Accountant who worked with law firm in Panama Papers scandal faces ID theft, as well as money laundering charges

By Christine Duhaime | February 4th, 2020

Accountant Richard Gaffey, who was charged with money laundering offences, among others, in connection with the Panama Papers scandal must face charges of identity theft at his trial in connection with working with the law firm Mossack Fonseca, a judge ruled last week in New York.

Gaffey had applied to have the ID theft charges dismissed.

The case is interesting because the US government is pursuing, in part, the issue of beneficial ownership in the case. They allege that the accountant helped clients of the Mossack Fonseca law firm, and of his firm, use shell companies owned by sham foundations in offshore tax havens with lax anti-money laundering compliance to tax evade. In those corporate documents to set up the shells and foundations, Gaffey allegedly listed an elderly woman related to the client on the share registers, which the government alleges was fraud because she was not the shareholder.

Gaffey argued that he had not stolen identity, merely used it for corporate structuring purposes, and emailed it out and such.

Usually in tax structuring and tax planning files, it is accountants who set up shell and other companies, not lawyers. Conversely, in M&A, it is lawyers and not accountants who set up shell and other companies for financings. The difference is that using an accounting or advisory firm means that, for the client, no part of the accountant’s work is privileged or protected. It also means non-lawyers are often opining on complex tax law, and the advice is uninsured. People who want to be tax structured are always advised of this and opt to use accountants anyway.

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