- Harris lost his appeal to the United States Court of Appeals for the 11th Circuit, the court finding "no merit" in Harris' challenges to the District Court's judgment 

Former employees
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Message from OffshoreAlert about the Marc Harris Organiation

Anderson's Ark Accountants Convicted -- Accountants Roosevelt L. Drummer and Roy Lentz, who prepared returns for Keith Anderson in the Anderson's Ark fiasco, will spend some serious prison time after being convicted of tax fraud.

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Marc Harric Arresting in Nicaragua
and deported the the United States

Offshore financial services provider Marc Harris, who was first exposed in OffshoreAlert in March, 1998, was arrested yesterday in Nicaragua and immediately deported to the United States. Harris was flown from Managua to Miami, Florida, where a criminal indictment – which is still sealed – was recently filed against him by the Internal Revenue Service.

As was previously the case with three of his clients in Panama, Harris was not given an opportunity to challenge the legality of the action through the local courts. Harris' lawyer, Roger Guevara Mena, and his second wife, Nubia Gutiérrez Rivas, accused the authorities of kidnapping the businessman, reported La Prnesa newspaper, of Nicaragua, today.

OffshoreAlert has previously exposed Harris' involvement in white-collar crime, including money laundering, banking fraud, securities fraud, insurance fraud and theft of tens of millions of dollars of client funds. He moved his operations to Nicaragua last year from Panama, where had been based for more than ten years, being allowed to operate due to apparent government corruption. His group holding company and main operating subsidiaries were incorporated in the British Virgin Islands and Nevis.

Quatloos! and OffshoreAlert will be publishing updates on this breaking story from its web-site at www.offshorealert.com. This message has been brought to you by:

KYC News Inc.
123 S. E. 3rd Avenue, #173
Miami, FL 33131, USA.
Tel.: +1 (305)372-6267
Fax: +1 (305)372-8724
Email: editor@kycnews.com
Web: www.kycnews.com


Documents about Marc Harris and The Harris Organization

Provided courtesy of Offshore Business News & Research, http://www.offshorebusiness.com

Below are a number of documents, including internal management memos, court rulings, depositions and financial documents, concerning Marc Harris and The Harris Organization financial services group of Panama, which has been accused of defrauding its clients. You must have the Adobe Acrobat Reader software program to open the documents.

New Documents

Project Joshua: 40-page re-organization plan dated August 7, 2002 as The Harris Organization restructures in the face of mounting debts.

Legal Disputes: Details of clients who, at July 31, 2002, were in legal disputes with The Harris Organization about being unable to redeem their investments.

Bank Balances: Details of bank accounts - and balances - maintained by The Harris Organization at various financial institutions as of August 5, 2002.

Suspect Clients: Details, including account numbers, of Marc Harris clients who have been involved in schemes that have been subject to criminal and/or civil legal action.

Lawrence Boulanger: Convicted drug dealer Lawrence Boulanger, a.k.a. John Berlingeri, who is a preferred shareholder and client of The Harris Organization, writes to thank a Harris employee for refusing to give details of his accounts to his estranged wife and then writes again asking why his request to liquidate his preferred shares has not been answered.

Lawrence Boulanger - Asset Forfeiture: Details of Boulanger's drug dealing activities are contained in this asset forfeiture application by the United States Government. Particularly fascinating are details of how robbers stole approximately $1 million in cash from Boulanger's home after they beat up his wife until the whereabouts of the safe - and its combination - were revealed.

Lawrence Boulanger - Money Laundering: Apart from his drug trafficking conviction, Boulanger is also under current indictment for alleged money laundering.

Lawrence Boulanger - False Passport: Boulanger is also under current indictment relating to allegedly obtaining and using a false United States passport.

Wallace Stull and James Somerville: Details of the drug dealing convictions of Stull and Somerville, who have been preferred shareholders and clients of The Harris Organization.

Latest News

Marc Harris is now using the name 'Mitchell Astor Gilbert Trust Co.' to conduct business, headquartered in Managua, Nicaragua.

On June 17, 2002, the following Eviction Notice was placed on the front door of The Harris Organization's offices in Panama City for non-payment of $47,000 in rent. Since some of the text is unclear in this scanned image, here is a transcript (in Spanish).

Believe it or not!

Below are four documents which show that the US government gave assistance to the Panamanian government in investigating OBNR for alleged criminal libel against The Harris Organization financial services group.

