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These stories were published Wednesday, Feb. 13, 2002
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Tax figure hit all the wrong buttons with U.S.
By Jay Brodell
editor of A.M. Costa Rica

A tax-avoidance guru arrested over the weekend near Heredia becomes the latest statistic in a renewed U.S. government push against terrorism, money-laundering, drugs, tax evasion and other challenges to the status quo.

Unlike their Canadian counterparts, U.S. citizens are expected to pay U.S. income taxes on money earned overseas, although there is a generous deduction.

The problem, however, was expressed by a friendly witness at a U.S. Senate hearing in April:

"Our tax code is riddled with special interest tax credits and exceptions carved out for increasingly narrow groups. The size, complexity, and perceived government favoritism in the code has eroded all respect for the tax system." 

Those were the words of JJ MacNabb, a self-described writer and financial planner who appeared before the Senate Committee on finance. He also said that personal greed and slow-moving federal enforcement efforts hamper tax collection.

Senators also heard that sophisticated scamsters are playing on the distaste many citizens have for paying taxes.

The man arrested this weekend, Keith Anderson, is an example of someone who built an elaborate business by telling people how to duck U.S. income tax. He combined aspects of religion and multi-level marketing with his program that involved selling instructional cassettes, holding seminars and eventually encouraging clients to invest their money with him in offshore trusts in Costa Rica. 

He was arrested after being a fugitive for 11 months in a hotel near residencial Los Arcos in the canton of Belén, Heredia, said police. 

A number of firms in Costa Rica quietly set up trusts or anonymous corporations for North Americans who wish to hide their assets, perhaps from taxation.

But Anderson faces indictment counts of conspiracy and money-laundering, in part, because what he preached did not really protect his clients. The U.S. tax officials called it fraudulent. Plus he generated a lot more tax avoidance by offering commissions to individuals all over the United States who brought other people into the program. He was highly visible with a Web site (http://www.andersonark.com) that is still working.

Anderson also spawned other companies indirectly when his employees quit and started tax-avoidance operations of their own, frequently from Canada.

The U.S. Internal Revenue Service replied with a little visibility of its own last Feb. 28 by raiding Andersonís Santa Ana compound and 14 other company locations in the United States. They did not arrest Anderson, who was not present, but they did generate a lot of domestic publicity just six weeks before U.S. citizens were supposed to file tax returns April 15.

Andersonís arrest this weekend generated articles in a number of U.S. newspapers, including The New York Times, again as U.S. tax time approaches. He is being held here to face extradition to the United States, a process that may take some time.

The raids on the Anderson Ark & Associates organization and other related companies has been called the "largest crackdown in the history of the U.S. Internal Revenue Service," and Anderson himself has been referred to as "the U.S. Internal Revenue Serviceís (IRS) most wanted man." The main reason is that through his companies Anderson has encouraged thousands of people to set up trusts and other tax avoidance schemes that have been giving the I.R.S. headaches.

Anderson originally set up Global Prosperity Group, which collapsed in 1997. It, too, was a multilevel marketing operation selling offshore trust whereby individuals allegedly could avoid income tax.

Anderson Ark built on the ideas promoted by Global, and Anderson ran it mostly from Costa Rica, although he had a brother and associates 



Some relevant Web sites:

U.S. Internal Revenue Service
Look for the scams page.
http://www.irs.gov

Anderson Ark & Associates
http://www.andersonark.com

also
http://www.thefreedomguide.com/
keith.html

Report to the U.S. Senate Finance Committee
http://finance.senate.gov/
040501jmtest.pdf


in the States, most of whom were arrested a year ago and face trial May 7.

U.S. law requires citizens to report their involvement in offshore trusts. The law also criminalizes creating a trust or other offshore entity for the purpose of evading taxes or to hide assets. Many of these offshore trusts are phony because the trustee who is supposed to control a trust actually takes orders from the person who put the money down in the first place.

Anderson is said to have gone one step further by telling clients that they could make tax deductions for normal living expenses and for elaborate and expensive seminars.

The I.R.S. notes that there are many legitimate uses of trusts by U.S. citizens. Holding property for minors, charities or the mentally incompetent are some legitimate reasons, the I.R.S. said.

"Abusive trust arrangements often use trusts to hide the true ownership of assets and income or to disguise the substance of transactions," said the I.R.S. The penalty for fraudulently transferring assets to a foreign trust is 35 percent of the value of the assets, said the I.R.S. And there may be criminal penalties, too.

