More revelations, this story just keeps giving....
CLARENCE THOMAS BILLIONAIRE BENEFACTOR HARLAN CROW BOUGHT CITIZENSHIP IN ISLAND TAX HAVEN
Leaked documents reveal the GOP megadonor held dual citizenship in St. Kitts and Nevis as he lavished the Supreme Court justice with gifts.
Harlan Crow sits for a photograph at the Old Parkland estate offices in Dallas on Oct. 2, 2015
HARLAN CROW, the billionaire GOP donor who paid for luxury travel on his private jet and yacht for Supreme Court Justice Clarence Thomas, was a dual citizen of the U.S. and the island nation of St. Kitts and Nevis as recently as last year, according to recently unearthed documents.
In 2012, Crow and his family were
granted passports for St. Kitts and Nevis, a tax haven known for impenetrable financial secrecy, through a cash-for-citizenship scheme. Documents provided to the Daphne Caruana Galizia Foundation by a whistleblower as part of its
Passport Papers investigation and reviewed by the Project on Government Oversight, or POGO, and The Intercept suggest Crow and his brother Trammell S. Crow paid hundreds of thousands of dollars for the passports. Financial transparency experts say the island’s tax regime would make tracking Crow’s assets, including gifts to Supreme Court justices, extremely difficult.
The documents were leaked from Henley and Partners, a London-based firm known for assisting the ultra-wealthy in obtaining “
golden passports,” which allow the holders to shield assets from their home country’s tax authorities. The firm advertises itself as “the global leader in residence and citizenship by investment” and has been shown to do business with controversial clients. An Organized Crime and Corruption Reporting Project investigation using the leaked documents reported that the firm was working with a rogues’ gallery of
accused financial criminals from around the world. An
investigative journalism collaboration, also based on the leaked trove of Henley documents, reported that oligarchs, fugitives, and
sanctioned businesspeople were among the clients seeking foreign passports. The passports, granted in 2012, would expire after 10 years unless renewed. It’s unclear if the Crow family renewed them last year.
The revelation of Crow’s history as a dual citizen of a nation considered to be one of the world’s most secretive tax havens raises new questions about the lavish, undisclosed gifts to Supreme Court Justice Clarence Thomas,
first revealed by ProPublica. On Monday, Senate Finance Committee Chair Ron Wyden, D-Ore.,
sent a letter to Crow seeking evidence that Crow “complied with all relevant federal tax and ethics laws,” something his dual-citizen status is sure to complicate.
“The American public deserves a full accounting of the full extent of your largesse towards Justice Thomas, including whether these gifts complied with all relevant federal tax and ethics laws,” Wyden wrote to Crow, demanding answers to detailed questions about whether he complied with IRS gift tax rules by May 8. St. Kitts and Nevis passport holders are not subject to a gift tax.
Even among tax havens, St. Kitts and Nevis is considered high risk by regulators, once even appearing on a
Financial Stability Forum list of countries that were “non-cooperative” with global efforts to fight money laundering and financial crime. In 2018, the European Union moved the nation to a list of “
non-cooperative jurisdictions,” citing its “
harmful preferential tax regime.” A 2018 investigation in
The Guardian dubbed it “the world’s most secretive offshore haven.” Even when tens of thousands of St. Kitts and Nevis business documents appeared in the “
Paradise Papers”
leak, company ownership was still hidden because the jurisdiction keeps so little information filed.
“International business tycoons and politicians, who have looted the assets of their nations — and other high wealth individuals — have used the dubious network of offshore tax havens across the world, which includes St. Kitts and Nevis, to hide their assets and income,” said Rep. Hank Johnson, D-Ga., ranking member of the House Judiciary subcommittee overseeing courts.
Harlan Crow did not respond to questions about his citizenship arrangement.
There is no evidence that Crow’s dual citizenship is connected to any illegal activity. A review of Supreme Court cases involving dual citizenship and taxation do not show any obvious signs of influence by Crow or favorable decisions by Thomas. But the existence of the potential conflict of interest is alarming to ethics experts.
How Justice Clarence Thomas May Have Benefited
Thomas has enjoyed one of Crow’s overseas assets registered in another “tax efficient” jurisdiction. The billionaire’s 162-foot luxury yacht, the Michaela Rose, that Thomas and his family spent a nine-day trip on in Indonesia in 2019, is owned by
Rochelle Marine Limited, a company domiciled in Guernsey, a British protectorate in the Channel Islands known for minimal taxation and maximum secrecy.