Request for Judicial Assistance 1 - document relating to a request for assistance by the Panamanian authorities in investigating OBNR principal David Marchant, who they charged with criminal libel for his exposÚ of Marc Harris. The criminal complaint was served on Marchant in 1998 and nothing has happened since. (JPEG file) 

Request for Judicial Assistance 2 - another document relating to the Panamanian request for assistance. (JPEG file) 

Request for Judicial Assistance 3 - another document relating to the Panamanian request for assistance. (JPEG file) 

Request for Judicial Assistance 4 - another document relating to the Panamanian request for assistance. (JPEG file)

What the US Government is supporting

Harris Organization Loses Appeal against loss of libel judgment to Offshore Business News & Research.

Harris Organization/OBNR libel judgment from Judge Michael Moore, sitting in the US District Court for the Southern District of Florida.

Client Victor Wojtas complains about being unable to redeem investments placed with The Harris Organization.

Client Albert Jackson complains about being unable to redeem investments placed with The Harris Organization.

Bogus insurance provided by Threshold Insurance Services, which was operated by The Harris Organization. Ilka Barria, Threshold's President, is also an officer of THO. Jeffrey Mann, who operated Lifeblood Biomedical, was sentenced to three years in prison for fraud on January 23, 2001 by a Florida court.

'Extremely Sensitive Memorandum' by Jonathan Brinkman on the accounting practices of the Special Projects Department of The Harris Organization, where clients' investments were treated as income by The Harris Organization

Internal management memo written in late 1996/early 1997 complaining of a liquidity crisis.

Internal management memo from Marc Harris to in-house counsel Gilberto Boutin authorizing the filing of 'criminal extortion charges' against three Harris Organization officers. Boutin himself was subject to similar action by Marc Harris several months later.

Internal management memo discussing an alleged "liquidity problem" and alleged illegalities at The Harris Organization.

Internal management memo accusing The Harris Organization of over-valuing assets.

Internal management memo accusing The Harris Organization of "co-mingling of client funds and unauthorized use of client funds", i.e. borrowing clients' assets without permission or compensation.

Balance Sheet of Third World Trust Co. which OBNR claimed at trial showed that more than $17 million had been misappropriated from clients by the Harris Organization as of December 24, 1996.

Order suspending the Florida CPA license of Marc M. Harris for negligence, incompetence and misconduct. This Order Includes full details of the complaint made against him.

Letter from a Canadian businessman about his not-very-flattering perception of the Harris Organization's claims vis-Ó-vis doing business in Cuba.

Other Documents

'Audited' 1997 financial statements of Marc M. Harris et Cie S. A. and its subsidiaries.

The Harris Matrix - controversial asset protection strategy of The Harris Organization that OBNR claimed at trial blatantly advocated the fraudulent conveyance of assets.

Deposition given in March, 1999 by Larry Gandolfi, Corporate Representative of The Harris Organization, as part of its libel action against Offshore Business News & Research. (550 pages)

Part One of a deposition given in December, 1998 by David Marchant, President of Offshore Business News & Research, as part of our defense against The Harris Organization's libel lawsuit.

Part Two of a deposition given in December, 1998 by David Marchant, President of Offshore Business News & Research, as part of our defense against The Harris Organization's libel lawsuit.

Tony Vigna Plea Bargain: Official agreement for leniency for this client of The Harris Organization in return for co-operating with the US authorities.

Joseph Vigna Plea Bargain: Similar agreement to his father's (see above).


Message from www.offshorealert.com

Banks, brokers and other companies are advised that offshore financial services provider Marc Harris is now operating under the new name of 'Mitchell Astor Gilbert Trust Co.'

The name change is part of a re-organization of his business activities following his group's recent eviction from its offices in Panama for non-payment of US$47,000 in rent and an application for a winding up order by one of many clients who claim to have been defrauded by Harris.

In recent months, the Harris group has moved much of its operations to Managua, Nicaragua.

Brokers that have continued to do business with Harris despite numerous allegations of impropriety against him include Georiga Pacific Securities, in Vancouver, and Richmark Capital.

This message has been brought to you by:

OffshoreAlert
123 S. E. 3rd Avenue, PMB #173
Miami, FL 33131, USA.
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Marc Harris, US-RP relations, Panamanian racism and fan mail
Former employees of The Harris Organisation weigh in

We are some of the 100 former Harris Organisation employees who were laid off this year. We have read with great interest the recent articles that have appeared in both The Panama News and La Prensa concerning the demise of The Harris Organisation in Panama and Mr. Harris’ flight from the country in April. In our opinion, Mr. Eric Jackson’s article contained neither false nor misleading information as Mr. Harris’ letter to the editor stated. On the contrary, it was Mr. Harris’ reply that contained the false and misleading information. First, Mr. Harris mentions the issues of corruption and lack of judicial security here in Panama. He is now living in Nicaragua so is he implying that Nicaragua is less corrupt and more judicially secure than Panama? We sincerely hope not, as it is, Nicaragua is actually worse on both issues. We must therefore conclude that Mr. Harris is deluded on this issue; otherwise he must be lying.

