It's being called the biggest leak in whistleblower history and it's shaking things up around the globe. The massive leak of data in the Panama Papers exposes a huge system of worldwide tax evasion. And that's causing federal regulators to focus attention on some U.S. operations that help companies incorporate or form LLCs, including the state of Delaware. And that could affect us as real estate investors.
I'm Kathy Fettke and this is Real Estate News for Investors.
On Sunday April 3rd, reporters from more than a hundred media outlets released 2.6 terabytes of information from a Panamanian law firm called Mossack Fonseca. The information includes almost 5 million emails, 3 million database files and more than 2 million PDFs.
Reporters are still pouring through the information so the scope of this data is not yet fully known, but it has essentially opened a Pandora's Box of information about how the extremely wealthy hide their assets. Of course, this is no surprise, but should make for some interesting reading over the next few months.
But what’s causing concern to the real estate investing world is the new focus on Delaware LLC’s.
As reported in Delaware Online, some critics say that Delaware's incorporation law also allow faceless corporations to legally hide assets. But Delaware Secretary of State Jeffrey Bullock is defending the state's incorporation system as the nation's "gold standard".
Delaware markets itself as a place that's business-friendly and can get a corporation up and running quickly. There are reportedly more corporations founded there, than there are residents. In fact, the paper says that Delaware gets 25 percent of its annual budget from incorporation taxes and fees.
And now with the Panama Papers opening up a gaping hole in the business of money laundering and tax evasion, President Obama is calling for reforms here in the U.S. The idea would be to prevent criminal activity, but it could also be yet another invasion of privacy.
How could this affect real estate investors with Delaware LLC's?
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