“If tax avoidance and secrecy are what Harlan Crow was seeking, it might be no coincidence that concurrently and for more than two decades Justice Thomas has been concealing the full extent of his financial relationship with Harlan Crow,” said Johnson, who recently
introduced legislation in the House that would create ethics and transparency rules for Supreme Court justices. “The public interest requires that financial relationships between Supreme Court justices and people like Harlan Crow be publicly disclosed.”
According to
NPR, the value of Thomas’s undisclosed gifts could total over a million dollars, and ProPublica’s investigation valued the Indonesia trip alone at $500,000. ProPublica later revealed that in 2014 one of Crow’s companies purchased and renovated Thomas’s
mother’s home in addition to buying several lots on the street. CNN then reported that the Supreme Court justice’s mother does
not pay rent and still resides in the home. Thomas didn’t disclose the sale on his ethics forms, despite co-owning the home prior to the sale.
Thomas
has said that his failure to report gifts he accepted from Crow did not violate the law because he did not have business before the court. But in 2005, an architecture firm appealed the Supreme Court in a case alleging misuse of copyrighted designs and sought $25 million in damages from Trammell Crow Residential, a firm founded by Crow’s father and in which the Crow family was invested at the time, as
Bloomberg reported on Monday.
The court, including Thomas, who did not recuse himself, voted to deny the petition.
Crow is not just a close friend to one of the most powerful judges in the country; he is also a prolific political donor, personally giving over $10 million by ProPublica’s estimates, largely to conservative causes, and that is only in publicly disclosed donations. ProPublica notes he also donates to groups not required to disclose their donors. While current law forbids
political giving or expenditures by foreign nationals, it does not preclude dual citizens who hold a U.S. passport from doing so.
Crow’s Dual Citizenship
The financial secrecy afforded by dual citizenship could allow Crow’s accounts in third-party countries to
remain invisible to regulators in the United States.
Crow oversees several financial entities in another small Caribbean island nation also known for its tax avoidance policies. Three investment funds belonging to Crow Holdings — the real estate conglomerate on which Crow serves as chair — are located in the Cayman Islands,
according to the IRS’s foreign financial institution list. One of the entities is an offshore feeder fund, a type of foreign investment fund that
shields investors from certain domestic taxes. (A company founded by Crow’s late father, Trammell Crow,
also lists a subsidiary in the Cayman Islands.)
“Feeder funds generally refers to an offshore fund that then buys onshore funds — it’s a way for foreigners to buy U.S. investments without normal reporting requirements,” said Sarah Alexander, a partner at Constantine Cannon, whose practice focuses on international financial misconduct. “In practice, it’s also a way to shield assets, and there’s a lot of U.S. persons who shouldn’t be there.”
“A very small percentage of American citizens hold dual citizenship with another country, and a key question is why Mr. Crow acquired St. Kitts and Nevis passports for himself and his family,” said Elise Bean, former staff director and chief counsel at the Senate Permanent Subcommittee on Investigations. “U.S. passports already enable U.S. citizens to visit a lot of countries without a visa, and there’s no indication Mr. Crow or his family plan to buy a house in St. Kitts and Nevis, so what is the purpose?”
For a U.S. citizen, gaining a St. Kitts and Nevis passport would allow less restricted access to only a few countries like Russia, Iran, and Belarus, according to
data compiled by Passport Index.
Payments for Passports
To obtain golden passports in St. Kitts and Nevis, the Crow family paid into the Sugar Industry Diversification Fund, one of several options for the citizenship-by-investment program at the time, according to internal Henley and Partners documents. That program and the law firm that had the exclusive rights to sell citizenship through donation have faced questions of self-dealing. The fund, controlled in part by lawyers associated with firm, made several investments into companies connected with the chair of Henley and Partners, according to an
Organized Crime and Corruption Reporting Project investigation, and the arrangement was eventually terminated.
Documents reviewed by POGO and The Intercept show payments of approximately half a million dollars for the Crow family’s passports, a small price to pay when considering the potential savings to be had by avoiding pesky estate, inheritance, income, or wealth taxes.
The prime minister of St. Kitts and Nevis criticized the investments of the fund, telling Parliament it was as if the money, intended to help residents of the islands’ transition from the sugar trade, had been “given away.”
CONTINUED:
Leaked documents reveal the GOP megadonor held dual citizenship in St. Kitts and Nevis as Crow lavished Supreme Court Justice Clarence Thomas with gifts.
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