DP Tool Club 24/CD_ASCQ_24_0995.iso/vrac/liberty.zip/29.TXT

Text File | 1995-07-02 | 15KB | 261 lines

                   PRIVACY TACTICS THAT CAN USE TODAY


               There are a number of little things that can help
          you to protect your privacy.  This chapter highlights
          several little-known options that you may find useful.


          Gold Certificates Provide Portable Privacy

               A gold certificate provides you with an attractive
          alternative to investing in physical metal, and offers
          a way to transfer assets out of the country.
               The Mocatta Delivery Order (MDO) is a title
          document representing ownership of a specific, numbered
          unit of gold, silver or platinum. With origins dating
          back to 1671, Mocatta is the oldest bullion trading
          firm in the world. As one of the world's most
          experienced precious metals organizations, Mocatta
          created the MDO to satisfy the highest criteria of
          privacy, safety, liquidity and flexibility.
               You can choose storage in either Wilmington,
          Delaware or Zurich, Switzerland. During the storage the
          metal is fully insured under a Lloyds of London
          insurance policy.
               The certificate is issued in your name (or the
          name of a corporation or trust, if you prefer) and
          identifies the physical gold, silver, or platinum
          owned. MDOs offer transfer of ownership features that
          enable the owner to sell, assign or collateralize the
          metal easily, yet provide the protection of non-
          negotiability, since a lost document can be replaced,
          unlike a bearer security. Since the order is non-
          negotiable, it does not have to be reported if it is
          taken in or out of the United States. There is no
          reporting of the purchase to the IRS. An MDO can be
          issued in the name of a family limited partnership or
          offshore trust, or assigned to one of them as a means
          of transferring ownership of the metal when the asset
          protection entity is created.
               For more information on the MDO contact
          International Financial Consultants Inc., Suite 400A,
          1700 Rockville Pike, Rockville MD 20852; (800) 831-
          0007.


          Use A Stand-Alone Telephone Calling Card

               Intended for travelers who use calling cards
          frequently, there is a discount telephone calling card
          that has a flat rate of 17.5 cents per minute for
          interstate calls, anytime, anywhere in the United
          States including Puerto Rico, Hawaii, Alaska, and the
          U.S. Virgin Islands. There are no surcharges, no
          monthly fees, no minimum monthly billings, and
          international calling is also available.
               The calling card is free, and is a stand-alone
          card, meaning that a person using the card does not
          have to change their long distance service. It saves up
          to 68% over the leading competitors, including prepaid
          phone cards (most of which are around 40 cents per
          minute).
               But it is the "stand-alone" part that makes us
          mention it here. Because the card can be applied for
          without having to subscribe to a new long distance
          service, one can use the card for things like calling
          overseas banks, and pay the separate calling card bill
          from a different bank account, or by money order. The
          record of calls made won't be showing up on your home
          or office phone bill, so there's no easy to follow
          trail of calls to an offshore bank or money manager.
          And since the separate calling card bill can be paid by
          money order, it doesn't create a credit card charge
          record which is one of the problems in recharging
          prepaid phone cards. (And you don't get an embarrassing
          "out of time" recording and cut-off, which can easily
          happen on a prepaid card when a $10 card is being used
          for an expensive overseas call.)
               For an application form, send a stamped, addressed
          reply envelope to Center for Business Information,
          Attn: Phone Card Applications, 816 Elm Street, Suite
          187, Manchester NH 03101-2101.


          How to Keep The IRS -- and Other Snoops -- Out of Your
          Safe Deposit Box

