Yet who makes these fictitious entities possible? To conduct business, shell companies like Drex need a registered agent, sometimes an attorney, who files the required incorporation papers and whose office usually serves as the shell's address. This process creates a layer between the shell and its owner, especially if the dummy company is filed in a secrecy haven where ownership information is guarded behind an impenetrable wall of laws and regulations. In Makhlouf's case—and, I discovered, in the case of various other crooked businessmen and international gangsters—the organization that helped incorporate his shell company and shield it from international scrutiny was a law firm called Mossack Fonseca, which had served as Drex's registered agent from July 4, 2000, to late 2011.Founded in Panama in 1977 by German-born Jurgen Mossack and a Panamanian man named Ramón Fonseca, a vice president of the country's current ruling party, it later added a third director, Swiss lawyer Christoph Zollinger. Since the 70s the law firm has expanded operations and now works with affiliated offices in 44 countries, including the Bahamas, Cyprus, Hong Kong, Switzerland, Brazil, Jersey, Luxembourg, the British Virgin Islands, and—perhaps most troubling—the US, specifically the states of Wyoming, Florida, and Nevada.Across the globe, there are vast numbers of competing firms, and many of them register shells that are every bit as shady as Drex.
Today, Panama's financial laws remain extraordinarily lax. Foreign firms can bring unlimited amounts of money into the country without paying taxes, and an International Monetary Fund report earlier this year said that of 40 recommended steps countries should take to combat money laundering and terrorism financing, Panama had fully implemented only one. In September, the New York Times reported that cronies of Russian president Vladimir Putin had funneled money offshore though shell structures in Panama. "When it comes to money laundering, we offer full service: rinse, wash, and dry," said Miguel Antonio Bernal, a prominent local lawyer and political analyst. "You can go to any law firm in the city, from the smallest to the biggest, and open up a shell company with no questions asked.""You can go to any law firm in the city, from the smallest to the biggest, and open up a shell company with no questions asked."
Back in the Diamond Ballroom, Ramses Owens took to the podium. Immaculately dressed and groomed with hair that was perfectly trimmed and parted, he embodied the banality of modern financial evil. Owens, who was billed in the conference program as a master of "tax planning," joked with the audience that he preferred to describe his work for clients as "asset optimization."When he worked at Mossack Fonseca, Owens drew on his expertise about the competitive advantages of incorporating companies on the South Pacific island of Niue. In 1996 the firm won exclusive rights to set up shell firms on the island, and within four years, 6,000 shell firms were registered there, some reportedly controlled by Eastern European crime syndicates and international drug cartels, according to international investigations and news accounts. The findings led to the imposition of international sanctions in 2001 that forced the island to shut down its corporate-registration business five years later. Mossack Fonseca turned lemons into lemonade for its clients by moving their accounts out of Niue and into other secrecy havens, including Samoa and, as revealed in court records that Mossack Fonseca was ordered to turn over, Nevada. (There is no proof that the firms they moved were engaged in criminal activity, though the identities of the owners of those companies remain unknown.)Americans are believed to hold more than $1 trillion secreted in offshore havens, with annual losses to the IRS alone coming to some $100 billion.
In 2001, the Nevada legislature considered a bill that would encourage companies to incorporate in the state by shielding them from disclosure and liability laws. "We are holding up a sign that says, 'Sleaze balls and rip-off artists welcome here,'" then state senator Dina Titus said during debate on the bill, whose supporters argued that it would gin up badly needed revenues.Titus, who now serves in the US House of Representatives, rather bizarrely proceeded to vote "Yes" on the bill, and her prophecy duly unfolded. Within a few years Nevada had become the headquarters for a variety of Ponzi schemers, corporate crooks, pump-and-dump penny-stock promoters, internet swindlers, and tax evaders. Among them were Donald McGhan, who in 2009 received a ten-year sentence for bilking investors of almost $100 million through a scam real estate venture called Southwest Exchange, and defense contractor Mitchell Wade, who used a Nevada-registered shell to funnel a bribe to then congressman Randy Cunningham. (The pair were doomed during a lunch when Cunningham diagrammed on his own congressional stationery a fatal list of bribes he'd received from Wade and the corresponding federal contracts he'd steered his way in exchange.)The secretary of state's website offers a host of reasons for companies to incorporate in Nevada, trumpeting the lack of corporate income tax and the near impossibility of piercing the "corporate veil." Those sorts of rules have helped draw some 300,000 active companies to the state, one for every nine residents, and netted revenues of $133 million in 2012 alone. So much of that activity is potentially criminal that Deputy Secretary of State Scott Anderson says his office has taken a number of steps to clamp down on abuses, including a rule that strictly prohibits anyone from creating a Nevada corporation to commit a crime. "Granted, if someone is going to do something illegal," Anderson conceded, "they probably wouldn't disclose it."One day during my trip I interviewed Cort Christie, head of Nevada Corporate Headquarters, one of the state's most prolific shell-firm incorporators. His company is located in an oversize, sterile office building in an area called Spring Valley. Christie is a former board member of the powerful, politically