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EB-5: First of Four Steps to Certain Economic Devastation for Wealthy Chinese

Well, 2015 was another banner year for the US EB-5 Visa Program. The quota was filled in record time with approximately 90% of the applicants being wealthy Mainland Chinese , aka ‘Golden Geese’. In the last week, there have been high profile articles in the NYTimes and Slate, criticizing the EB-5 program. Both of these articles (and most of the hundreds of comments they attracted) took the position that EB-5 was not good for the US. However, neither of these articles, or any of the dozens of prior ones I could find on the internet, ask the question, “Is the EB-5 program good for the Chinese Golden Geese purchasers?

There is little doubt that the acquisition of a second passport and home is a prudent life strategy for Chinese Golden Geese. I remember one of my first clients telling me that as part of a merchant family in a Chinese port city, previous generations had experienced various dangers from Emperors, British, Taiping, Nationalists, Japanese, Communists and ‘New Capitalist-Communists’.

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The lesson learned was “No matter how good things are, always keep a fast junk in the harbour, fitted out with gold bars, a second set of papers, and a prearranged berth in a safe harbour. Unfortunately it is still ‘interesting times’ in China and this wisdom still rings true. However, the junk has been replaced by the airplane and the gold bars by a Gold Visa Card. The question still remains, which passport and which safe harbour?

The Chinese have long had an idealistic view of immigration to ’Gum Shan’… the ‘Golden Mountain’… the United States.  Given the almost mythical status of the US and the various drivers of Chinese emigration, it is natural that the US is often cited as one of the primary target destinations and passports.

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EB-5 promoters are continuing to sell this idealistic view of the US to thousands of Chinese Golden Geese at large trade events such as “Invest in America”. One has to remember that the sales people at these events are only paid if they sell a unit to a buyer. Therefore there is no incentive for them to investigate whether the product they are selling has any negative consequences for the buyer. In fact, even if they are aware of such downsides, they have a significant incentive NOT to tell the buyer, as they would lose their commission on the sale.

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What is the ‘Elephant in the Room’ that the sales people are not discussing. First worldwide US taxation and then the Americans advising the Chinese government of the individual’s worldwide assets!

How could this be???

Let me walk you through the preordained steps to financial devastation.

Step 1: Acquire US resident Alien Status through the EB-5 program: Never mentioned in the fancy presentations or glossy brochures is the FACT that the MOMENT that the purchaser obtains resident alien status they become as much of a US taxpayer as a native born American. This full US tax liability on a WORLDWIDE basis is applied whether the purchaser plans to move to the US or remains abroad and is simply buying this as a conduit for their children to live in the US. There are some EB-5 purchasers who later become aware of their US tax liability but mistakenly think they can dodge paying because their assets are in China or otherwise outside the US. I have even had one gentleman tell me that since Chinese names are similar they will never be able to pick him out of the crowd. He was a bit shaken when I pointed out that the US would obviously clearly identified him before they ever gave him an EB-5 visa. These Chinese businesspeople are not used to dealing with an effective, efficient and all seeing tax authority like the IRS and are often still in denial about the issue.

This moment in time reminds me of the late 1990’s when the Qualified Intermediary Regime (“QI”) first came into being.  I noted at the time, that this was going to uncover all of the non-reporting overseas Americans. In addition, it was an efficient and effective mechanism for the US to actually collect the tax from these wayward taxpayers. The few journalists that I spoke with ignored the story “because no one else was reporting on it” or “Swiss banking secrecy will never go away”. After the QI regime came into effect, it started a series of events triggered by the UBS tax evasion scandal  where UBS tried to hide US clients from the QI reporting requirements. This episode directly resulted in the introduction of FATCA which is QI on steroids. Then the US forced countries around the world to force their local institutions to implement FATCA.

