A
few weeks after she realized her husband was finally leaving her, Sarah
Pursglove flew down to the Bahamas to figure out how much money he
really had. Like many women married to very wealthy men, she didn’t know
much about the family accounts. Her husband, a Finnish entrepreneur
named Robert Oesterlund, had sworn to a Canadian court that his
immediately calculable “net family property” totaled just a few million
dollars. Pursglove was skeptical. She could come up with several family
purchases worth more than that off the top of her head. There was the
165-foot yacht, Déjà Vu — that cost a few million dollars a year just to
keep on the water. There was the $30 million penthouse at the Toronto
Four Seasons, which was still being renovated. It wasn’t their only
home. The Déjà Vu wasn’t even their only yacht.
Pursglove
grew up in a working-class family. She did not consider herself to be a
complicated person, or a greedy one. Recent events in her life had,
however, inculcated a newfound habit of suspicion. Her husband’s
tirades, his frequent absences and threats to leave, had led inexorably
to the day when she tailed him through the streets of Toronto and caught
him picking up an interior designer for what appeared to be a romantic
ski getaway. She had been with Oesterlund since she was 25 and scraping
by as a cruise ship’s photographer. Now, as she assessed her crumbling
marriage and girded for divorce, she wondered what else she didn’t know.
Her
first answers came that morning in the Bahamas, as she quickly rifled
through papers in their soon-to-be-former vacation home. She didn’t have
long: The caretaker, Pursglove suspected, was loyal to her husband and
would soon alert him that she was there. In a pile of mail was a
statement from a bank in Luxembourg showing an account with at least $30
million in cash. She had never seen it before. There were two laptops —
one with baby photos of their younger daughter, which she set aside. In
a cupboard were documents concerning not only Xacti,
the internet company she and Oesterlund had built, but also oddly named
corporations in other states and countries. Finally, there was a
statement from their accounting firm. She had never seen that before,
either. The accountants seemed to think her husband was worth at least
$300 million.
But
even as Pursglove was repacking her suitcase for the flight home, her
family’s fortune was vanishing into an almost impenetrable array of
shell companies, bank accounts and trusts, part of a worldwide financial
system catering exclusively to the very wealthy. In recent decades,
this system has become astonishingly effective at “offshoring” wealth —
detaching assets, through complex layers of ownership and legal
planning, from their actual owners, often by hiding them in another
country. Created by lawyers, accountants and private bankers and
operating out of a global archipelago of European principalities, former British colonies
and Asian city-states, the system has one main purpose: to make the
richest people in the world appear to own as little as possible.
Pursglove
would soon learn, however, that navigating this offshore archipelago is
not easy. In any given year, trillions of dollars sit safely in the
offshore financial world, effectively stateless, protected by legions of
well-compensated defenders and a tangle of laws deliberately designed
to impede creditors and tax collectors. Even the United States
government finds it challenging: A special Internal Revenue Service
division known as the “wealth squad,” set up in 2010 to crack down on
high-end tax evaders with multinational holdings, today has enough
manpower to assess only about 200 cases a year.
Pursglove
would rely on her own wealth squad: a pair of highly creative lawyers,
using Pursglove herself as the ultimate informant. It would take them
more than two years and millions of dollars to breach the defenses of
the offshore financial world. Their efforts would leave a trail of
thousands of pages of court documents through Canada and the United
States, revealing the inner workings of a system exquisitely engineered
to repel scrutiny.
But
much of her family’s financial situation was still a mystery when she
first saw the bank statement on her husband’s desk in the Bahamas,
Pursglove later told me. She packed the laptop and documents, left her
suitcase near the front door and went for one last walk on their beach.
When she returned to the house, the caretaker was nowhere to be seen. A
different member of the household staff, a kindly older man who tended
to the landscaping and washed the family boats, had already put her
suitcase into a waiting taxicab. She hugged him goodbye and drove to the
airport.
When she opened her suitcase at the security line, there was no laptop. No paperwork. It was all gone.
Robert Oesterlund wasn’t
born rich, either. When Pursglove first met him, on a cruise ship off
Helsinki in the ’90s, he ran a struggling flower-import business. He was
tall, with piercing blue eyes and a boyish charisma that outlasted his
initial awkwardness. Pursglove, who grew up in Wales, found him
charming. They married in 1998, on the Caribbean island Dominica, and
settled in the United States.
