By Juliana Schifferes
In the Caribbean island nation of Dominica, an intriguing problem emerges upon examining the Citizenship-by-Investment program. What should a nation-state do when, rather than expelling or imprisoning criminals, its bureaucracy permits them to enter their country? How can the state cope with the new burden?
Inspired by Government Accountability Project’s own Zack Kopplin’s investigative efforts, this blog series serves as an ancillary designed to complement his own inquiry by exploring aspects of his work for a popular audience.
The Citizenship-by-Investment program allows any world citizen, so far as they can pay some fees and pass a background check, to emigrate. Fair enough. But what if the background checks were cursory and the real point of the matter was revenue—the fees themselves? Thus, Dominica became a playground for the rich-and-sinister: international criminals who can afford to escape law enforcement using Dominica’s pay-to-play system.
First up on our blog this week will be mini-Madoff Pedro F Berbel. He ran a Ponzi scheme that encompassed a multilevel marketing scheme. The multilevel marketing scheme supposedly paid people for clicking on ads. What is problematic about this is not that most MLM marketers (or victims) are “just gullible”, but that they are some of the most financially vulnerable people in the US and perhaps around the world who need revenue themselves. MLMs are therefore inherently predatory.
Berbel exploited his Ponzi scheme victims as much as he possibly could. His company made 38 million, using more than 100,000 duped participants as tools in the search for cash. In terms of how the money was used, that primarily revolved around money laundering and real estate. Another figure is Gursamarjit Singh—a fraudster in the real estate field. After his sister-in-law acted as whistleblower, the Indian government put out a notice for his arrest; claims issued were severe enough to require questioning by border guards if he happens to enter the country again. Nevertheless, Singh hews to dissembling and accusing the justice system of injustice rather than admitting wrongdoing. He told investigators the Indian government’s claims are “wrong, frivolous and misconceived.” Yet, many in India found that the collapse of the real estate holdings he proffered wiped out their life savings after his online real estate business folded. Singh’s lawyers also discredited his own sister-in-law, describing her as simply motivated by “enmity.” Plus, he had friends in high places—many in the British Tory party were also duped.
This international spread demonstrates the depth of danger to the world economy just a few, free criminals can pose—and this should give us pause beyond Dominica itself. Dominica’s corrupt revenue sources are now everyone’s problem.
One must examine whether impunity-as-strategy will support Dominica’s future. Unfortunately, the answer seems to be affirmative. As unsatisfying as these resolutions of criminal justice are, there is a theme of a perverse sustainability in the process. As an observer said of another system, it is a “self-licking ice cream cone”. It is the perfect transaction: a country flush with cash, at least for the elite, and an emergency rescue from jail time for new citizens. Effectively, new Dominicans pay bail for their misdeeds and then escape punishment. Perhaps permanently.
But the cynicism is inescapable, and not just by the Dominican state. Another fraudster, this time focused on the self-help industry, stole from the desperate and gullible by requesting cash payments from his followers. Dazhan Zhang, a charismatic leader with hundreds of followers within hundreds of centers across the world, used self-help to harm followers—perhaps literally, in the case of a wounded woman in Canada.
Our investigative prowess, exemplified by Zack Kopplin, illuminates wrongdoing, and by making problems visible to the public we can begin the long process of policy change. Government Accountability Project has a long history of initiating shifts, with the help of partners, both internationally and within the United States. Donating, and keeping abreast of our investigations, will inevitably enable our spread across the global landscape.