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Step 2: IRS globally gathers information from every financial institution about the Chinese Golden Geese WORLDWIDE assets and income and assesses US taxes. If the Chinese Golden Geese do not immediately pay their US tax bill, then the US can immediately move to place a tax lien on all assets in the US and all financial assets held internationally by financial institutions through the QI agreements. They can also use mutual collection clauses in their tax treaties to have other taxing agencies seize assets held outside the US. The US is well aware that with the EB-5 program they are getting new Golden Geese to pluck and you will see a major SUCCESSFUL effort to find and collect from these people using FATCA, whistleblowers, life style audits etc. Those Golden Geese who were foolish enough to try and underreport on their US tax returns will see enormous financial and possible criminal penalties.

Step 3: IRS shares all this financial information on worldwide assets and income with China: China signed an agreement that not only has Chinese banks turning over information on American resident aliens and citizens BUT also obligates the US to give information to China about Chinese taxpayers.

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Step 4: China uses this information to criminally charge Chinese Golden Geese with tax evasion and other possible charges. While seizing Chinese assets, the government uses its agreement with the US to collect on assets held outside of China.

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With these four clear steps in mind, now imagine all the Chinese Golden Geese who have undeclared money and are wandering naively around the Invest in America show. I wonder if a single one of them suspects that their purchase of an EB-5 visa will inevitably trigger a cascade of events which will result in the IRS and China picking the bones of the carcass which was their wealth. Sounds too dramatic? Just remember what happened to wealthy Americans who had money hidden in Switzerland who ignored the inevitable sequence of events that started with the QI regime. Only this time, the steamroller will work a great deal faster, as all the information gathering, sharing and collection apparatus are already in place.

One may question why others have not outlined this path to destruction. Simply put, unlike the EB-5 salespeople, I come from the perspective of being an immigration and tax lawyer who has spent the past 25 years helping American Golden Geese leave the US tax system. The number of US Golden Geese who are leaving is growing at an exponential rate (). In fact, the total for the last quarter of 2014 exceeded the total for the entire 8 years of the Bush administration. This skyrocketing trend will continue under whoever becomes the next President in 2016.

I am therefore shocked when I see wealthy Chinese blindly walking into the US tax liability minefield that I just lead my clients out of.

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The strategy of getting a second passport and safe harbour is a sound one, but you need proper experienced legal advice not a self interested sales pitch! The loss of the $500,000 EB-5 investment is the least of a Chinese Golden Geese worries.

rats

Another Record number of US expatriations…is this the beginning of an avalanche of Wealthy Americans leaving the US tax system?

Well the latest list of Americans who have renounced their US citizenship has been published and it is another record setter. So what does this really mean and should the average American be concerned that a multitude of Wealthy Americans will soon be abandoning ship?

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The first step to understanding the whole situation is to get some definitions nailed done. In the area of renunciation, the US government has defined ‘Wealthy’ as a person who either has $2,000,000 in wealth or has paid more than an average of $157,000 in US tax over the past five years. These criteria are set out in IRS 8854. Individuals who trigger these tests are called ‘Covered Expatriates’ . It is only Covered Expatriates who trigger a capital gains deemed disposition. This capital gains event is the same that would occur upon sale or death, with the same rules, exemptions and rates applying. It is often referred to as an ‘Exit Tax’, which I find misleading as it sounds like a new different tax that is being applied against the taxpayer, which it is not.

There is a much publicized ‘List’ of ‘Tax Expatriates’. The List only sets out Covered Expatriates and not all people who renounce, relinquish or give up their long-term resident alien status. As has been widely reported the number of “Wealthy” Americans who have been expatriating has been steadily increasing for the past few years, as evidenced by ever increasing numbers on the List. Although it is widely reported that FATCA outing Non-Us Resident ‘Accidental Americans’ is the major reason for this increase, I would question that premise for the following reason. In my experience, most Wealthy Americans living outside the US (especially ultra-high net worth individuals) were already well aware of their US tax liability and were already US tax compliant.