Living
in Florida and New York, they started a series of companies. Oesterlund
came up with most of the ideas, Pursglove would later state in court
filings, and ran the companies day to day. Pursglove hired the
employees, trained them and helped manage the offices. Their earliest
success was a direct-mail firm called Credit Key Express, which promised
credit cards to people with bad credit. Later they started Columbia
House-style online membership clubs that sold discounted movie posters,
books, DVDs, even dietary supplements. Xacti, which came to enfold most
of their ventures, sold banner ads, video games and various other kinds
of software, including “toolbars” that promised to clean viruses off
your computer or free up space on your hard drive. The businesses threw
off enormous amounts of cash, and by the mid-2000s, Oesterlund and his
wife had become wildly rich. They bought a $5 million house back in
Finland and their first yacht, a 48-foot cruiser.
Pursglove
is 47, with a round, watchful face and well-kept brown hair. I first
met her in the spring of 2015, over coffee in New York. She rarely
smiled, and I found her unexpectedly reserved for the wife of a
jet-setting, large-living entrepreneur. She explained that Oesterlund
was the flamboyant one, an insecure man ruined by his sudden wealth. “I
was his stop button — ‘No, we don’t need it,’ ” Pursglove told me. “He
was kind of never content. He always needed to buy the next thing.” In
2007, they bought their first private jet, and then a bigger boat, an
82-footer that Pursglove named Integrity. She liked the name, she
explained. “At the time, Robert was — I thought he had integrity.”
Not
everyone agreed. In 1999, the Florida attorney general sued to shut
down Credit Key Express, saying that it misled customers into thinking
they would receive preapproved credit cards. (In fact, all they got for
their money was a list of banks that might give them credit cards.) Some
years after Credit Key Express shut down, the Florida attorney general
came after Xacti’s club businesses, claiming that Oesterlund’s companies
had again misled customers. According to court filings, they had abused
what are known as “negative options”: Customers would provide their
credit card number for a “trial offer,” only to be charged a monthly
fee, disclosed in the fine print and difficult to cancel.
In
2010, Oesterlund, on behalf of his companies, signed an agreement with
the Florida attorney general promising to abstain from deceptive
marketing practices. But officials in Iowa and Oregon also began
scrutinizing the businesses. Despite Oesterlund’s promises, consumer
complaints continued to pile up, and in 2013, Florida’s attorney general
finally sued Xacti and its club businesses, extracting a $500,000 settlement.
When
the investigations began, in 2009, Pursglove was living with the two
children in Boca Raton, but Oesterlund lived on Integrity in the
Bahamas, unable to join them. He had overstayed an earlier visa, and the
United States denied him a green card. The denial and the
investigations enraged him, Pursglove told me. He employed dozens of
people in Florida, he fumed, and had provided the United States millions
of dollars in tax revenue. He told his wife their businesses were being
unfairly harassed by bureaucrats. Going forward, Pursglove explained,
“he wanted to pay as little taxes as possible to the U.S.”
In
2011, they went into contract on the penthouse in Toronto, hoping to
unite the family eventually in Canada and establish residency for
Oesterlund there. While it was being renovated, they bought yet another
boat, the 165-foot yacht they named Déjà Vu, and spent a year sailing
around Europe and the Caribbean, with tutors for the kids. But their
relationship would soon grow strained. Oesterlund later testified that
their marriage was a “rocky ride ever since the start,” but Pursglove
blamed their new lifestyle. Somewhere along the way, she told me,
Oesterlund had fallen in with a tribe of wealthy globe-trotting nomads
and minor celebrities. He befriended Kevin O’Leary, a judge from “Shark
Tank,” she says, and partied at the Maya-themed Lyford Cay estate of
Peter Nygard, the Finnish-Canadian retail mogul. Oesterlund’s money and
his boat attracted hangers-on and women, Pursglove says.
By
his wife’s account, some of Oesterlund’s new friends also began
tutoring him in how to minimize his taxes. (Oesterlund himself declined
to comment for this article, as did most of the lawyers, accountants and
financial advisers named in court records.) He traveled constantly,
Pursglove says, in part to reduce the amount of taxes he would be
required to pay to any of the countries where he owned a home. At the
time, Pursglove told me, she regarded these efforts — spearheaded by a
well-known Florida accounting firm, Daszkal Bolton — as aboveboard “tax
planning.” But court records suggest that Oesterlund had begun exploring
how to structure his business to insulate himself not just from taxes
but also from future civil litigation. “I want to have in writing a
statement,” he wrote to his lawyers in 2011, “that I can no longer be
subject to Florida or U.S. law.” Take every step necessary, he added, to
“remove myself from the country of Evil.”
