Re: "Contempt" charges likely to increase

[Duncan Frissell <frissell@panix.com>]

At 11:57 AM 4/5/96 -0800, Timothy C. May wrote:

>So, I see a rise in the use of "contempt" charges. Contempt charges have a
>kind of time limit, in practice, and there is a common interpretation that
>a person may be jailed on contempt charges so long as there is likelihood
>that she will eventually reveal the information sought. (Reporters have
>been jailed for more than six months, and I recall that Rebecca Morgan was
>jailed for a couple of years for refusing to tell the court the whereabouts
>of her daughter...)

Hence the proper approach which is to constantly demonstrate your contempt
for the court.  Daily (hourly) phone calls, faxes, email, physical letters
going on in boring detail all the reasons that you have for never purging
yourself of the contempt.  Logically, that should shorten your imprisonment
but in practice...

Obviously offshore key escrow facilities should have provisions similar to
those in Foreign Asset Protection Trusts (FAPS).  For example (from a recent
non-fiction work on FAPTs written by one of the greatest minds of his
generation):

*******************

Duress Provisions

The trust document should also contain language that basically says, "The
Trustees should not obey any instructions that anyone else gives them under
the orders of any court that has no jurisdiction over them."  

You see, a foreign-based trust is not under the jurisdiction of a court in
any other country.  A court can only order people to do things if it has
them under its physical control.  For example, a German court cannot send
the police to Bermuda or to the Channel Islands to force your trust's
trustees to transfer trust assets to the court for payment to creditors.  

What creditors in a German court will try to do in such cases is to find
someone in their jurisdiction who has some powers over the trust.  They then
order this person to direct the Trustees to cough up the trust assets.  

A duress clause frees the Trustees from any obligation to obey instructions
caused by orders from a German court.  It is a powerful method of protecting
your trust from the asset grabbers.  

But, you may ask, "What if a persistent creditor manages through some
miracle to get an order against the trustees from a court in the foreign
jurisdiction where the trust is located?  That's easy.  You include "flight
provisions" in your trust.  

Flight Provisions

You know that German courts or those of any other country will have no
jurisdiction over your offshore trust assets.  But what do you do if a
really dedicated creditor tries to pursue your trust in the courts of the
trust's home jurisdiction.  Flight provisions take care of this situation.
These provisions will require that the location (situs) of either the trust
or the trust assets (or both) be changed automatically, in the event that
creditors move against your trust in its home location.  So even if they do
manage to get a court order against your trust, the trust will have been
moved to another jurisdiction.  Your creditors will have to start all over
again.

It is important to realize that having a "flight" clause in your trust is no
guarantee that the trust will successfully escape.  The trust and its assets
must be moved in time.  It is possible that the trustees will fail to act in
time and your trust may be frozen in its foreign jurisdiction.  These
provisions do add an additional layer of protection, however.

If you do run into financial problems, you may move your trust in advance of
need -- before any lawsuits are filed.  You can also protect yourself
further if your investments are physically located in a third jurisdiction
-- neither in your country of residence nor in the trust jurisdiction.

Trustee Switching Provisions

In addition to moving the trust itself, you may also want or need to change
Trustees.  Trustee switching provisions give power to both the Trustee and
the Trust Protector to remove Trustees and name new Trustees.  For example,
if Trustees in one country come under court order to relinquish the trust's
assets, those Trustees can be removed and replaced with new Trustees, who
are not affected by the court order.

**********************

DCF