FATCA mostly served to uncover those ‘US persons’ who were not US tax compliant either through ignorance or wilfulness. While the numbers of Accidental Americans in places like Canada are expatriating in very large numbers as evidenced by the long delays in renunciation appointments, I would strongly suspect that most of these were not Covered Expatriates. Rather they were lower or middle class Americans living abroad who suddenly found themselves under the IRS microscope and decided to renounce their American citizenship.

The total number of Americans who are renouncing is significantly larger than the number on the List. However, if we make the assumption (which given bureaucratic mishandling may be a big one) that the List contains ALL of the Wealthy Americans who renounce there is no doubt that this number has been steadily increasing. The Elephant in the Room is whether the numbers of Wealthy Americans who leave the US tax system will increase to the tipping point where tax revenues are fatally reduced?

To answer this question, one must first divide Wealthy Americans into one of two groups. Namely

Group A) Those who are happy with their US tax burden; and
Group B) Those who are unhappy with their US tax burden

 

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Then one must ‘read the tea leaves’ to see if the daily news will cause the numbers of Group A to decrease and Group B to increase. Will new ‘Tax the Rich Proposals’ spouted by 2016 POTUS hopefuls accelerate this migration? I believe that any independent observer can see that appears an increasingly number of Wealthy Americans are feeling that the US government is not spending their tax dollars well and that THEY feel that the amount of tax they contribute is increasingly ‘unfair’.

As noted economist Albert O. Hirschman so eloquently put it, members of Group B have the available responses of Exit, Voice, and Loyalty.  In short, “Leave”, “Object/Lobby for change”, or “Shut up and Suck it up”. In addition, I would add that Group B also previously had the option of trying to ‘Cheat the Game’, by engaging in tax evasion through non-disclosed offshore accounts. However, while popular in the past, the combination of Whistleblowers, the Qualified Intermediary Regime, FATCA, John Doe Summons, and Tax Exchange Information Treaties have quickly eliminated this as a viable option to pursue.

As the explosion of political donations by Wealthy Americans to candidates and SuperPacs indicates, Voice is a familiar and therefore popular response. However, Group B members are discovering that, at best, this is an indirect method of dealing with their unhappiness with their current US tax burden. To be successful, their political donation must a) result in the election of a specific politician or group of politicians ; AND b) that politician must bring forward legislation to reduce their current US tax burden; AND c) that bill must pass three readings of an extremely partisan House and Senate; AND d) that bill must be signed into law by POTUS; AND e) future politicians must not undo that reduction of their current US tax liability. While a familiar option for Group B, its real effectiveness as a strategy is more often being drawn into question.

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The option of ‘Leaving’ (i.e. renouncing) means that a member of Group B must be motivated enough to take one time action to a) get another citizenship; b) overcome their current ‘life inertia’ to organize their personal and business lives elsewhere as they cannot remain physically in the US for a significant enough time to trigger the ‘substantial presence test’;  and c) must be psychologically prepared to give up their US citizenship. Increasingly as discontent with the useful of the Loyalty, Cheat, and Voice options grows, the tendency towards Leaving will continue to accelerate.

This is reflected in the increasing numbers on the List.

 

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It is worth pointing out that there is not perfect market knowledge of the Leave option. Ignorance of the option or exaggeration of the benefits of the US or the risks abroad are significant. Many native born Americans do not realize that a) there are many first world major developed countries (e.g. Canada, Australia, New Zealand, much of Europe, Singapore, HK) where they can easily reproduce their personal and business lifestyles at a significantly lower global tax burden, through basic legal pre-immigration tax planning; b) that it is not a difficulty visiting the US in the future from 4 to 6 months depending on their tax planning; and c) that ‘dangers’ being a victim of violent crime are actually higher in the US then these destinations. I have observed that some of this ignorance is fuelled by advisors who are either themselves ignorant or who overplay the dangers and difficulties of the leave strategy because of their own prejudice that such a move is ‘unpatriotic’ or a fear that they will lose control over their major client if they move outside of their immediate control.