There are currently some 76 lawsuits brought against the Harris Orgainisation by unhappy clients who cannot get their money back. Could this have any bearing on Mr. Harris’ move to Nicaragua? It seems to be very probable as we are also unaware of any serious attempt to notify clients about the "move". We invite anyone with a copy of any such mass letter or e-mail to submit a copy. Calling any of the company’s contact numbers gets you a recording from Mr. Kenneth Darlington that says to send an e-mail or a fax. In fact it is our recollection that when PATCO was being established with its corresponding bank accounts in Managua, that we were repeatedly and emphatically warned to keep it secret and that no one must ever know that The Harris Organisation was behind PATCO. When Mr. Harris left in April to go to Managua, we were told that he was going to get some work done in Nicaragua and would be back to Panama in a week or so. When he failed to return within the specified time, we were further reassured that Mr. Harris encountered more to do than originally expected and would be back shortly. When his personal items were removed from his office in 501 Balboa Plaza, as well as from his apartment at Los Delfines complex we knew that to be all lies.

Mr. Harris denies having Nicaraguan citizenship. Several of us former employees remember seeing his documents claiming Mr. Marc Matthew Harris is Mr. Marco Mateo Harris, born in Nicaragua. Were these documents forgeries then? Unlikely as it was said at the time that Mr. Harris paid good money for those documents in Nicaragua, a country he purports to be less corrupt than Panama. Interesting! It has been said that Nicaragua has no extradition treaty with the USA and that Mr. Harris being a "native born" Nicaraguan cannot be extradited to face any charges up north. Please remember that Mr. Harris was a firm believer in second passports and in his favor he practices what he preaches.

Mr. Harris mentions that laying off 100 employees was a "painful but necessary measure". This was true, as the money had stopped coming in some time ago. The budget was not there to justify all those workers. Sad but true. The Organisation was bloated and top heavy and in dire need of restructuring if it were to survive. The financial situation has been grave for years. Mr. Harris promoted himself to be the boy genius yet he refused sage advice from within the company’s management to restructure and downsize some time ago. Any CEO worth his salt would have downsized years ago. Not Mr. Harris! This was part a deliberate effort by Mr. Harris to gain sympathy. When he was attacked in the press he always mentioned the 130 to 150 workers and their families that he employed. In particular, his effective use of his nominees who were on staff to avert and block many legal claims against him needs to be mentioned. His use and abuse of women who were not privy to the whole picture of what he was really doing because of their lack of basic business experience and knowledge combined with Mr. Harris’ flattery and charm made them easy dupes to be used.

At this point, organizational survival does not seem to have been the deciding factor in determining those who were fired. Those who remain on staff share one characteristic, their usefulness to Marc M. Harris and his personal affairs. When they are no longer useful to him, they will be kicked out on the street and will most probably be left unpaid what they are owed as well. When we, as former employees, went to claim the money we were owed, we were told by Max Hidalgo that Mr. Marc M. Harris told him to not pay the former employees, as they were all traitors. We still feel the warmth of his concern for our welfare. Thank you Mr. Harris. Our spouses, children and those who depended on our salaries thank you as well. We understand how hard it must be for you to live in a Managua with the many millions of dollars you STOLE from your naïve and trusting clients. We realize that even with money, Managua is not a nice place to live. That mugging you suffered in that taxi in Managua must have come as quite a shock to someone with an ego the size of yours. Could this incident also be a warning of Divine retribution? God’s judgment, unlike man’s, is perfect. Now you know what poor Dr. Mengele felt like when he had to leave Nazi Germany and ended up in Brazil. Call it your cosmic Karma.

The Harris Organisation has ceased to exist. The offices in Buenos Aires, Santiago de Chile and San Jose have all been closed down. The offices in Balboa Plaza here in Panama City were vacated rather hurriedly with some $42,000 in back rent owed. In fact the employees were unable to remove all furniture and files before the unhappy office owners locked them out. All that remains are a few employees in an office rented by Max Hidalgo y Asociados and the PATCO office in Nicaragua. We must therefore assume that Mr. Harris’ sojourn in Nicaragua has more to do with what is good for Mr. Harris than what is good for his now poorer clients and former staff. The Nicaraguan judicial system will protect him from any clients who seek legal redress for damages.

