Monday, December 23, 2013
The tiny Cook Islands in the middle of the Pacific would seem to be little more than lovely coral atolls; however, the Cooks have become a global pioneer in offshore asset-protection trusts.
International regulators have been cracking down on tax haven countries like the Cayman Islands and Switzerland, but have paid scant attention to the Cooks. The long arm of U.S. law does not reach this paradise, which has allowed hundreds of wealthy people to keep their assets out of the hands of creditors, former spouses, disgruntled business partners, and angry patients.
Besides legal protections, the Cooks provide anonymity. The value of the assets can’t be disclosed, and it is illegal in the Cooks to identify the owner of the trust. Because of this, these trusts have quite a following among those who fear they could be sued, such as doctors facing malpractice suits and businessmen avoiding creditors. Based on a trove of documents recently released, wealthy people stashing their money in the Cooks include R. Allen Stanford, the mastermind behind a $7 billion Ponzi scheme, Dr. Michael M. Kamrava, the doctor who lost his license in the Octomom case, and Dr. Richard Edison, the so-called Dr. Dread who was sued after five patients at his plastic surgery clinic died.
See Leslie Wayne, Cook Islands, A Paradise of Untouchable Assets, The New York Times, Dec. 14, 2013.
Special thanks to Joel Dobris (Professor of Law, UC Davis School of Law) for bringing this article to my attention.