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Entries in Cayman Islands (2)

Wednesday
Aug292012

Romney Party Yacht Flies Cayman Islands Flag

ABC News(NEW YORK) -- Gov. Mitt Romney's campaign toasted its top donors Wednesday aboard a 150-foot yacht flying the flag of the Cayman Islands.

The exclusive event, hosted by a Florida developer on his yacht "Cracker Bay," was one of a dozen exclusive events meant to nurture those who have raised more than $1 million for Romney's bid.

"I think it's ironic they do this aboard a yacht that doesn't even pay its taxes," said a woman who lives aboard a much smaller boat moored at the St. Petersburg Municipal Marina.

Romney's Cayman-based investments have come under fire during the campaign.

The event, attended by no more than 50 people, along with Romney's relatives, including older brother Scott, appeared on no public calendars. ABC News obtained a schedule of the Romney campaign's "Victory Council" and waited dockside to speak with members.

"It was a really nice event. These are good supporters," said billionaire Wilbur Ross, an energy industry executive.

Spencer Zwick, one of Romney's top fundraisers, said the event was not to raise money, but simply to thank donors.

Virginia Gov. Bob McDonnell was scheduled to speak.

The Cracker Bay is owned by Gary Morse, developer of the Villages retirement community. Companies controlled by Morse gave nearly $1 million to the pro-Romney Restore Our Future superPAC. Registered in the Caymans, the Cracker Bay has an impressive art collection and can seat 30 for dinner.

Romney to date has declined to identify the names of his top "bundlers" -- those who gather checks from scores of donors on the candidate's behalf.

"He is the first nominee in 12 years to withhold these names," said Sheila Krumholz, executive director of the Center for Responsive Politics, which tracks political money on the website opensecrets.org.

"These are the most important insiders," she said. "The public needs to know who these people are because they are the ones who stand to gain the most from a Romney presidency."

Her group and others have gathered more than 20,000 signatures from people calling on Romney to name his top bundlers.

Campaign officials at the event declined to comment. "I think Gov. Romney is going to do what he has to, to follow the law," Gov. McDonnell told ABC News.

Among those attending was Mel Sembler, a former top supporter of President George W. Bush and Charlie Moncrief, an oil executive from Texas, and his wife Kit. Other guests covered up their nametags as they exited for waiting busses and SUVs to take them to their next event.

Kit Moncrief said she and her husband had pledged to raise $1 million for Romney. When asked about the fundraising, she said: "We don't like it either, but it's the system," she said.

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Copyright 2012 ABC News Radio

Wednesday
Jan182012

Romney Parks Millions in Cayman Islands

Joe Raedle/Getty Images(BOSTON) -- Although it is not apparent on his financial disclosure form, Mitt Romney has millions of dollars of his personal wealth in investment funds set up in the Cayman Islands, a notorious Caribbean tax haven.

A spokesperson for the Romney campaign says Romney follows all tax laws and he would pay the same in taxes regardless of where the funds are based.

As the race for the Republican nomination heats up, Mitt Romney is finding it increasingly difficult to maintain a shroud of secrecy around the details about his vast personal wealth, including, as ABC News has discovered, his investment in funds located offshore and his ability to pay a lower tax rate.

"His personal finances are a poster child of what's wrong with the American tax system," said Jack Blum, a Washington lawyer who is an authority on tax enforcement and offshore banking.

On Tuesday, Romney disclosed that he has been paying a far lower percentage in taxes than most Americans, around 15 percent of his annual earnings. It has been Romney's Republican rivals who have driven the tax issue onto center stage. For weeks, Romney has cited a desire for privacy as his reason for not sharing his tax returns -- a gesture of transparency that is now expected from presidential contenders.

"I can tell you we follow the tax laws," he said recently while on the campaign trail in New Hampshire. "And if there's an opportunity to save taxes, we like anybody else in this country will follow that opportunity."

