Steve Martini - The Enemy Inside

“So where do we go from here?” Norman, Alex’s dad, asks the question.

“That’s the problem,” I tell him. “After what happened tonight, our biggest dilemma is no longer a legal issue. We must now be concerned for your son’s safety.”

“What do you mean?” With this, I have Mother Ives’s undivided attention.

“It pains me to tell you this, but whoever killed the girl probably wants to kill your son,” I say.

“I think you’re being overly dramatic,” says Alex.

“Bullshit,” says Harry.

Sharon Ives looks at Harry as if he has just defecated on her best china.

“You can double that for me,” says Herman.

“Only reason you’re alive is some Good Samaritan pulled you from the flames the first time,” says Harry.

“Why would someone want to kill Alex?” she asks.

“You better ask your son,” I tell her.

She looks at him. “Alex, tell me! What have you gotten yourself involved in? I want to know, and I want to know now!”

“Mom!”

“Tell your mother!” Norman Ives piles on. “Son, we need to know what’s going on if we’re going to be able to help you.”

Alex looks at me with an expression like I’ve ratted him out. “All right!” He’s had enough. Everybody, including his parents, beating on him, and now two murders. “I’ll tell you what I know,” he says. “Not that it’s going to do any good. I can’t see any connection. You have to promise not to tell anyone else.”

“Get him a drink,” says Harry. “I have a feeling it’s going to be a long night.”

Over Jameson on the rocks, the kid unloads what he knows. “A few years ago, if you remember, there were news stories about the Treasury Department, the IRS, and some offshore banks. Internal Revenue was cracking down on overseas banking. They were chasing US citizens who had money deposited in confidential offshore numbered accounts. One estimate was there was two hundred and fifty billion dollars in back taxes and penalties owed on what was hidden offshore. Pick a report and they’ll give you a different number,” says Alex. “Nobody knows for sure how much. According to the US politicians who were leading the charge, these people with the numbered accounts were dodging US taxes, either by shifting funds offshore before paying taxes or depositing income earned overseas and not reporting it.”

“I remember,” says Harry. “As I recall, the Swiss bankers were screaming that the fakers in Washington had them stretched out on the rack. The powers in D.C. were turning the screws. Threatening lawsuits.”

“To the Swiss, banking was a cornerstone industry, and confidentiality was its foundation. It was the principal reason many people banked with them, especially the wealthy,” says Alex. “In many cases these were not interest-bearing accounts. The well-heeled were often willing to deposit money and pay fees for privacy. Uncle Sam had fallen on hard times.”

“Not hard to see why,” says Harry. “Forty years of profligate spending by American politicians pissing away other people’s money had them searching cupboards for loose change.”

“Somebody suggested the idea of shaking down the overseas banks to get them to cough up the names of American taxpayers,” says Alex. “After all, most of these were foreign corporations, and Washington was wallowing in class warfare. Hating the rich was in vogue,” he says.

“And it wasn’t just civil lawsuits. Some of the European officers of these banks were threatened with criminal prosecution here in the United States. Charges that they had knowingly conspired to assist US customers to commit fraud and tax evasion. And our government had a big hammer. International wire transfers,” he says. “If you want to send money by wire to another country, something that is done daily by businesses around the world, many transactions require that you convert it into US dollars because the dollar is the world reserve currency. That means that these transactions have to go through the Federal Reserve System in New York. The US Treasury Department let it be known that overseas banks refusing to cooperate with the IRS by failing to disclose the identity of US account holders might have their wire transfers blocked by the Fed in the future. In effect, this could put foreign banks out of business.”

“T. R. said to carry a big stick, but nobody ever said anything about a cudgel,” says Harry. “Still, I guess if they owe the taxes.”

“That was true, as far as it went,” says Alex. “But then some strange things began happening. Stories started to crop up around Capitol Hill that the Treasury and the IRS were beginning to soften on the issue. Evidence started to surface that they were cutting deals, outlining a plan that wasn’t nearly as forceful as the words and accusations they were spouting in front of the cameras.”

“Pushback from foreign governments?” asks Harry.

Alex shakes his head. “There was that, but there was something more. We were told that identification of some accounts was being treated as out-of-bounds, off-limits. There was something called the ‘PEP Office’ that had been set up at one of the foreign banks that had a branch office in Washington. PEP, we were told, stood for ‘Politically Exposed Persons.’ These are people with power in public office. It’s one of the things banks look for as a red flag in terms of possible money laundering. Typically it involves third-world dictators who might be looting their national treasuries. But not always. It could also involve politicians from developed countries who have suddenly acquired funds offshore and they want to hide it in a numbered account.”

“Funds from where?” says Harry.

“That’s the question,” says Alex. “Nobody knows. What was more interesting was that when this information surfaced, that there might be US PEPs out there, politicians with numbered accounts, a lot of them seemed to lose interest in the offshore banking issue. Some of the people pounding loudest on the table suddenly got very quiet.”

“Your government at work for you,” says Harry.

“Go on,” I tell him.

“Because the Swiss banks were being hammered by the IRS and the Treasury Department, they decided to use a random selection method for picking several thousand US account holders at one bank headquartered in Switzerland. The identity of the account holders and the account information for the unlucky ones who were picked was to be turned over to the IRS for audit. The account numbers were to be drawn at random in hopes that the fear of exposure would force other Americans to come clean, file returns with the IRS, and avoid enforcement actions should their accounts be selected for audit. But according to Tory, a source working at the bank told him that there were a number of accounts that were never placed in the pool for selection.”

“Who told him this?”

“I don’t know. It happened on our first trip when we were in Switzerland. But I didn’t go to the meeting. He wanted to go alone.

“There’s more,” says Alex. “We were told there was a whistleblower, a man by the name of Rubin Betz. He had been arrested by the FBI for tax evasion and money laundering some years earlier. I can’t remember exactly when. He claimed he was being set up, that the government had built a case against him because they wanted to shut him up. At the time they arrested him, he worked for one of the offshore banks. I can’t remember which one.

“He claimed to have the goods on a number of powerful people, including some American politicians who he said held sizable numbered accounts in banks overseas, accounts that were never disclosed either to the IRS, to Treasury, or on public disclosure forms that are required to be filed under federal law. He said that these people were being allowed to skate while others were being hammered by the government.”