So whether you think that the current numbers of Wealthy Americans who are leaving their US tax burden behind is insignificant or that they are ‘the canaries in the coal mine’, the plain fact is that the numbers are increasing quarter by quarter. As Ian Angell and I point out in our book “ Flight of the Golden Geese: How the 1% matter to the 99%” whether this trickle becomes a flood is important to those left behind because the current tax revenue model depends on these 1%er Golden Geese for over 1/3rd of the total personal tax take.

 

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Kill the Non-dom Movement: Folly in Fairness Clothing?

Well now Labour has nailed its colours to the mast and boldly declared that they will eliminate the non-domiciled remittance tax system if elected.

This populist “Tax the Rich” announcement actually had them leap forward in the polls past the Tories. Some politically motivated Labour advisors suggest that the number of super wealthy Non-Doms who will leave the UK if the system is dropped is minimal. They point to their analysis that there was not a huge drop in the number of Non-Doms after the Non-Dom Levy. There are others who determined there was a significant drop. Whichever analysis you believe, you have to remember that we are discussing the impact of a levy of either 30,000 or 50,000 pounds. Getting rid of the Non-dom system means imposing worldwide taxation by the UK, which is magnitudes different in impact. As an international tax lawyer and the co-author of “Flight of the Golden Geese” with LSE Professor Emeritus Ian Angell, I have seen the impact of such short-sidedness on a daily basis for 25 years in my law practice.

To a super wealthy Non-Dom, the non-com levy was comparable to their annual legal and accounting bill for compliance. Hardly enough of a hit to cause one to sell up and disrupt one’s life. However, with the abolition of the Non-Dom system the UK taxing on a world-wide basis is a very large fiscal hit. Suddenly the cost of the estate agent fee and limiting your time in the UK to less than 90 days seems quite worthwhile. The problem for your average Brit is that the Non-dom consumer spending in places like London is the petro to the UK economy. With the departure of even a relatively small number of current Non-Dom’s, it isn’t difficult to imagine the devastation in the goods and service industries which depend on this clientele for the bulk of their business.

So the British voter is now in the same position as the French voter was in 2012. Should they vote for the candidate who is selling a populist “Tax the Rich” agenda or not? How did that turn out? Quite frankly, like the French who saw the wealthy flee in droves after Hollande was elected, the British people will only know after they cast their ballot whether they just helped the UK commit economic suicide.

keep calm

Disaster Waiting to Happen Room.

Roger “BitCoin Jesus” Ver is Outraged…Outraged I tell you!

I guess that Roger Ver is not aware of the Streisand Effect!

For those who are not familiar with his story, a bit of background. After acquiring citizenship in St. Kitts and Nevis (“SKN”), Mr. Ver decided to expatriate from the US. He later wanted to enter the US for a conference. Like all SKN nationals, Mr. Ver required a US B1/B2 visa to visit the US.

After getting rejected for a US visa for entirely predictable reasons including a past serious criminal record, Mr. Ver took to the media to tell a tale of being “wrongfully punished” by “childish officials” who did not “know or follow their own laws”.  This included a series of interviews that were posted on-line.

This media blitz brought him to my attention for the first time. His story did not jive with the experiences of the well over one hundred individuals who I have help expatriate from the US in the past 25 years.  This prompted me to look a little deeper into the situation and post a blog.   I later sent tweets to Mr. Ver and to the various media outlets which had interviewed him linking the blog.

On Sunday evening, almost 2 weeks after initially posting my blog, I received the following direct messages on Twitter from Mr. Ver:

“Direct Messages › with

Roger Ver  > You should be ashamed by the amount of lies and FUD you are spreading about me. You have no idea what you are talking about and didn’t bother to fact check anything or you would know that you are mistaken.

Roger Ver  > Go learn to use google or spread your lies about someone else.”