In
2012, Oesterlund and Pursglove moved with the children to Toronto; at
the end of the year, Oesterlund raised the idea of separating, Pursglove
says, and at the beginning of 2013 he flew to Dubai to party with
friends. “He was backward and forward that year in Toronto,” Pursglove
says. “I would ask, So, are we getting divorced? And he wouldn’t do
anything.”
It
was in early 2013, when she learned that her husband had sought to sell
off Xacti, Pursglove told me, that she started to think about hiring
lawyers of her own. “You want to throw me away like I was a piece of
[expletive] and then take everything too,” she emailed him one night.
“Women get 10 percent in Russia by law,” Oesterlund wrote back. “In Dubai they get 0 percent.”
When
she asked for copies of documents related to the potential sale, her
husband was livid. “I am closing out all checking accounts on you now,”
he texted her. “You aren’t going to use my funds to pay some Jewish
lawyer.”
That
night, he cut off her Xacti email account. “We will file papers and as I
no longer own anything of value you get nothing then I can start a new
company later in life,” he wrote. “Was it really worth it?”
One
divorce attorney urged her to settle with her husband as soon as
possible or else risk losing everything. Another told her the case would
be too daunting for a normal family lawyer, even in South Florida,
where high-priced divorces are common. Eventually, she found herself in
the offices of Jeffrey Fisher.
Fisher was not
a normal family lawyer. Early in his career, at the height of the South
Florida drug wars, he worked for the United States attorney’s office in
Miami, prosecuting cocaine smugglers and money launderers. When he
opened his own firm with a partner in West Palm Beach in the late 1980s,
he began specializing in cases that were equal parts divorce and
white-collar litigation, representing the discarded wives of rich men
with complex business concerns.
I
first began hearing about Fisher a few years ago, when he approached a
college friend of mine, Zachary Potter, to join his practice. Potter was
working at one of the country’s largest law firms, advising Fortune 500
companies. He enjoyed the challenge, but the work could be stodgy: When
Fisher called him, Potter was working a seven-year, $100 million case
that hinged on federal leasing rules for long-haul trucking companies.
Around
the same time Potter moved to Palm Beach to join Fisher’s firm, I began
writing for The Times about the political activism of the very wealthy,
much of it oriented around defending their fortunes from the predations
of government. Our professional interests soon converged. We joked
about spending our days trading phone calls with the same class of
handlers, consultants and lawyers, hired by the rich to guard their
wealth and privacy.
One
day last year, we caught up over drinks at a Palm Beach hotel. Potter
was easy to spot: In a town of pastels and prints, he still favored
charcoal suits and crisp white shirts. All around us was the chatter of
lithe women and their expensively tailored, somewhat older male
companions — inhabitants of a world at once ostentatious and opaque. As
we sat down, Potter slid a neatly stapled stack of papers down the bar
toward me. It was a court brief, Potter explained, one of hundreds he
and Fisher had filed in a particularly knotty case involving a man named
Robert Oesterlund. If I truly wanted to peer inside the hidden world of
the superrich, Potter told me — and if I really wanted to understand
how extremely wealthy people protected that wealth — I ought to read the
case’s public court file and judge for myself.
Not
long after, I met Fisher at his office in Florida, a modest
fourth-floor space equipped with plush leather chairs and a sweeping
view across the water to client-rich Palm Beach. At 61, Fisher is short
and wiry, with thinning gray hair swept back over a high and gently
tanned forehead. In a cross-examination, he stands erect, chest cocked,
as if to fill the courtroom. When Fisher talks about working the Florida
divorce circuit, he makes it sound almost fun. “The beauty of high-end
divorce law it is that it is usually handled on an expedited basis,”
Fisher says. “If you’re a person like me, who doesn’t want a
five-year-long case, there’s nothing better.”