U.S. citizens must report any financial transaction greater than $10,000, and Costa Rican law requires that any transaction of $10,000 or more in cash be reported.

Andersonís latest operation was brought down by a two-year undercover investigation by an Internal Revenue agent, who said he gave the firm $100,000 in cash the agent said had been earned illegally. Reports of sales pitches by Anderson and his associations said that he mixed evangelical Christianity with patriotism and termed the trusts he marketed "constitutional trusts," as if there were some protection of the trusts in that document.

While he was a fugitive, Anderson conducted a few interviews by telephone to business reporters in the United States. He told one that "the criminal government of the United States" has deceived people into believing that the income tax laws were properly enacted when in his view they are illegal. 

The Anderson firm made money with cassette instructional courses ($1,250), two- to three-day seminars in the States or in Costa Rica (from $2,000) and longer seminars (upwards of $7,000). In addition, investors could participate in what appeared to be a multi-level marketing operation in which they are paid for attracting other persons to the program.

Since Sept. 11 and the attacks in New York and Washington, the United States has stepped up its anti-money-laundering activities. The U.S. government has arm-twisted a number of former tax haven countries into agreeing to provide bank deposit information for investigative purposes.

Furthermore, the U.S. government has linked money-laundering with drug trafficking, and it has linked drug trafficking with terrorism. Agents have tried to close down or dry up any investment sources that do not provide for governmental oversight in the United States and overseas. Plus a closer eye is kept on funds transfers.

U.S. citizens living overseas can exempt up to $78,000 of earned income this year from U.S. federal taxes. The exemption does not apply to unearned income, such as interest or rents. So any interest earned in Costa Rica is taxable.

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Bush to stress cutting demand in his antidrug plan
By the A.M. Costa Rica wire services

President Bush says Americans who buy illegal drugs are helping fund international terrorists. Bush unveiled his national drug control program Tuesday, telling drug producing nations that he will work to cut the demand for drugs in the United States.

President Bush says illegal drug use not only contributes to the breakdown of American families, it helps fund the nation's enemies.

"Drugs undermine the health of our citizens, they destroy the souls of our children, and the drug trade supports terrorist networks," he said. "When people purchase drugs, they put money in the hands of those who want to hurt America and hurt our allies."

President Bush says the former Taliban rulers of Afghanistan made "significant" amounts of money because the country produced 70 percent of the world's opium trade. He says that is money that went to feed and hide those responsible for the terrorist attacks of Sept. 11. When Americans fight drugs, Bush says, they fight the war on terror.

The president's drug control plan calls for more than $19 billion to stop drug use before it starts while helping to treat those Americans who already have a drug problem. Bush says his program will also disrupt the drug market by reducing domestic demand 10 percent over the next two years and 25 percent over the next five years.

The president says reducing demand will come in homes and schools and places of worship where he says Americans must reaffirm the values of responsibility and good citizenship while dismissing the idea that drug use reflects individual freedom.

"The best way to affect supply is to reduce demand for drugs," he said. "We can work as hard as we possibly want on interdiction, but so long as there is demand for drugs in this country, some crook is going to figure out how to get them here."

Drug use among American youth has stabilized over the last few years but still remains close to an all-time high with researchers saying one out of every two teenagers has tried an illegal drug by 12th grade. President Bush says that puts the fight against drugs in the center of his national agenda not only to help Americans struggling with drug addiction but to help friendly governments eradicate the drug trade.

"As demand goes down, so will supply," he said. "As we reduce demand in America, it will take the pressure off of our friends in the south. It will make it easier for our friends in Mexico to deal with the drug problem. It will make it easier for Colombia to be able to deal with the growers and the mobsters who tend to wreak havoc in your country."

The president's plan includes more than $2 billion for drug interdiction with $730 million to fund the Andean Counterdrug Initiative to stop the production of illegal drugs in Bolivia, Brazil, Colombia, Ecuador, Panama, Peru, and Venezuela.


 
Idea grows in U.S. Senate to end Cuban travel ban 
By the A.M. Costa Rica wire services

WASHINGTON, D.C. ó Some U.S. lawmakers plan to make another attempt to lift travel restrictions on Americans to Cuba. But the Bush Administration remains opposed to the move. 

The House last year passed legislation that would have effectively ended the 40-year ban on travel to the Communist-ruled Cuba. But the measure was never offered in the Senate.