For those of you who are not as hip as Mr. Ver (my hand is up) “FUD” stands for ‘fear, uncertainty and doubt’.  After sending the messages, Mr. Ver then immediately prevented me from privately replying directly to him by unfollowing me.  As a result, Mr Ver left me with only a very public blog to respond, which would result in drawing even more unwanted attention to himself.

So let’s examine my original blog to see if Mr. Ver’s criticisms are warranted. There are two possible types of errors/misinformation/lies that I could have made; namely ‘mistakes of fact’ or ‘mistakes of law’.

Let’s break it down by element;

1st Assertion of Fact: “Mr. Ver was convicted of a serious crime in the US and served 10 months in jail. While, he brushes this off as “persecution for his libertarian views”, a read of the publicly available court proceedings seems to make this a bit of a stretch. What is not at issue is the conviction and the sentence.”

I present as indisputable evidence supporting this assertion of fact, the publicly available transcript of Mr. Ver’s Guilty Plea and Mr. Ver’s Sentencing.

2nd Assertion of Fact:  “Next according to credit information, since his release, it would appear that Mr. Ver has been living in California and Hawaii rather than Japan as he claimed.”

I do have a complete credit history including places of residence and applications for utilities, which anyone who runs a basic credit check can get. It does list various residences in Santa Clara, San Jose and Honolulu from 1997 through to just before Mr. Ver’s expatriation.

However to spare Mr. Ver from any possible easy identity theft issues, I will not post them here. Anyone who wanted to do their own credit check can see the same information. In his interviews, Mr. Ver continually claimed to have left the US at the conclusion of his incarceration in 2003 and moved to Japan. As I said in my blog;

“While he may be doing a bit of “resume expansion” for “street cred” regarding claiming living in Japan, its not criminal. However, it does undermine any claim he might have that he “tried to submit a bunch of proof he lived in Japan” to American officials who refused to accept it. It would also explain why he applied for a B1/B2 visa at the American visa office in Barbados (responsible for St. Kitts and Nevis) rather than Tokyo (which deals with legal residents of Japan)”

1st and 2nd Assertion of Law:

“Mr. Ver needed to prove to US officials that he had sufficient residential connections with a country within that office’s jurisdiction. This was to overcome INA s. 214(b) that he intended to immigrate to the US.”

“Even if Mr. Ver had been able to show sufficient ties to St. Kitts to overcome the immigrant intent, then the B1/B2 visa could still have been denied under INA 101(h) as he had a prior serious conviction.”

This interpretation of US immigration law was verified by a review of the statue; the Foreign Affairs Manual; and a telephone discussion with a long-time US colleague who is on the board of the American Immigration Lawyers Association. Mr. Ver could have identified these two points of law himself, if he followed his own advice and availed himself of Google.

Since the original blog cited all the support for my further statements of law and fact, I won’t bore you to tears with repeating it again.

In conclusion, it appears that Mr. Ver made his initial mistake in not seeking proper legal advice about his ability to visit the US post renunciation. He may have been fine with that situation, and proceeded to renounce anyway. However, he may have decided NOT to take that step to preserve his ability to re-enter the US.

His second mistake was in applying for a US B1/B2 visa without properly preparing himself to overcome the intending immigrant and criminality hurdles.

Mr. Ver’s third mistake was going public with his “somewhat questionable” story and drawing attention to his serious criminal record. Border officials at every country which he will hope to visit in the future, could very well prevent him from entering because of his prior incarceration.

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His fourth mistake was drawing attention in SKN to the fact that he had been granted citizenship despite the fact of his serious criminal conviction. While the new government has decided to continue the economic citizenship program, they are also firmly committed to reviewing any prior grants of citizenship to questionable applicants like Mr. Ver. His final mistake was to draw even more attention to the situation by calling me a liar and incompetent.

