Transfer Pricing is well known to students of financial crime; it occurs when a taxpayer elects to take profits from an international transaction in a lo- or zero-tax jurisdiction, by manipulating sales process through the use of controlled corporate entities. Profits only show up where there are, effectively, no taxes payable.
The crime generally manifests itself as tax fraud, or money laundering, or both. and it is responsible for the loss of literally billions of dollars in tax revenues, on a global scale. Importers and exporters are often pressured to engage in illegal price manipulation, for they are uniquely situated to alter books and records. Generally, Transfer Pricing schemes are employed to evade taxes upon sales, but there are instances where large purchases give financial criminals the opportunity to resort to Transfer Pricing.
ANTHONY ASTAPHAN - A TRUE DIPLOMAT OF DOMINICA
A case study, to assist readers in understanding the issues involved. J Astaphan & Co Ltd., d/b/a/ Astaphan's, has been engaged in retail consumer sales in Dominica for decades. You are familiar with Dominica attorney Anthony Astaphan, counsel to the Prime Minister, Roosevelt Skerrit; Anthony's extended family owns the business.
According to reliable Dominica sources, Astaphan's purchases its US-based goods from a Florida corporation named Vanste, Inc., in what purport to be arms-length transactions. In truth and in fact, the sole officer of Vanste Inc. is Neyra Beatriz Ceballos, who, notwithstanding her last name, is the wife of Jack Maurice Astaphan. Miami-Dade County Official Records searches confirm their spousal standing.
JACK MAURICE ASTAPHAN
Vanste shows only one employee, Jack Astaphan, and he confirms this on his Internet postings. Vanste's "office" is a single family residence, not zoned commercial, at 15746 SW 101 Street, Miami, Florida. This real estate is owned by Jack Astaphan, and he has registered it as Homestead under Florida law, meaning that it is his primary residence. Both Astaphan and Ceballos show that property as their residence for voting purposes. The hard line telephone number at that address, (305) 386-5669, comes back to Anthony Astaphan's sister, Genevieve Astaphan.
If the purchase prices paid by Vanste Inc. for goods shipped and sold to Astaphan's in Dominica are for a lesser amount than Vanste paid for them, and therefore Dominica Inland Revenue Division will only tax the arriving goods on the stated value/purchase price, then duty is greatly reduced, and Transfer Pricing has occurred. If this is the case, Vanste's declared profits ( or losses) may constitute tax fraud in the United States, for whoever reaped the illegal benefits. Additionally, Dominica tax obligations, owed by Astaphan's, should be examined.
Unfortunately, in a country where undue influence and corruption is the order of the day, we understand that Anthony Astaphan has insured that Inland Revenue is forever prohibited from auditing Astaphan's books of account, so we are unable to quantify the amount of taxes evaded, at either the US or Dominica end, but we trust that this article has given the reader additional insight into the mechanics of Transfer Pricing and tax evasion,, as it relates to sales, rather than purchases.
Chronicles of Monte Friesner - Financial Crime Analyst
Contributed by Kenneth Rijock - Financial Crime Consultant
Authorized by Andrei Slavenkov - Investigator (Netherlands)
* Footnote: I called Jack Astaphan on Monday February 9:22 AM to (305) 386-5669 and identified myself clearly and asked why his family and he are involved directly in illegal activities in the State of Florida? Jack screamed and hung up!!
* I called back at 11:30 AM and spoke briefly to Jack who was busy working and requested that I call back at a more convenient time.