Democratic Sen. Byron Dorgan of North Dakota plans to reintroduce a bill that would end the travel ban. Dorgan chairs an appropriations subcommittee that heard from several Americans who were fined by the U.S. Customs agency because they made unauthorized travel to Cuba.

Marilyn Meister testified Monday she has been fined $7,500 for going on a bicycle trip to Cuba. The 75-year-old retired teacher from Wisconsin said she was harassed and yelled at by Customs agents immediately upon her return to the United States. "I was quite chagrined," she said, "to be treated in such an abrasive way by a representative of my own government after a week of seeking to be a laudable representative of my country while in Cuba."

Cevin Allen of Washington State said he was fined $700 for visiting Cuba for only one day to bury the ashes of his parents by a church they built as missionaries. 

The Bush administration has increased  enforcement of the travel ban, which has been eased to allow some food and medicine sales to Cuba. 

Officials say more than 150,000 Americans  visited Cuba last year, but only two-thirds were authorized under provisions for cultural exchanges and limited commercial  activities.

Richard  Newcomb,  director of the foreign assets  control of the Treasury  Department defended the travel ban. He said, "Part of the foreign policy goals 
 

of the President vis-à-vis Cuba is to minimize the flow of hard currency to the government of Cuba."

Newcomb and other U.S. officials say the embargo will be lifted only after there is a transition to democracy. Until then, they argue, tourist dollars are propping up the Communist government.

It is an argument echoed by members of the politically influential Cuban exile community. Dennis Hayes is Vice President of the Cuban American National Foundation. He said, "The tourist industry itself is built to funnel money into the Castro regime. This is done through a variety of ways, including the illegal confiscation of wages. This is done through a process whereby unionization is not just illegal, but can result in firings, beatings and imprisonment. 

But Dorgan, noting that Americans are allowed to travel to Communist-led North Korea and China, argues it may be time to reassess U.S. policy toward Cuba because it has done little to bring about change.

"There comes a time when American policy has to be reviewed if you have a policy in place for 40 years and you are not accomplishing your objectives, then it seems to me you might be evaluating whether that policy is working." He said.  "Fidel Castro has been in office during the terms of 10 U.S. presidents. That might persuade someone to start thinking 'you know, this is not working.'"

Critics of the embargo say the best way to bring about democratic change in Cuba is through trade and travel.

One such critic is former U.S. Sen. Dennis DeConcini who said, "If a half a million or a million Americans travel there over a 12-month period of time and spend $100 or $200 million, Cuba would be substantially changed and the government could not withstand the amount of information that would be brought in and made accessible to Cubans. You cannot police that, even in a Communist society in my judgment." DeConcini has made eight trips to Cuba over the years. 


 
Gunman plugs his own computer so it won't 'talk'
By the A.M. Costa Rica staff

The police were pounding at the door. The car theft suspect looked at the one witness who could provide evidence against him. He took out a .45-caliber pistol, aimed it and fired.

Right into the CPU of his computer.

The arrested man is Javier Santvañez Solano, according to the Judicial Investigating Organization.

The raid took place Monday afternoon in Barrio Don Bosco where police were looking for a man who figured in an elaborate car-theft ring that was based in Esparza and broken up five months ago. Investigators were working on the assumption that additional information they needed was in the computer of Santvañez, said a spokesman.

They said the man fired the pistol with the intention of destroying the computer hard drive. There was no immediate report of the condition of the drive.

Then the investigation took on a serious tone. Police found a large quantity of munitions in the dwelling, 

including some U.S. Army-type fragmentation grenades, they said. Also found were shotgun shells and .45-caliber and 9- millimeter bullets.

When they found more explosive materials, police cleared the scene until demolition experts arrived with K-9 dogs.

Investigators said that in addition to the two grenades, six detonators also were found, and these were ready to be wired to a timing device.

Also encountered were other unauthorized weapons, including a mini-Uzi submachinegun, a precision rifle and the .45-caliber pistol.

Investigations expressed their strong concern in finding the explosives. They noted that someone tried to use a grenade against police last week. The grenades might have been appropriated from an arms shipment that moved through Costa Rica, perhaps to an eventual destination with Colombian rebels. They are highly effective within a 20-meter (65-foot) radius, investigators said.

They urged residents to keep an eye out for such material and to treat it with caution, if found.