I will not try to claim that I am George Washington and never told a lie in my life or was wrong in some professional opinion over the last quarter century. However in this area, the facts were easily verified and the law was very straightforward and well known to me and the expert I consulted.

In short, Mr. Ver seems to be compounding poorly exercised initial judgement by just digging himself deeper and deeper. Mr. Ver here is some free advice from a qualified lawyer who has two and a half decades of experience in this area…”Well you are certainly not ‘ahead’, I would humbly suggest that you quit before you get even further ‘behind’.

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One final remark for those supporters who think I am a ‘government thug’ who is just out to undermine the credibility of BitCoin, I would like to point out a few things that make this accusation silly. First, Mr. Ver’s failure to secure a US visa had absolutely nothing to do with Bitcoin. With his past and lack of preparedness, Mr. Ver would have had the exact same visa outcome if he was the ‘My Little Pony Jesus’ rather than the ‘BitCoin Jesus’.

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Second, I just finished publishing a book called “Flight of the Golden Geese” which is all about individuals who are freeing themselves from their current governments.  This hardly burnishes my credentials as a government thug.

Third, my co-author, Ian Angell is a London School of Economics Professor Emeritus who is considered by many in the Bitcoin community to be the Godfather of the concept of Cryptocurrency, having espoused the concept almost 2 decades ago. In fact, Mr. Ver’s own Twitter profile features a picture of Professor Angell speaking at a recent conference in London they both attended.

Bold Boris

Boris Johnson and the IRS: A Lion in Winter becomes a Lamb in Spring

Brits are heavily divided on their opinions regarding Mayor of London Boris Johnson but all can agree he is both interesting and colourful. In the last three months, “BoJo” has also captured the attention of the media on the other side of the Atlantic over his row with the US and its ‘citizenship-based taxation’. Mr. Johnson’s IRS troubles stem from the fact that he was born in the US to British parents, before returning to the UK as a young boy. As a result, he is considered a “US person” for tax purposes, with all of the liabilities that result therefrom.

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In November, he boldly announced that a bill he had received from the IRS was “outrageous” and that he “would not pay”. His resolute defiance outraged some American observers, who felt that he was not paying his “fair share” . It also served to ignite a large constituency of overseas “Accidental Americans” who thought that they had found a knight in shining armour who would slay the FATCA beast.

However a scant 2 months later, Boris Johnson meekly announced that he had paid his US tax bill and was going to renounce his US citizenship. Why did the Lion in Winter turn into the Lamb of Spring?

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I would STRONGLY suspect that it had nothing to do with concerns of possible arrest for tax evasion on his upcoming book tour in the US. Rather it may be the discovery that he was quite mistaken in thinking that the IRS need him to pick up his chequebook in order to collect. The IRS would just have gone to his bank, brokerage firm etc., all of whom are Qualified Intermediares, and had them seize BJ’s accounts to settle any outstanding bill they thought he owed. I think that BJ received a quiet late night call from his private banker informing him of this reality, which had the same sphincter tightening effect as hearing the pump action of a shotgun while playing around with the farmer’s daughter in the hayloft.

chris-brown

Chris Brown refused entry into Canada: Someone’s misjudgement just cost millions

American entertainer Chris Brown was refused entry to Canada on Tuesday evening for being criminally inadmissible. His problems stem from two very famous assault convictions in 2009  and 2014. It has also been rumoured that he had also previously been denied entry into Canada on two prior occasions for the exact same reason.

Whatever your opinion of Chris Brown as a person or his music, there is no doubt that this refusal is expensive. As a result of cancelling sold out shows in Montreal and Toronto, concert promoter LiveNation is refunding the tens of thousands of tickets purchased. Along with lost ticket and merchandising revenue, there are also enormous sunk non-recoverable expenses. These include rental of two of Canada’s largest concert venues; marketing; cost of having the crew ship, set up and break down a very elaborate stage, sound and lighting system; hotels; administrative costs etc. etc. etc. This will easily cost millions and all because one single issue was not properly dealt with upfront.