But tax experts tell ABC News there are other reasons Romney may not want the public viewing his returns. As one of the wealthiest candidates to run for president in recent times, Romney has used a variety of techniques to help minimize the taxes on his estimated $250 million fortune. In addition to paying the lower tax rate on his investment income, Romney has as much as $8 million invested in at least 12 funds listed on a Cayman Islands registry. Another investment, which Romney reports as being worth between $5 million and $25 million, shows up on securities records as having been domiciled in the Caymans.

Official documents reviewed by ABC News show that Bain Capital, the private equity partnership Romney once ran, has set up some 138 secretive offshore funds in the Caymans.

Romney campaign officials and those at Bain Capital tell ABC News that the purpose of setting up those accounts in the Cayman Islands is to help attract money from foreign investors, and that the accounts provide no tax advantage to American investors like Romney. Romney, the campaign said, has paid all U.S. taxes on income derived from those investments.

"The tax consequences to the Romneys are the very same whether the fund is domiciled here or another country," a campaign official said in response to questions. "Gov. and Mrs. Romney have money invested in funds that the trustee has determined to be attractive investment opportunities, and those funds are domiciled wherever the fund sponsors happen to organize the funds."

Bain officials called the decision to locate some funds offshore routine, and a benefit only to foreign investors who do not want to be subjected to U.S. taxes.

Tax experts agree that Romney remains subject to American taxes. But they say the offshore accounts have provided him -- and Bain -- with other potential financial benefits, such as higher management fees and greater foreign interest, all at the expense of the U.S. Treasury. Rebecca J. Wilkins, a tax policy expert with Citizens for Tax Justice, said the federal government loses an estimated $100 billion a year because of tax havens.

Blum, the D.C. tax lawyer, said working through an offshore investment vehicle allows the investor to "avoid a whole series of small traps in the tax code that ordinary people would face if they paid tax on an onshore basis."

Wilkins agreed, saying the "primary advantage to setting those funds up in an offshore jurisdiction like the Cayman Islands or Bermuda is it helps the investors avoid tax."

"It helps U.S. investors avoid U.S. tax," said Wilkins, "it helps foreign investors avoid taxes in their home country, so it's not illegal or improper to set those funds up in a foreign jurisdiction, but it makes it more attractive to investors because it helps them avoid paying taxes on that income."

Bain's presence in the Cayman Islands is not something the firm advertises. The Los Angeles Times first disclosed Romney's offshore accounts in 2007, during his initial run for the presidency. ABC News found references to the firm's accounts in the Caymans in the footnotes of securities filings. When ABC News went to the office address listed for Romney's Bain funds, lawyers in the Caymans were not eager to answer questions.

Asked if he could confirm the existence of the Bain accounts, David Byrne, the chief marketing officer for the law firm Walkers, listed on documents as Bain's Caymans' representative, said he could not. "No, I can't at all," said Byrne. "Unfortunately, I can't comment at all on that."

There is now less secrecy than there was even two weeks ago surrounding Romney's tax rate. The money he made through Bain investments was taxed as capital gains at a 15 percent rate, instead of the higher tax rates borne by most Americans. Newt Gingrich told reporters Wednesday that his income was taxed at 31 percent.

The so-called "carried interest" rule has been the source of extensive debate in Washington, with opponents criticizing the allowance to tax those earnings at 15 percent a glaring loophole that benefits only the wealthiest Americans. Under the carried interest rule, income that is determined to be capital gains -- like the profit reaped by hedge fund managers -- is subject to the lower 15 percent rate.

Wilkins said Romney's arrangements reminded her of the now-famous remarks by billionaire financier Warren Buffet, who revealed in 2007 that he was paying taxes at a lower rate than his receptionist.

"Well, I think it's the issue that is sort of on the front page every day, when we look at the Occupy Wall Street movement and that people are really losing patience with the idea that a lot of multinational corporations have and a lot of wealthy people have that while they benefit from everything this country has to offer...they don't seem to be willing to pay their fair share," she said.

Romney, who left Bain in 1999, has confirmed that his earnings largely come from investments, and the tax rate he pays is consistent with that "because my last 10 years, my income comes overwhelmingly from some investments made in the past, whether ordinary income or earned annually. I got a little bit of income from my book, but I gave that all away. And then I get speaker's fees from time to time, but not very much."

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