               A safe deposit box is a veritable necessity for
          keeping things like offshore bank books, precious
          metals certificates, bearer securities, cash, coins,
          etc. Yet a safe deposit box can create its own
          problems.
               One obvious problem is that upon death of the
          boxholder, the bank is required to deny access to the
          box until a properly appointed executor and an IRS
          agent open the box. The IRS will presume that all
          assets are the property of the deceased, so that if you
          are holding assets that you have given in trust to your
          children, they will become part of the taxable estate -
          - or worse, they may be applied to some debt of the
          estate. Unreported foreign accounts could even be
          seized as being part of a crime. IRS agents tend to
          assume criminality, and you are no longer available to
          provide an alternative honest explanation.
               But there are other safe deposit box problems that
          are at least as important as dealing with the box upon
          death. For example, if the box is in one name only,
          many banks will not honor a power of attorney to let
          somebody else have access to the box in an emergency,
          unless the power of attorney is signed in person in the
          bank. If you are in a foreign hospital, and need to
          authorize your spouse to open the box, this could
          become a major problem.  Even if the bank will accept a
          notarized power of attorney, there may be problems in
          arranging for a foreign notary to visit, then having
          the notary certificate authenticated by the U.S.
          Embassy or Consulate, and sending it to the bank.
               The solution is to form a corporation to hold your
          principal safe deposit box. The corporation can change
          the names of the people authorized to access the box
          simply by furnishing the bank with an updated
          resolution form. And a box belonging to a corporation
          is not frozen by a bank because of the death of a
          natural person, even if that person is the sole person
          then having access to the box.
               To do this properly, we recommend that the
          corporation be used only to hold the safe deposit box.
          This provides the maximum privacy, because the
          corporation has no activities to cause it to be audited
          or investigated. Under federal law, even an inactive
          corporation must file a tax return, but a corporate
          return showing no income can be filled in each year
          without having to pay an accountant to do it. (Usually
          after three years of zero income returns, the IRS sends
          out a form letter saying there is no need to file
          further returns unless the corporation begins to have
          income.)
               The other obligation that must be met is to ensure
          that the corporation is in good standing, so that you
          don't have a crisis in which the corporation no longer
          exists because the annual reports were not filed.
          Delaware is the best state for this, because an
          inactive corporation only needs to file a simple annual
          return and pay an annual fee to the state (and an
          annual fee to its Delaware registered agent.)
               Privacy can be maintained by having the registered
          agent file the annual return with the state, signing it
          as "incorporator," which keeps the list of officers off
          the state records. Most large corporation services will
          not provide annual report filing services, but the one
          mentioned below will do so. To be entirely safe, one
          can even leave the registered agent with funds to
          prepay the state fees each year, thus ensuring that
          there is no accidental termination of the corporation
          because of a late payment.
               Since the holding of a safe deposit box is not
          deemed to be conducting business by any state, the
          Delaware corporation is not required to qualify to do
          business in the state in which the box is held, thus
          improving privacy and keeping the existence of the
          corporation out of the public records in your own
          state.
               For information on a service that can form a
          corporation for you in Delaware (or in any state),
          write to Incorporation Information Package, 818
          Washington Street, Wilmington DE 19801.
               Keeping the IRS away is not the only reason to
          have a corporation hold your safe deposit box. It also
          keeps a personal creditor from being able to have the
          box frozen by a court for an inspection of the
          contents, which can easily happen during a lawsuit or
          other claim against you.


          Privacy and Data Encryption

               Your business affairs are your personal matter.
          Encryption is an electronic procedure that digitally
          encodes (converts into unintelligible gibberish) and
          decodes (converts back to readable language).
               Today any reasonably powerful desktop computer can
          encrypt and decrypt messages which the most powerful
          supercomputers in the world, working together, could
          not decrypt.  Programs to do this are very inexpensive,
          and already available to anyone.
               Most encryption programs take advantage of a
          mathematically sophisticated encryption technology that
          requires two different keys, both of which are
          necessary to decrypt the message.  The sender needs
          only one to send a message.  The receiver decodes the
          message with the second key -- which never needs to
          leave his computer, where it can be protected by
          passwords.  Although the mathematics are daunting, the
          program makes the process simple and straightforward.
               Examples of everyday uses are a writer who sends
          chapters of his new book to his publisher;
          collaborators on an invention working at a distance and
          needing to keep others from claim-jumping a discovery;
          paying bills or ordering from mail-order catalogs by
          sending encrypted credit card numbers over the
          telephone; an accountant who scrambles backup tapes so
          that clients needn't worry about lost confidentiality
          if the tapes are lost or stolen; and attorneys
          communicating with clients and other attorneys via
          encrypted documents.
               At the same time, the costs of international
          communications and transportation have declined to the
          point where even the average individual can afford to
          internationalize.  And countries around the world are
          competing for that business.  You can take advantage of
          what these countries have to offer to safeguard your
          freedom and privacy using exactly the same techniques
          as giant multinational companies.
               Encrypted messages can move across international
          borders without interference, by telephone, by radio,
          or by courier.  A "message" means anything that can be
          digitized -- a sequence of words, music, a digitized
          picture, a forbidden magazine or book, etc.
               Privacy of electronic communications leads to an
          ability to do business from anywhere in the world, with
          anybody in the world.
               It is technically feasible to use these techniques
          to create a totally secret banking system, with account
          owners identities being unknown even to the bank.
          Credits could be transferred between accounts from
          anywhere in the world through encrypted communications.
          In a world where governments are increasingly
          subscribing to treaties limiting banking secrecy, and
          requiring identification of depositors, it is unlikely
          that this technical possibility will actually occur in
          the near future.  But unlikely is not impossible -- and
          the time may come when some government permits such a
          service, or when entrepreneurs sneak it in the back
          door by calling it a barter exchange instead of a bank.
          Since everything is electronic, such a service could
          even be operated from a ship, an orbiting space
          station, or The Moon.  It is only thirty years since
          the first Moon landing -- who knows what the next
          thirty years might bring.  The data haven may
          eventually supplement the tax haven.
               Meanwhile, data encryption is available to anybody
          for whatever use they wish to make of it.  A package
          offering basic information on encryption, including
          copies of several different computer programs for IBM-
          compatible computers, is called The Privacy Disk and is
          available for $49.95 from Noble Software, 51 MacDougal
          Street, Suite 192, New York, New York 10012.  (A 3.5"
          diskette will be sent unless you specify a 5.25"
          diskette.)
               Noble Software doesn't have a catalog or
          literature about the programs, so don't expect a reply
          if you write and ask for "more information" about The
          Privacy Disk.
               With the government making proposals to outlaw the
          sale of encryption programs, this is something you
          might want to buy now and put away even if you have no
          immediate use for it.