Pursglove
hired him about a year earlier, not long after seeing her husband with
the interior designer. Oesterlund responded by filing for divorce in
Canada — where Fisher could not personally represent Pursglove — and
threatened to cut off his wife. She had $90,000 in the bank, not enough
for a protracted legal battle. But she also had cellphone pictures of
documents concerning something called a Cook Islands asset-protection
trust, which she found a few months earlier. Oesterlund was listed as
the “settlor,” the person who “donates” property to a trust.
The
Cook trust was a bad sign. A typical estate-planning trust is designed
to allow someone to benefit from a property — a car, a home, a plane, a
bank account — without technically owning it or controlling it. An
independent trustee, sometimes an individual, sometimes a specialized
firm, is assigned to make decisions about the best use of the assets.
That independence can, for example, provide a tax advantage or prevent a
spendthrift beneficiary from plowing through an inheritance. But in
some cases, the claim of independence is a sham. The trustees are
puppets; the settlor still controls the asset in practice. And trusts
organized in the Cook Islands, a self-governing state associated with
New Zealand, are particularly difficult to investigate. Cook courts
typically do not recognize American court orders, including divorce
judgments. To sue a Cook trust, you have to actually fly to the Cook
Islands, in the middle of the South Pacific, roughly 6,000 miles
southwest of Florida. “It’s like Switzerland used to be, but squared,”
Fisher told me. Once assets were hidden inside a Cook trust, he had
learned, it was almost impossible to get them out.
Emails
in Pursglove’s possession hinted at why Oesterlund might have found a
Cook trust appealing. Searching through the trash folder on Pursglove’s
laptop, Fisher’s paralegal found that the 2011 email she had been copied
on — the one in which Oesterlund had asked his lawyers to remove him
from “the country of Evil” — also contained a reply from Xacti’s
corporate counsel, Jennifer Miller. She wrote that if Oesterlund created
“a parallel corporate structure of companies outside the U.S,” moved
his operations offshore and “implemented a personal asset protection
strategy,” he could become almost untouchable. Any money spent to sue
him in the United States, Miller assured him, “would probably be
wasted.”
Fisher knew he
needed to act very quickly. He didn’t know where Oesterlund had put the
family’s money, exactly. He didn’t have any direct evidence of fraud.
But the longer the case dragged on, the more opportunity Oesterlund
might have to drain assets out of the country and into untouchable
accounts overseas.
The
documents in Pursglove’s cellphone pictures showed corporations in the
Caymans and Nevis, both well-known offshore financial centers. But she
didn’t know exactly what these companies did. Oesterlund had stopped
making mortgage payments on the house in Boca Raton, she later said in
court filings, and threatened to evict her mother and disabled aunt from
a house they had bought in Wales. He warned Pursglove that he wouldn’t
pay any bills until she agreed to a settlement. “Your mortgage of
$20,000 was due on the first,” he texted to Pursglove. “Late fee $500 on
Friday. Bad credit in 30 days. I recommend you pay it!”
Fisher
had to freeze Oesterlund’s transactions in place until he could gather
more evidence. The only way to do that, Fisher concluded, was to hit him
from two sides at once. In late March 2014, Fisher filed a divorce
action on behalf of Pursglove in Palm Beach County, hoping to wrest the
divorce proceeding back to Florida from Canada. But he also prepared a
related civil complaint, citing the Cook trust and Oesterlund’s
threatening emails: Oesterlund, Fisher wrote in court papers, was using
illegal asset transfers to defraud his wife, the co-owner of his
companies. One set of claims would leverage Pursglove’s rights as a
wife. The other, crucially, would leverage her rights as an owner.
Within
days, Fisher persuaded a judge in Palm Beach County, Jeffrey D. Gillen,
to impose a sweeping asset injunction against Oesterlund, one that
prohibited him from selling, merging or borrowing against any of his
assets. The order would stop additional offshoring — if Oesterlund
complied.
Fisher
also obtained a 2012 tax return for the family’s holding company, RSOP.
(The name is an anagram of Oesterlund and Pursglove’s initials.) The
return showed that RSOP had grossed more than $73.5 million that year,
an amount that Pursglove says she found astonishing. But when Fisher
scrutinized the tax return, he found something even more shocking.
Despite the impressive grosses, RSOP was reporting ordinary business
income of just $12,284. Virtually all the revenue had somehow
evaporated.