 
Week-long Tico cultural fest planned by Manuel Antonio hotel
By the A.M. Costa Rica staff

A week-long art show and sampling of Costa Rican wine and cigars will be part of a Festival of Costa Rican Culture at Hotel California in Manuel Antonio. The week-long event starts Sunday, Feb. 24. 

The festival also will feature a show of the work of various Costa Rican artists all day every day, said organizer and hotel owner Robbie Felix. In addition, the hotel will be having coffee tasting, a wine tasting and a theater presentation that will benefit a local school. 

"We expect to have live music, dance, traditional music, and one night of sampling of Costa Rican puros and cognac." she said. All events will be in English and Spanish, she said.

Here is a day-by-day schedule:

All days: Art show featuring Costa Rican artists every day of the festival. 

Feb. 24: Traditional Costa Rican food, provided by local mothers who are members of a civic association, folk dancing by local children's dance groups, wine-tasting of wine, mostly sparkling, made in Costa Rica and provided by the Vicosa Winery of La Garita. In addition there will be live music.

Feb. 25: More traditional dance and a series of small plays acted by children at the Inmaculata School, 
 

which will benefit from the event. The theater 
presentations will be at the school, which is undergoing remodeling. Transportation will be arranged from the hotel to the school.

Feb. 26: Dinner Party featuring afterwards a Puros and Cognac Party, which will be an event to try and evaluate Costa Rican cigars.  A local cigar expert will describe the various types of Costa Rican and Cuban cigars.

Feb. 27: An all-day reception for the artists who have contributed to the show and a coffee tasting of Costa Rican products with a full dessert bar. The coffee is from the Café Milagro firm in nearby Quepos.

The artists are Carlos Aguilar, Roberto Lizano, Andres Salas, Fabio Herrera, Mario Mafioli, Jaime Umana, Minor Mora and Alejandro Oregón, said Ms. Felix. In addition handicraft manufacurers Arteaquí and Riomaravilla of San José will be represented.

Many of the events will be raising funds for local programs and youngsters, said the owner. Ms. Felix said that visitors can simply come and visit or sample the food or even try out the hotelís swimming pool.

The events are open to everyone, and Ms. Felix said she hope visitors will all enjoy a little piece of the local culture. More information is available at hotelcal@racsa.co.cr or rfelix@yahoo.com or by calling 777-1234 inside of Costa Rica.


 
Skating Union to probe
victory by Russians

By the A.M. Costa Rica wire services

The international body that oversees figure skating will investigate the judging at Monday's controversial Olympic pairs figure skating competition that pitted Russia against Canada for the gold medal. 

Russians Elena Berezhnaya and Anton Sikharulidze won the gold over Canadian duo Jamie Sale and David Pelletier, shocking television commentators and many in the crowd. Boos rained down from the crowd when the results were announced. 

The Russian duo skated beautifully during their routine, entitled "Meditation," but made several clear technical mistakes. The Canadians "Love Story" routine was seen as flawless but perhaps less artistically pleasing. 

The International Skating Union says it is doing an "internal assessment" to see if judges at the event followed proper rules and procedures.  Canada's skating association called for the investigation Tuesday and said it may launch its own probe. 

Five of the nine judges for Monday's event favored the Russians, with four of the pro-Russian votes coming from communist or former Soviet Bloc nations: Russia, Poland, Ukraine and China. France cast the fifth vote that gave the Russians the gold. 

U.S. will warn 
college tourists

By the A.M. Costa Rica staff

The State Department is distributing information to  more than 1,500 U.S. colleges and universities to tell students to avoid drug and alcohol abuse while on   spring and summer breaks.

"The information is provided as part of the   department's effort to inform as many Americans   as possible of hazards they may encounter outside the U.S.," said an announcement. "We endeavor to achieve as wide a distribution as possible to some of our most vulnerable travelers ó young people going abroad, some of them for the first time."

The State Department said that each year, more   than 2,500 American citizens are arrested abroad,   about half on narcotics charges, including possession of very small amounts of illegal substances. 

"Young Americans have suffered injury or even   death from automobile accidents, drowning, and   falls, in addition to other mishaps," said the   department release. "While these accidents are   sometimes chance occurrences, many are caused by  alcohol or drug abuse.  Sadly, other Americans have been raped or robbed because they have found   themselves in unfamiliar locales or are incapable of  exercising prudent judgment while under the   influence of drugs or alcohol.


 
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