Module 2 CASE STUDY

In Module 1, you learned about: The misuse of legal persons and legal arrangements to conceal the proceeds of financial crimes and, the definition of beneficial ownership In Module 2, you will have the opportunity to: Review these key concepts through an actual case study of a transnational scheme that misused shell companies and a trust formed in multiple jurisdictions

FACTS:

•  Chen Shui-Bian, the former President of Taiwan, China •  Corruption case, involving him and his family members •  Proceeds of corruption used to buy properties in the United States •  Transnational scheme:

•  Use of multiple legal structures; legal persons and legal arrangement •  Use of offshore bank accounts

 SOURCES –  h#ps://star.worldbank.org/corrup6on-­‐cases/sites/corrup6on-­‐cases/files/

Chen_US_Jus6ce_Dept_PR_Jul_14_2010.pdf  –  h#p://www.jus6ce.gov/opa/pr/us-­‐forfeits-­‐21-­‐million-­‐worth-­‐property-­‐purchased-­‐alleged-­‐bribes-­‐paid-­‐family-­‐

former-­‐president

The Chen Shui-Bian Case

The Chen Shui-Bian Case (i) CORRUPTION IN TAIWAN, CHINA

A.  Corruption payment

of approximately US $6 million in Taiwan, China

The Chen Shui-Bian Case (ii) TRANSFER OF FUNDS

A.

B. Transfer of illicit funds from Taiwan, China to Switzerland (via Hong Kong SAR, China)

The Chen Shui-Bian Case (iii) MISUSE OF LEGAL STRUCTURES

A.

B.

Formation of a trust in St. Kitts & Nevis and British Virgin Islands (BVI) shell company, using services of a Miami based lawyer

C. D.

E.  Manha(an  Condominium  owned  by  West  28th  Street  LLC  

F.  House  in  Virginia  owned  by  Pegasus  Virginia  LLC  

The Chen Shui-Bian Case (iv) PURCHASE OF PROPERTIES

Beneficial Owner Chen Shui-Bian

Avallo Ltd—Bank Account Wegelin and Company Private Bank Jurisdiction: Switzerland Signatory Authorities: Cheng Chi-Chung (Son) and Wu Sue-Jen (Wife)

Knight Square Irrevocable Trust Jurisdiction: Island of Nevis Owns: Avallo Ltd Trustee: Global Fiduciaries Ltd Beneficiary: Huang Jui-Ching (Daughter in Law)

Avallo Ltd Jurisdiction of incorporation: British Virgin Islands Owns: Avallo Ltd Trustee: West 28th Street, LLC

West 28th Street, LLC Jurisdiction of incorporation: United States—New York Owns: West 28th Street, Unit 5B

TRUST

LTD

LLC

Property West 28th Street, Unit 5B

The Chen Shui-Bian Case

West 28th Street, Unit 5B

OWNERSHIP STRUCTURE

The Chen Shui-Bian Case MULTIPLE LAYERS

THE CHEN CASE USED… Multiple structures •  Shell Companies •  A Trust •  Offshore Bank Accounts

Across multiple jurisdictions •  Taiwan, China •  Switzerland •  St Kitts and Nevis •  British Virgin Islands

Involving several family members, acting as nominees/intermediaries including; •  Wu Sue-Jen (Wife) •  Cheng Chi-Chung (Son) •  Huang Jui-Ching (Daughter in Law)  

Congratulations!

You have successfully completed Module 2. Now go to Module 3 to review Tools for Transparency.