That
was when — and why — Fisher dispatched Pursglove to the Bahamas: to
gather clues about where the money went. When Pursglove returned to the
house to confront the caretaker that day, she told me, the caretaker
admitted removing the papers from her suitcase. Bahamian police took
custody of the papers, but later, and for reasons they never explained,
handed them over to Oesterlund. When Fisher tried to subpoena the papers
back, Oesterlund’s lawyers said he could not find any such documents;
in any case, they wrote, Pursglove had no right to “stolen” materials.
But
back in Florida, Fisher’s legal blitz was having the intended effect.
In a rush to unfreeze his assets, Oesterlund invoked his right to an
emergency hearing. That handed Fisher a crucial opening: Florida law now
gave Fisher the right to demand documents, on a highly expedited basis,
from any company or person who might have evidence relevant to the
hearing. Shortly thereafter, Fisher’s detailed requests began arriving
on the desks of Oesterlund’s bankers, his lawyers, his accountants and
tax planners, his stockbroker and most of his senior executives. When
the opposing parties finally met in Florida court in April 2014, the
room was overflowing. Oesterlund had sent his divorce lawyers. The
companies had their own lawyers. There were lawyers for the banks. There
were lawyers for the accountants. Even some of the lawyers had lawyers.
More
important, some of these lawyers had brought thousands of pages of
records with them to the hearing. Under normal discovery rules, Fisher
might have spent months or years fighting for them. Instead, it took
four days: Potter flipped through the boxes in the courtroom, yanking
out whatever seemed interesting, while Fisher cross-examined witnesses
on the fly. There were bank statements, emails between accountants and
lawyers and a few organizational charts tantalizingly stamped
“confidential.” One piece of paper, from a lender called Fifth Third
Bank, showed that Oesterlund had claimed a net worth of $400 million,
even more than they thought. Other documents showed that Pursglove owned
a third of RSOP.
In
Canadian court, Oesterlund accused his wife of making “wild
accusations” and absconding with their two daughters to Florida. But
Fisher now had a growing heap of evidence that not only bolstered
Pursglove’s claims but also rooted them in the Florida jurisdiction
where his client lived and he practiced. Seeing the danger, Oesterlund’s
attorneys switched tactics, hoping to block the corporate fraud suit
entirely and send Pursglove’s divorce back to a Canadian judge. She was a
resident of Toronto, they argued to Judge Gillen, and a Florida court
had no jurisdiction over the divorce.
For
Pursglove and her husband, as for many members of the global 1 percent,
“residency” was an elusive and easily manipulated concept. Pursglove
was a British citizen with a United States green card who now lived in
Boca Raton. Oesterlund was a citizen of Finland who had also obtained a
passport from Dominica. They had homes in at least four countries and
spent a year living on their yacht. “These parties are global citizens
of substantial means,” Judge Gillen mused from the bench. “Their
situation is a blessing and a privilege for them, but for this court,
their lifestyle creates a challenge.”
Gillen
decided to split the difference. The divorce would stay in Toronto. But
the civil litigation — the corporate fraud lawsuit — could proceed in
Florida, where many of the family’s companies were still run out of a
Boca Raton office park. In late April, Fisher’s assistants began
stacking boxes of files in the hallway outside his office. A similar
pile grew next door, outside Potter’s office. In May, they started
reading in depth.
First they searched
for the missing $73 million they had seen on the tax return. It turned
out that most of RSOP’s revenue wasn’t missing at all. Instead, Fisher
later argued in court papers, RSOP was transferring tens of millions of
dollars to another company, this one called Omega Partners. Omega was
based in the Bahamas, which has no corporate income tax. RSOP had two
partners, but Omega had only one: Robert Oesterlund.
Omega
didn’t appear to have any employees. In fact, it seemed to consist of
little more than a post office box in a government building in Nassau.
But Omega did at one point have a lucrative contract with Oesterlund’s
Florida company, Xacti L.L.C., to pay search engines to advertise his
websites. This contract appeared to be an extraordinarily bad deal for
Xacti. For every dollar of advertising Xacti purchased, it also had to
pay Omega — Oesterlund in corporate form — 58 cents. For this privilege,
Xacti also paid Oesterlund another $200,000 each month, personally, for
“management services.”
