In response to my winning FOIA lawsuit, which the IRS in now appealing, the IRS redaced some of the emails the judge order them to produce. The rest are still being withheld pending the outcome of the appeal. These unredacted emails confirm that the bank was not shut down because it deserved to be shut down, or because it facilitated tax evasion or money laundering, or because it was insolvent, becuase none of those things were true.
They provide conclusive evidence that IRS and OCIF shut down the bank as part of an improper quid pro quo with the IRS: the U.S. Treasury Dept. would be able to use the shutdown to convince foreign banking regulators that Puerto Rico was not a high-risk tax haven.
The IRS needed the bank shut down because its high-profile Atlantis investigation — the subject of a 60 Minutes broadcast an Australian federal court later ruled defamatory and a New York Times article — came up empty. Since the two-year criminal investigation found no evidence of wrongdoing by the bank or anyone running it, the IRS needed OCIF’s help to save face.
The public was told that OCIF acted independently. But the OCIF Commissioner’s own email confirms that the action against the bank was done in collaboration with IRS-CI. Other emails show that collaboration began six months earlier, that the outcome was negotiated between the IRS and OCIF, that the IRS knew Euro Pacific would be de-banked well over two months before the decision was announced, and that the arrangement had the support of Puerto Rico’s Governor, Secretary of State, and Secretary of the Treasury.
The IRS and its J5 partners then launched a worldwide publicity campaign claiming the bank was shut down for facilitating tax evasion and money laundering — the very crimes their own investigation found no evidence were actually committed.
This is not speculation. It is shown by admissions in IRS and OCIF emails obtained through a FOIA lawsuit I filed as the bank’s sole shareholder, a month after the Federal Court in Puerto Rico dismissed my civil rights lawsuit against the IRS and OCIF — a lawsuit that alleged the very conspiracy these emails now confirm.
Out of a total of 520 pages of emails produced so far, not a single one shows evidence that Euro Pacific Bank had inadequate KYC or AML procedures, or that there was any evidence the bank helped a single customer launder money or evade taxes. Nor was there any discussion about how shutting down the bank would actually stop any tax evasion or money laundering from taking place. Instead, all the emails focused on the public relations opportunity for the J5 to exploit the closure of the bank to boost its own reputation regarding its ability to disrupt the enablers of tax evasion and money laundering, even though closing Euro Pacific Bank disrupted neither.
In fact, one IRS email explicitly highlights “that the criminal and civil impact on U.S. taxpayers may be minimal, but the reputational value to the U.S. and IRS is high.” Another email IRS Cheif Jim regarding how well the press conference went, Jim Lee wrote that “the OCIF Commissioner is incredibly passionate about ‘cleaning’ things up in Puerto Rico.” Lee’s use of quotes around “cleaning” shows he didn’t treat it as a literal fact, but as a label. The emails back that up—there’s no evidence of wrongdoing, only discussion of PR. If anything was “cleaned up,” it was the optics around a high-profile investigation that came up empty.
In another email about the press conference Jim Lee references some other banks in question that are also being looked at “for some nefarious activity related to a couple of South American countries.” Then he immediately adds, “These banks in question DO NOT include the bank we are looking at as part of the J5 investigation operation and the topic of this event.” Lee expressly distinguished Euro Pacific Bank from the banks allegedly suspected of “nefarious activity.” His all-caps clarification that those banks “DO NOT include” Euro Pacific Bank undermines his press conference remarks that imply it was involved in nefarious activities. Ironically, in 520 pages of emails related to shutting down Euro Pacific Bank, the only reference to “nefarious activities” related to other banks-not Euro Pacific Bank.
The three-month lag between the joint decision to shut down my bank and the “emergency” TRO and receivership to announce and implement that decision with a high-profile, highly scripted press conference, demonstrate that the “insolvency” claim was pretextual — a convenient regulatory hook to justify immediate seizure without normal due process, all while the real goal was the reputational “win” the emails openly celebrate.
The official reason the OCIF Commissioner gave for the emergency TRO to shut down the bank and place it into receivership was protecting customers. Yet not a single one of the 520 pages of emails even mentions a risk to customers. In fact, there was no risk to customers. The bank was completely solvent, with no debt, no loans, no past-due bills, and more than enough cash and gold to honor all deposits in full, with millions left over for the sole shareholder. Yet in the almost four years since the bank has been in receivership, only about one dozen of the bank’s 3,500 customers have received any money back. The threat to depositors didn’t come from the bank, but from OCIF’s takeover of the bank.