Namely, ‘Getting the talent onto the stage’.

I was interviewed by Global News Toronto yesterday on this matter.

GTNH0225BorderImmigrationChat

Given the amount of money at stake and the prior refusals, the most prudent way of proceeding would have been to seek a special permission from a Canadian visa office even prior to the scheduling of the concerts.

Although his management team did say on Twitter that they were “ready at their end”, at best this would appear to be saying that they were going to attempt to apply for this permission that day. Trying to make an application at a port of entry on the day of the concert was not particularly wise. Given Mr. Brown’s notoriety, nature of his offences and his very public continuing legal challenges, hoping to find a sympathetic ear with an official who would take the personal heat of granting this permission was pretty much doomed to failure. In this case, playing ‘Border Officer Roulette’ had the same nasty outcome as playing ‘Russian Roulette’.

russian roulette

Given the fact that he sold out two major shows, LiveNation may be willing to give it another go with Chris Brown. In a global market with international talent, this incident is a very expensive lesson that borders matter. Lets hope for their shareholder’s sake that they insist that some proper advice whenever the talent leaves their home country to do an event they are promoting.

Roger Ver, ex-U.S. citizen, millionaire, self-described libertarian and founder of passportsforbitcoin.com., holds his passport as he poses for a photograph in the Shibuya district of Tokyo, Japan. Photographer: Tomohiro Ohsumi/Bloomberg

Roger “Bit-Coin Jesus” Ver: Martyr or Poster Child for not doing your own US Renunciation?

To tell you the truth, I never heard of Roger Ver until a few weeks ago, when the Twitterverse blew up regarding his rejection for a US visa. This rejection was completely contrary to the experience I have had with my US expatriation clients going back 25 years. In all of that time, I had never had a client refused a US visa (if they needed one) or been so much as pulled over at a US port of entry, let alone denied entry. Had the US completely changed its long standing attitude towards expatriates overnight, or was there more to the story than what met the eye?

I started with hearing what Mr. Ver had to say. It was a story of persecution and government ineptness, but was it credible? A quick public search on the internet, and credit records was revealing. First, Mr. Ver was convicted of a serious crime in the US and served 10 months in jail. While, he brushes this off as “ persecution for his libertarian views”, a read of the publicly available court proceedings seems to make this a bit of a stretch. What is not at issue is the conviction and the sentence. Next according to credit information, since his release, it would appear that Mr. Ver has been living in California and Hawaii rather than Japan as he claimed. That would make sense, as the Japanese are very leery of letting even visitors in with criminal records, let alone issuing some type of residence status. While he apparently has been at least interviewed by journalists in Japan, it would be interesting to find out if he ever disclosed to the Japanese his criminal past. While he may be doing a bit of “resume expansion” for “street cred” regarding claiming living in Japan, its not criminal. However, it does undermine any claim he might have that he “tried to submit a bunch of proof he lived in Japan” to American officials who refused to accept it. It would also explain why he applied for a B1/B2 visa at the American visa office in Barbados (responsible for St. Kitts and Nevis) rather than Tokyo (which deals with legal residents of Japan).

With regards to the failed US B1/B2 application, Mr. Ver needed to prove to US officials that he had sufficient residential connections with a country within that office’s jurisdiction. This was to overcome INA s. 214(b) that he intended to immigrate to the US. Since he chose to apply at the US Embassy in Barbados, he would be required to satisfy US officials of his ties to a country within their jurisdiction such as the one of his adopted citizenship, St. Kitts and Nevis. Mr. Ver may have absolutely no ties to St. Kitts aside from citizenship, if he acquired his citizenship under the Sugar Fund donation path rather than by purchasing an eligible residence. He certainly didn’t mention a home in St. Kitts during his various radio interviews. Even if Mr. Ver had been able to show sufficient ties to St. Kitts to overcome the immigrant intent, then the B1/B2 visa could still have been denied under INA 101(h) as he had a prior serious conviction. It should be noted that those pundits who cite the Reed Amendment, barring US “tax” expatriates, are way off-base. The regulations required to enable this provision have never been passed. Therefore, it cannot not be used to bar an American expatriate from entering the US. In addition, Mr. Ver had no special RIGHT to a B1/B2 visa just because he was previously a US citizen or was and is still paying taxes to the US treasury. In short, with proper legal advice, he should have known that he would not have met the non-immigrant standard or overcome the criminal inadmissibility bar prior to renouncing his US citizenship.