Mr. Harris denies that he is the beneficial owner of a private plane, a King Air Turbo Prop, in Panama. Please remember that Mr. Harris preaches asset protection which means not having assets directly traceable to ones name. Benson Aviation owns the plane and if you follow the trail, it leads back to Mr. Harris. That is why the pilots came to the THO offices in Balboa plaza to pick up their pay checks. Once again Mr. Harris practices what he preaches. A liar yes, but a hypocrite no! Even Mr. Harris knows that any business with the name of Marc M. Harris on it will not have many customers and he badly needs the income that plane is generating right now. Caveat emptor!

We sincerely hope that Mr. Harris realizes that we are now 100 former employees who worked with him both day and night for 24 hours and for many years. We know him well and so we will be watching what he says and what he does. We will now call him on the floor for his lies and misdeeds. We may still not have the full picture of all his nefarious activities but as we get together to discuss our experiences with him, we learn from each other and add yet another piece to the puzzle and therefore have a clearer picture of what went on and is going on. We will do our best to get the word out as to who he is and what he does to make sure no one else loses money down the black hole Marc M. Harris has created.

In closing, let us say that we believe that you did an excellent Job Mr. Jackson on your well-researched article about Mr. Harris’ recent activities. You scooped the Spanish language media here in Panama on this highly important and ongoing story. Congratulations and thank you. In the future, feel free to contact us in order to verify any future statements by Mr. Harris and his associates or any thing related to previous Harris activities. It is the least we can do.

The Former Employees of The Harris Organistion

PS: We were happy to see Mr. Tomas Cabal’s letter to you Mr. Jackson. We’re glad to know that he is still getting a paycheck from Mr. Harris since he is Mr. Harris’ personal public relations assistant. He didn’t mention that fact in his letter. Is that within the realm of professional journalism?



U.S. Department of Justice

Marcos Daniel Jiménez
United States Attorney for the
Southern District of Florida


PRESS RELEASE

FOR IMMEDIATE RELEASE

November 24, 2003

For Information Contact Public Affairs

Matthew Dates, Special Counsel for Public Affairs, (305) 961-9285
Marjorie M. Selige, Public Affairs Specialist, (305) 961-9048


OFFSHORE TRUST OPERATOR CONVICTED IN
TAX AND MONEY LAUNDERING SCHEME

Marcos Daniel Jiménez, United States Attorney for the Southern District of Florida and Brian Wimpling, Special Agent-in-Charge, Internal Revenue Service, Criminal Investigation, today announced that a federal jury convicted Marc M. Harris on tax fraud and money laundering charges.

Marc M. Harris was found guilty of conspiring to defraud the Internal Revenue Service, in violation of Title 18, United States Code, Section 371, two counts of evading excise taxes for 1993 in violation of Title 26, United States Code, Section 7201, conspiracy to launder money, in violation of Title 18, United States Code, Section 1956(h), and twelve counts of money laundering, in violation of Title 18, United States Code, Sections 1956(a)(1)(B)(i) and 1957.

Harris faces a maximum penalty of 5 years’ imprisonment and a $250,000 fine on the tax-related conspiracy charge and each tax evasion charge, respectively. He is also subject to 20 years’ imprisonment and a fine of up to $500,000 on each money laundering count.

During this trial, the jury heard evidence that the defendant conspired with Aurelio Vigna, Joseph Vigna and others, to evade federal excise taxes on the sale of ozone-depleting refrigerant chemicals (commonly referred to by its Dupont trade name, “Freon”) to customers in South Florida. Congress imposed significant excise taxes on the sale or use of Freon. During the relevant time, this excise tax ranged from a low of $1.67 per pound to a high of $4.35 per pound.

Evidence introduced at trial showed that Harris, the Vignas and others, engaged in a scheme to evade federal excise taxes by failing to report and remit those taxes to the Internal Revenue Service and by filing phony paperwork to conceal domestic sales of illegally imported Freon. In furtherance of the tax evasion scheme, the defendant established and utilized domestic and foreign shell corporations and bank accounts. As a result of the scheme, the defendant evaded and caused the evasion of approximately $6.2 million in excise taxes between January 1993 and June 1994.

As part of this conspiracy, Harris also assisted his co-conspirators in evading federal individual and corporate income taxes on money earned by his co-conspirators and their Florida corporations.

Finally, the jury heard evidence that Harris laundered more than $8 million in proceeds generated from the illegal Freon smuggling scheme with Aurelio and Joseph Vigna. The defendant laundered the Vignas’ money through a series of wire transfers through Panamanian corporations and bank accounts.

Mr. Jiménez commended the investigative efforts of the Internal Revenue Service as well as the cooperative efforts of the United States Customs Service and the Environmental Protection Agency. Trial attorneys Gregory E. Tortilla and Shelly L. Goldklang, of the Justice Department’s Tax Division prosecuted this case.

From: http://www.usdoj.gov/usao/fls/Harris2.html

 

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