Oesterlund
appeared to be charging his own companies to pay their bills, Fisher
argued in court papers. He was charging them so much, in fact, that RSOP
was making almost no net income. Yet Omega was taking in millions of
dollars a year. With the stroke of his signature on a few pieces of
paper, it appeared to Fisher, Oesterlund had used Omega to make
virtually all of his family’s United States tax liabilities disappear.
What
Oesterlund had done is known as “transfer pricing,” a practice that has
come under growing criticism in recent years. Multinational
corporations use it to shift their costs to high-tax countries and their
profits to low-tax countries. Often, there is little or no economic
reality to these transactions. Apple, for example, is an American
company headquartered in Cupertino, Calif. Most of the research and
development that goes into an iPhone happens in California. But
according to Apple, if you buy an iPhone in Europe or Asia, the
intellectual-property rights contained in your phone actually belong to
Apple subsidiaries in Ireland, where the company has negotiated for
itself a special tax rate of around 2 percent. Apple charges those
subsidiaries relatively little for the rights to this intellectual
property, yet allows them to collect most of the money Apple makes from
selling the phone. In 2011, the Irish subsidiaries — which conduct
virtually none of Apple’s research and build few of its products —
collected two-thirds of Apple’s 2011 worldwide pretax income.
Fisher
wondered whether Oesterlund’s transfers were really legal. He called
Gregg D. Polsky, a law professor now at the University of Georgia, who
occasionally worked for Fisher as an expert witness. Polsky knew a lot
about tax law, but as he later explained to me, he did not have a
satisfying answer for Fisher. In theory, Polsky says, federal rules
require that related companies charge themselves the same price they
would charge some other company. But in practice, the prices can be
difficult to second-guess. Who can really say exactly what Apple’s
intellectual property is worth? “The sophisticated people will hire
high-priced advisers who will come up with a study that will give them
the value they want,” Polsky says. “The I.R.S. has to decide if they
disagree with that value and if they can both challenge it and prevail
in court.” (In August, European regulators ordered
Ireland to collect $15 billion in unpaid taxes from Apple, charging
that the company’s special tax rate violated European Union rules.)
Fisher
didn’t have time to wait for the I.R.S. to take an interest in
Oesterlund. He needed some other lever — a legal basis to look more
closely into the myriad offshore entities that appeared to be connected
to the Oesterlund companies. A solution presented itself when Fisher,
searching online for Oesterlund’s name one morning, learned about the
long trail of consumer disputes Oesterlund’s companies had left behind.
Until he saw the settlement with the Florida attorney general, Fisher
had assumed Oesterlund was running a basically legitimate internet
business. Now he realized not only that Xacti had come under
investigation, but also that the investigation created an opening for
Pursglove. Oesterlund had signed a binding agreement with the Florida
attorney general just nine months earlier: To keep Xacti from skipping
out on refunds, the agreement barred Oesterlund from implementing “any
change in the form of doing business or organizational identity as a
method of avoiding the terms and conditions set forth in this settlement
agreement.”
Fisher
felt this was a pretty good description of what Oesterlund seemed to be
doing with the offshore companies. Moreover, papers turned over at the
hearing showed that Pursglove was the sole owner of an Xacti subsidiary
that was subject to the same settlement. That meant Pursglove was also
bound by its terms.
This
gave Fisher an idea. In May, he opened a third front, one that would
give Pursglove her most powerful legal tool to begin peeling back the
layers of her husband’s finances. Intervening in the Florida attorney
general’s dormant case, he claimed that Oesterlund had embroiled
Pursglove’s company in a fraud against the people of Florida. The only
way to stop it was for the court to drag the whole business — the Cook
trust, the Nevis company and whatever else the court would let Fisher go
find — back to Florida. To put it another way, Pursglove sued herself.
Oesterlund’s
lawyers moved to toss this new lawsuit out of court too. Fisher thought
he could become a kind of “private attorney general,” as he put it,
pursuing Oesterlund for the public good.
Oesterlund’s lawyers saw it
differently. It was “unfounded, illogical, frivolous” for Pursglove to
sue herself and her husband on behalf of the attorney general, they
argued. Oesterlund’s personal lawyer, a veteran litigator named Gary
Rosen, dismissed the lawsuit in court as “a leverage point” concocted by
Fisher to pressure Oesterlund in the divorce. Oesterlund’s offshore
trust was not an elaborate scheme to defeat the settlement, the lawyers
argued, but the normal estate planning of a wealthy and successful
businessman. And Pursglove, they said, was no victim. She had been part
of her husband’s planning from the very beginning.