It should also be noted that Mr. Ver has not yet appeared upon the list of US renunciations, despite having expatriated almost a year ago. It is noteworthy that this list only contains “Covered Expatriates” , who are individuals who renounce either their US citizenship or long-term resident alien status AND meet certain net worth or tax paid thresholds. This may be because he will be on a future list or like his claim to live in Japan, his claimed net worth or US tax bill is a bit inflated.

Now onto the question of his acquisition of St. Kitts citizenship. St. Kitts recently had their visa-free travel to Canada revoked as a result of an incident involving questionable judgement on the government’s part. This followed on the heels of a prior US Treasury warning about the St. Kitts citizenship program . As a result, St. Kitts decided to cancel all existing passports and make all citizens re-apply. It is worth noting that under international law, a passport is the property of the issuing government, not the actual citizen. This fact is printed on the inside cover of most country’s passports and is undisputed. As Mr. Ver renounced his US citizenship in early 2014, we can therefore reasonably surmise that his St. Kitts citizenship was issued prior to this date. Therefore, Mr. Ver will be in the unenviable position of asking the St. Kitts government to issue him a new passport. If they decide not to do this (or revoke one that was issued within the past few weeks), then despite the fact that he is a citizen, Mr. Ver may find himself without a passport that would allow him to travel. If he is in St. Kitts, then he would be stuck there. If he is abroad, then he will be in that country without a valid passport and therefore probably find himself deportable to St. Kitts.

The next question is whether St. Kitts could take steps to strip him of their citizenship because of his criminal past? Depending on the facts in the application, St. Kitts could seek to claim that there was a material misrepresentation on the citizenship application. The remedy they would seek would be to strip Mr. Ver of his citizenship. However, there might be an argument that since he has already renounced his US citizenship, such an act would render Mr. Ver stateless. There is a UN Agreement on Statelessness that was signed by the UK but not by the US. St. Kitts obtained independence from the UK in 1983, after the UK signed onto this Agreement. There could be an argument that they are also signatories and therefore are treaty blocked from revoking Mr. Ver’s citizenship as it would render him stateless as a result. This looks like years of litigation ahead.

In summary, I will leave it up to the court of public opinion as to whether Mr. Ver is a martyr. What is pretty clear is that if he got any advice through this whole process, it was not very good. Before spending any time or effort in seeking a second citizenship for the purposes of expatriation, Mr. Ver should have sought out proper US immigration advice as to if and how he could overcome a criminal inadmissibility bar. If this first hurdle could be cleared, he should have tried to acquire citizenship in a country which does not require him to obtain a US visa. If not possible, then he should have sought advice as to whether St. Kitts was the best option for him. If it did turn out to be the best choice he should have made sure that he not only acquired St. Kitts citizenship, but also supplied himself with a multitude of “indicia of residence” to be able to satisfy officials that he was not an “intending immigrant”. Since he apparently did none of this, my only advice to Mr. Ver at this point is to go house hunting in St. Kitts. He should also make sure that he has good internet service as it looks like he will be attending most future Bitcoin conventions by Skype either because he may not be issued a new passport or he may even have his St. Kitts citizenship revoked.

He may be the “Bit-coin Jesus” but he sure proved that “Penny-wise is Pound Foolish” when it comes to seeking proper legal advice on something as serious as a US expatriation.