A major campaign “bundler” for President Barack Obama’s re-election campaign has helped convicted and alleged financial criminals navigate offshore tax loopholes in the U.S. Virgin Islands, The Daily Caller has learned.
Marjorie Rawls Roberts, who has pledged to raise between $100,000 and $200,000 for President Obama’s 2012 campaign, has faced heat in recent months after news reports confirmed that she helps her wealthy clients navigate the kinds of offshore tax benefits the president has publicly criticized. And now The Daily Caller has learned exactly who some of those wealthy clients are.
Roberts helped recently convicted $7 billion ponzi schemer R. Allen Stanford with his application for tax benefits from the U.S. Virgin Islands Economic Development Corporation. Those benefits permit recipients to avoid paying some — or all — of their taxes, as long as they live in the U.S. territory for the majority of a given tax year and fulfill certain financial and development obligations to the local economy.
The Virgin Islands Daily News reported that Stanford applied for those tax breaks in 2006, and that the territory’s current governor, Democrat John de Jongh, approved the application after taking office in 2007.
Stanford, who was convicted of defrauding 30,000 of his investors with bogus investments in his Antiguan bank while living a lavish lifestyle from the spoils of his scheme, owes hundreds of millions in back taxes. In early 2009, the Associated Press reported that the federal government placed four tax liens against Stanford, totaling about $212 million, between 2007 and 2008.
Attorney General Eric Holder praised Stanford’s conviction during a March 2012 Senate Appropriations Subcommittee hearing. “Just this week, we secured a conviction against the former board of directors’ chairman for an international bank [Stanford Financial Group], orchestrating a $7 billion investment fraud scheme,” Holder said in his testimony.
Even so, the Obama re-election campaign continues to accept bundled donations from the tax attorney who helped Stanford navigate the Virgin Islands’ tax loopholes.
Campaign spokesman Ben LaBolt did not answer The Daily Caller’s requests for comment on the matter.
Roberts also did not respond to multiple requests for comment.
In addition to helping wealthy clients navigate tax loopholes in the Virgin Islands, Roberts has been a major financial supporter of New York Democratic Rep. Charlie Rangel. Rangel has fought to ease IRS tax pressures on Americans in the U.S. Virgin Islands.
In November 2007, The New York Times reported that several of Roberts’ clients would financially benefit from a Rangel proposal — since failed — that would have limited the U.S. tax agency’s authority to investigate and audit potential tax criminals enrolled in the U.S. Virgin Islands EDC program.
TheDC has confirmed that Marjorie Rawls Roberts is currently helping a company owned by the National Rural Utilities Cooperative Finance Corporation (CFC) through its ongoing application for those same offshore tax benefits. TheDC has previously reported that CFC is at the center of a major financial crime scandal involving Gov. De Jongh.
Roberts is helping Innovative Communications Corporation (ICC), a company that the CFC-owned Rural Telephone Finance Corporation (RTFC) acquired in 2010.
A U.S. Virgin Islands Economic Development Corporation spokeswoman confirmed to The Daily Caller that ICC is currently applying for tax benefits, and that its board has not yet decided whether to approve that application. The spokeswoman also declined to speculate on a timetable for the application’s consideration.
If the Economic Development Corporation were to green-light ICC’s application, it would go to Gov. de Jongh for final approval.
Businessman Jeffrey Prosser, who ran ICC until its 2007 bankruptcy, told TheDC that Byron Smyl of the forensic accounting firm Alvarez and Marsal launched the application process, with Roberts’ help.
Smyl’s firm took over ICC when Prosser was forced out in October 2007, maintaining control until CFC took it over in October 2010.
“Smyl sought the representation of Marjorie Rawls Roberts … for legal advice relating to the application for new tax exemption benefits,” Prosser said.
Prosser told TheDC that former Virgin Islands Sen. Roosevelt David, a de Jongh friend whom CFC hired as a consultant after he left office, is greasing the wheels to speed up the application process.
“Mr. Smyl, through Roosevelt David, started the process of applying for new and bigger benefits: 100 percent exemption of all taxes, including income taxes,” Prosser said.
Prosser said that Roberts’ help with the “application process and legal representation continued” after RTFC took over the company from Smyl’s firm in 2010. “Through Mr. David, Governor John de Jongh is pushing the application through the Economic Development Corporation,” Prosser added.
David refused to comment when TheDC asked what duties he was performing for CFC, replying only: “I’m not in a position to have this interview, sir.” He then promptly hung up the phone.
Smyl did not return requests for comment.
De Jongh spokesman Jean Greaux said the governor’s office is “unaware” of the application ICC submitted.
Thus, it remains unclear whether de Jongh will approve CFC’s application to receive tax benefits for its ICC subsidiary, and when that might happen.
Prosser told TheDC that if the governor should approve the application, he expects ICC would save – and the government of the Virgin Islands would lose – about $3 million per year for 10 years.
TheDC has previously reported that several finance executives involved with CFC are under sealed indictment for financial crimes but have not yet been arrested.
According to a Justice Department source, the case was stalled after two DOJ prosecutors allegedly accepted cash bribes from some of those sealed indictees.