It was, in truth,
hard to say where Pursglove’s involvement with the offshoring began and
ended. In court filings, Oesterlund produced an email showing that on
at least one occasion, Oesterlund’s advisers had discussed setting up a
separate trust for Pursglove and for the couple’s United States
properties. When I looked closely at the contracts between Xacti and
Omega, I noticed that one of them bore not only Oesterlund’s signature,
on behalf of Omega, but also that of Pursglove, on behalf of Xacti. She
was also at one time a beneficiary of the Cook Islands trust, albeit
only in the unlikely event that Oesterlund and both of their two
daughters happened to predecease her.
Indeed,
because Pursglove was a United States resident with a large ownership
stake in several profitable United States businesses, she stood to pay
far less in taxes if her husband could move the profits offshore.
Moreover, both Pursglove and Fisher now stood to benefit from his new
legal strategy: Lawyers are barred from working on contingency in
divorces, but in the civil lawsuits, Fisher would be allowed to charge
Pursglove a percentage of whatever money he could find and drag back to
Florida.
Strikingly,
Pursglove didn’t seem to have much sympathy for the consumers who had
filed complaints against her family’s companies — the very basis of
Fisher’s carefully plotted legal strategy. On more than one occasion,
first during a long meeting in New York and later over a candlelit
Italian dinner with Fisher and Potter in Delray Beach, I asked Pursglove
whether she had any reservations about how she and Oesterlund had made
their money. Whatever regrets she had about her husband, I learned, did
not extend to the family business. “Every time you click on an ad,
someone gets money,” she told me, shrugging. “We were the people who got
the money.”
All
this raised the possibility that Pursglove’s main objection to the
offshoring scheme was that her husband had decided to cut her out of it.
Oesterlund himself insinuated as much. “Wow your Jeff is desperate,” he
texted her in May 2015, meaning Fisher, after a Canadian judge issued a
further freeze of his assets. “Why would he want to expose you by
trying to reopen the attorney general settlement? But ok we will throw
you under the bus.”
Pursglove
says she always knew Oesterlund was trying to minimize their taxes. But
like many wealthy people who hire expensive help to execute complex tax
transactions, Pursglove had considered herself to be avoiding taxes,
not evading them — precisely the distinction wealthy people hire an
accounting firm like Daszkal Bolton to observe on their behalf, however
finely. Now, though, she was relying on Fisher to dismantle Daszkal
Bolton’s handiwork.
Fisher’s
argument was that Oesterlund had begun offshoring the companies to
shield himself from consumer lawsuits, but then, as a divorce grew
imminent, redeployed the same plan to shield assets from Pursglove. And
that assertion was bolstered by a new discovery.
Studying
bank documents Fisher had subpoenaed, Fisher’s paralegal, Lindsey
Crews, noticed that Pursglove’s stamped signature appeared on paperwork
in early 2013 that gave an Xacti executive named Skip Middleton,
Oesterlund’s right-hand man, authority over at least six Xacti-related
bank accounts with Wells Fargo. A few months later, Middleton used his
newfound authority to remove Pursglove from the accounts. Not long
after, around the time Oesterlund created the Cook Islands trust,
someone using Pursglove’s signature stamp had caused RSOP, the family
holding company, to guarantee a $17.5 million loan from a Florida lender
called C1 bank, using the Déjà Vu as collateral. The loan papers
attested that Middleton had witnessed Pursglove signing for the loan in
Florida. But Pursglove wasn’t in Florida on the date indicated: Her
passport stamps proved that she was actually in Toronto.
A
clearer picture emerged as they studied documents subpoenaed from
Daszkal Bolton. It turned out that in early 2013, after Pursglove asked
Xacti’s executives to inform her of any large cash transfers or major
business decisions, Oesterlund ordered Middleton to cut her off. Over
email, he told Middleton to ban her from their Boca Raton offices and to
remove Pursglove as a signatory to the company bank accounts. Middleton
forwarded the email to a Daszkal Bolton accountant. “Umm, Houston, we
have a problem,” Middleton wrote, referring to Oesterlund’s demands. The
bank forms adding Middleton to the accounts — supposedly with
Pursglove’s permission — were filed two days later.