connected Nevada Registered Agent Association (MF Corporate Services is a member), which "is working to ensure the state's future as America's incorporation center," according to the group's website. It warns that if Nevada's "current tax-advantaged, pro-business environment is lost, the state's reputation… will be lost as well. Once that public trust is damaged, it cannot be easily replaced."Last year, the NRAA lobbied against a proposal by the secretary of state that would have tightened up rules discouraging corporate secrecy. The bill, which Christie told me "would've curbed the appearance that people can come out here and hide out," was overwhelmingly rejected.On the morning of November 4, I cruised down S. Casino Center Boulevard through the heart of downtown Las Vegas, past the Golden Nugget and El Cortez (the original mob-owned casino) and the heaviest concentration in America of restaurants offering $9.99 prime-rib dinners. Then I got on Interstate 15 and headed south to Henderson, a suburb where gigantic malls give way to a seamless blur of stucco and adobe-style tract houses.MF Corporate Services is situated in the Parc Place Professional Complex, home to several identical, single-story buildings with red-tile roofs. There were only a few cars in the parking lot, and I didn't see anyone outside. A red-and-white metal MF Corporate Services sign, planted into a patch of rocks and cactuses, blew forlornly in the warm breeze.As far as I could tell from public records and court documents, MF Corporate Services doesn't do any drop-in work—its only purpose seems to be setting up Nevada shells for Mossack Fonseca clients—and the remote setting did nothing to dispel that impression. Amunategui runs day-to-day operations, though internal company documents I found in court records show she works closely with Mossack Fonseca employees in Panama, such as Leticia Montoya, the custodian of record for dozens of shell firms linked to Lázaro Báez.Montoya has quite a checkered career, having previously registered or served as a nominee director for at least six anonymous companies that were involved in major international corruption scandals. Among those is a Panamanian shell firm called Nicstate, whose beneficial owners turned out to include former Nicaraguan president Arnoldo "Fat Man" Alemán. He used Nicstate and other offshore vehicles to divert nearly $100 million of state funds into his own pockets. Montoya also helped set up Mirror Development Inc., which Siemens of Germany employed to funnel bribes to Argentine government officials who helped it win a $1 billion contract to produce national identity cards. This was just one component of a global scheme by Siemens, which also used corporate cutouts to pay off government officials in Bangladesh, Venezuela, and Iraq, where the recipients included Saddam Hussein.I figured that my best chance to speak to Amunategui would be if I dropped in unexpectedly, so I hadn't called ahead. When I knocked on the glass door of MF Corporate Services, a man holding a clipboard, sitting in a randomly placed blue chair in the office's lobby, waved me in. A white plastic trash bag filled with shredded documents sat just inside the door, and a framed map of the world hung on a wall. There were four clocks above it, showing the time in Las Vegas, Hong Kong, Switzerland, and Panama.The man on the chair—a locksmith, it turned out—called to Amunategui when I asked to speak with her, and she emerged from a back room. Her face was splashed with freckles, and she wore her long brown hair in a bun. She frowned softly and declined to talk when I told her I was a journalist interested in MF Corporate Services' work for Báez. "Give me your name, and I'll see if our attorney can talk to you," she said while shaking a finger in the negative."The attorney for Mossack Fonseca?" I asked."No, my company's attorney," she replied, referring to MF Corporate Services. "They're separate."I stood there for a moment beneath the bright glow of the ceiling lights, desperately trying to figure out a way to keep the conversation going. There was so much I still wanted to know, and Amunategui was the closest I'd come to being able to speak directly with someone actually affiliated with Mossack Fonseca.I wanted to ask her about specific people who'd been linked to Mossack Fonseca–incorporated shell firms by the US government, court records, international investigators, and my year of research: Billy Rautenbach, an alleged bagman for Robert Mugabe, the longtime ruler of Zimbabwe; Yulia Tymoshenko, a former Ukrainian prime minister and oligarch nicknamed the "gas princess"; Beny Steinmetz, an Israeli billionaire who'd reportedly used a Mossack Fonseca–incorporated shell firm in the British Virgin Islands to pay a bribe to a wife of the homicidal dictator of Guinea, where Steinmetz was seeking (and subsequently got) a huge mining concession. I even wanted to ask her about Mossack Fonseca's feel-good Facebook page and Twitter feed, which feature pictures of smiling recipients of the firm's charitable contributions and platitudes from the likes of Thomas Edison and Dr. Seuss ("Today you are you! That is truer than true!").But Amunategui wouldn't say a word after taking down my contact information. She promised she'd pass it on to her lawyer. She didn't even bother to escort me out the door but ducked into her personal office, sat at a desk sprinkled with a few folders and FedEx packages, and picked up the phone. I could hear her talking from the hallway, and though I couldn't make out what she was saying, she was clearly speaking in an agitated manner, presumably with the company's aforementioned lawyer (whom I never heard from).Amunategui's refusal to answer questions was frustrating, but unsurprising. When you work with Mossack Fonseca there are a lot of dirty secrets to keep, so being tight-lipped is perhaps the most essential part of doing your job.Ken Silverstein is a reporter for First Look MediaNevada had become the headquarters for a variety of Ponzi schemers, corporate crooks, pump-and-dump penny-stock promoters, internet swindlers, and tax evaders.