“The Role of State Government in Combating Illicit Financial Flows”
Speaker: Eryn Schornick, Senior Policy Advisor, Global Witness Anti-money-laundering Team
Widener University Delaware Law School
Ruby Vale Moot Court Room
4601 Concord Pike
Wilmington, Delaware
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Monday, March 12, 2018
6:30 p.m. – Social Gathering and Networking
7:00 p.m. – Program:
Welcome: DPA President, Mark Fowser
Opening Remarks: DelCOG President, Nick Wasileski
Speaker: Eryn Schornick plus audience Q & A
Light refreshments
FREE and open to the public
True or false? Delaware is a haven for money laundering, drug trafficking, terrorism, and investment fraud. Because of Delaware’s accommodating business codes and the secrecy around formation of Limited Liability Companies (LLCs) in Delaware, it’s all too true. In an article in the December 1, 2017, edition of The News Journal, Karl Baker reports: “Secrecy around LLCs [Limited Liability Companies] in Delaware . . . can slow law enforcement efforts to find companies that act as conduits through which allegedly tainted money flows.”
Eryn Schornick’s presentation will address the problem of hidden company owners and the real life impact of these anonymously-owned companies based on Global Witness’s investigations into corruption, including money laundering. While policy solutions are being negotiated at the federal level, the presentation will highlight “the role of state government in combating illicit financial flows.”
Ms. Schornick has led a Global Witness investigation in partnership with NBC and Reuters into large-scale global money laundering, including the proceeds of drug trafficking and dubious Russian and Eastern European investments in luxury properties. Her work has looked at how investors, business, government contractors and other major stakeholders are involved in or are exposed to financial and reputational risk in cases of corruption, fraud, and theft facilitated by anonymous shell companies. She is a NY licensed attorney with a focus on international humanitarian law and international human rights law.
‘World’s top online brothel’ is Delaware company in ‘good standing.’ This headline in the February 9, 2018, edition of The News Journal leads into an article by Margie Fishman that states: “Backpage.com, … involved in nearly three-quarters of the 10,000 child-trafficking reports received annually by the National Center for Missing and Exploited Children, has been sued repeatedly by state prosecutors, sex trafficking survivors and victims’ advocacy groups, [but] is currently meeting all requirements for a business entity outlined in Delaware law, according to Secretary of State Jeff Bullock and Attorney General Matt Denn.” Bullock said, “We don’t have the legal authority” to dissolve the company.
Mark Hays, Anti-Money Laundering Campaign Leader at Global Witness says in reference to Fishman’s article, “Extensive details are given about how the owners of Backpage used shell entities in Delaware and overseas to nominally sell their ownership stake in the company, while still retaining control by other means – thus distancing themselves from further legal accountability.”
DelCOG has been active in raising awareness and sponsoring state legislation to reform Delaware LLCs. John Flaherty, DelCOG board member, says, “We have a history of ignoring legitimate law enforcement investigations; that does not bode well for the reputation of Delaware, especially because our economy is dependent on incorporation fees and business taxes that make up a significant part of the state bud-get. But we are a leader in the incorporation of LLCs and must take responsibility for fixing the system.”
“We are aware of the role that Delaware legal entities play in facilitating money laundering and sex trafficking, including the Backpage case,” Hays adds. “Global Witness works closely in coalition with a number of anti-trafficking groups that have documented the use of shell entities in trafficking networks in some detail. Delaware remains somewhat oppositional in this space, but there are shifts afoot at the federal level that may signal a sea change in the diverse, bipartisan support for this measure, which could in turn shape’s Delaware’s position.”
The audience will be able to comment and to ask questions during the Q&A following the presentation.
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4601 Concord Pike, Wilmington, Delaware
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Enter lower level lobby from the parking lot (see top of screen)
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