More on "Fraud" and Anguilla

[tcmay@got.net (Timothy C. May)]

I've been thinking about this whole "Taxbomber" issue of "fraud." (I'm
still not completely sure whether Taxbomber lost his account at Offshore
Information Services Ltd. because:

a) what he was offering actually violated Anguillan law (was there a
determination that selling camouflage passports violates a specific
statute?)

b) what he was offering constituted fraud (to whom? His customers certainly
knew what they were buying. To potential victims in the future?)

c) he brought unwelcome attention to Anguilla in general and to Offshore
Information Services Ltd. in particular. (Vince's mention that the whole
island had read the story suggests something to this.)

d) he violated some particular clause of his service agreement with
Offshore Information Services Ltd.


>From Vince's homepage (http://online.offshore.com.ai/)

"Could You Use a Virtual Presence Offshore?

       Do you have an offshore corporation and need an offshore web site?
       If your offshore corporation does business from offshore is it tax free?
       Is your country trying to censor the Internet?
       Can talking about abortion on the net get you in trouble?
       Are they censoring information about an ex-president in your country?
       Are your political views suppressed where you live?
       Is Amway the only multi-level-marketing company allowed in your country?"

Now I read from this that Vince is encouraging "multi-level-marketing
companies" to use his service. Am I wrong on this?

Another name for this, commonly used, is "pyramid scheme." Or "Ponzi
scheme." There are many summaries of MLM on the Net. Here's one, from
http://www.best.com/~vandruff/mlm1.html :

(begin quote)

"For most MLMs, the product is really a mere diversion from the real
profit-making dynamic. To anyone familiar with MLMs, the previous
discussion
(which focused so much on the fact that MLMs are "doomed by design" to
reach market saturation and thus put the people who are legitimately trying
to sell the product into a difficult situation) may seem to miss the point.
The product or service may well be good, and it might oversaturate at some
point, but let's get serious. The product is not the incentive to join an
MLM. Otherwise people might have shown an interest in selling this
particular
product or service before in the real world. The product is the excuse to
attempt to legitimate the real money-making engine. It's "the cover."

"Intuitively, we all know what is really going on with MLMs. Just don't use
the word "pyramid"!

""You see, if you can convince 10 people that everyone needs this product
or service, even though they aren't buying similar products available in
the
market, and they can convince 10 people, and so on, that's how you make the
real money. And as long as you sell to a few people along the way, it is
all legal." Maybe. . . ."

(end quote)

Now, personally, and from a libertarian free-market free-choice
perspective, I have no problem with pyramid schemes. I think of them as
examples of evolution in action, like gambling.

But I rather suspect that setting up a pyramid scheme in the towns of
Anguilla would generate reaction by the authorities. (To be sure, certain
MLM enterprises escape prosecution in the U.S., some get closed down...I
have no idea which would be acceptable to the Anguillan authorities and
which would go too far.)

Why do I mention all this stuff? Why focus on Vince's invitation for MLMs
to set up shop on his service?

This should be clear. Operating a pyramid scheme is arguably more a
clearcut case of "fraud" than selling pieces of paper to willing buyers.

The items in Vince's list are certainly more consistent (which is good)
with what we expect "data havens" to support. I just can't square the name,
"Offshore Information Services Ltd.," (which is also good), and the list I
quoted above with Vince's recent comments about wanting "clean" businesses!
It seems from his recent comments that he wants nice, simple "widget
makers" to offer nice, simple, legal-in-all-jurisdictions "tax avoiders."

When I asked if his site would accept or tolerate "Let's kill the Queen"
screeds, he replied  "Not acceptable.  This is not the market I am after.
I don't see the profit in it."

Well, as Steve Martin used to say, "Ex-c-u-u-s-e me!" Namely, this appears
to conflict directly with two of Vince's suggestions for why his site is
attractive, namely:

      "Are they censoring information about an ex-president in your country?
       Are your political views suppressed where you live?"

Suggestions that Brits ought to rise up and kill the monarchy are of course
time-honored political expressions, common in Scotland, Ireland, Wales, and
even in parts of Merry Old England herself. This has even happened in the
past.

And a certain Iranian exile, living in Paris in the 1970s, routinely called
for the killing of the Shah. I imagine Khomeini would've had his Anguilla
account revoked. "Not acceptable.  This is not the market I am after.  I
don't see the profit in it."

I'm sorry to be so harsh to Vince and his fledgling service. But we have a
duty (to the themes of our list) to call a spade a spade. A nominal data
haven which invites customers to do the things Vince describes in his home
page, but then which cuts and runs when the heat is applied....well, this
is not a good thing.

--Tim May




Boycott "Big Brother Inside" software!
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---------:---------:---------:---------:---------:---------:---------:----
Timothy C. May              | Crypto Anarchy: encryption, digital money,
tcmay@got.net  408-728-0152 | anonymous networks, digital pseudonyms, zero
W.A.S.T.E.: Corralitos, CA  | knowledge, reputations, information markets,
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