A
lawyer for Middleton did not reply to a request for comment. (When
Fisher deposed him this past April, Middleton invoked his Fifth
Amendment rights almost 300 times, including to the question of whether
he had forged Pursglove’s signature.) A spokesman for Daszkal Bolton
told me that the firm would not comment on litigation or client matters.
But documents obtained by Fisher suggest that Oesterlund’s lawyers and
accountants had indeed spent 2013 trying to make him untouchable,
trading complex organizational charts, debating what companies to create
in which countries, even what value to assign them.
Early
in the fall of 2014, Fisher printed out a copy of the Xacti
organizational chart and taped it behind his desk. He ordered everyone
in the office to keep a copy as well. Every time they found a new
Oesterlund company, they would add it the chart, which came to resemble a
convoluted treasure map. In the Caribbean, there were shell companies
with names like Paradise Liquidity I and Integrity Investment Holdings,
formed by a Nevis holding company and then immediately transferred to
Oesterlund’s Cook Islands trust. There was a second Cook Islands trust,
also created in June 2013, right as the Florida attorney general began
nosing around Oesterlund’s businesses again. There was $35 million or
more in cash, in bank accounts in, among other places, Monaco,
Luxembourg, Canada and the Bahamas.
Yet
on paper, it was hard to find anything that Oesterlund actually owned
himself. Shortly after Judge Gillen froze his assets, Oesterlund removed
himself as a “beneficiary” of the two trusts, even though they now
appeared to contain much of the family’s businesses and property. The
Toronto penthouse was now owned by a Delaware corporation, which was
owned by a Nevis corporation deposited in one of the Cook trusts. At
some point, Omega had also been transferred into one of the trusts. The
Déjà Vu, meanwhile, was now owned by a Caymans corporation whose
“membership interest” — its ownership — had been shifted into one of the
trusts. In exchange, the trust paid Oesterlund the sum of $100.
Unknown
to his wife, Oesterlund had even purchased an apartment complex in
Georgia, using $23 million in loans backed by the Housing and Urban
Development Department. The application, which Potter obtained with an
open-records request, was personally signed by Oesterlund, who listed an
address in Boca Raton where he hadn’t actually lived in at least four
years. But after the sale closed in 2013, other documents indicated,
control of the apartment complex was shifted to a Bahamian company, and
finally into the trust. The United States government appeared to be
guaranteeing a $23 million loan to a Cook Islands trust in the South
Pacific.
Oesterlund’s legal strategy
was also becoming clear: Don’t explain anything. The trusts had hired a
small Miami law firm called Kaplan Zeena, whose lawyers excelled at
navigating the complexity and opacity of the offshore legal world. They
cited obscure international treaties and arcane points of Caribbean law,
Potter told me. They filed endless procedural and jurisdictional
objections, burying Potter and Fisher in paperwork. Pursglove was now
receiving alimony and child support, but much of it was taken up paying
off a jumbo mortgage and back taxes; Fisher would get paid for his
firm’s work only if she won. (Kaplan Zeena, too, did not respond to
emails seeking comment.)
Potter,
who had to write most of the replying briefs, believed that
Oesterlund’s trusts were filing motions or objections it seemed certain
to lose, just to exhaust and bankrupt Pursglove. In one lawsuit, the
trusts fought against releasing a single piece of paper. The goal wasn’t
merely to win, Potter felt, but to prevent the case from progressing
far enough for its actual merits to be heard. “This isn’t some weird
aspect of the process,” he says. “This is the game itself.” Nor could
Fisher, despite invoking the authority of the Florida attorney general
against Oesterlund, count on help from the actual Florida attorney
general. The office had sent a lawyer to monitor at least one hearing in
Pursglove’s lawsuit, but had taken no official position on her claims.
Fisher was on his own.
But
in the late fall of 2014, Oesterlund ran short of a commodity that had
once seemed in bountiful supply: time. For many months, his lawyers had
successfully delayed Fisher’s demands to depose him in person, insisting
on a variety of jurisdictional, geographic and practical complications.
In the process, however, Oesterlund had exhausted the patience of a
series of Florida judges. Now, under threat of being held in contempt
(and, potentially, the court’s issuing a warrant for his arrest),
Oesterlund agreed to show up in a Toronto law office.
A
video of the day shows that he arrived a few minutes late. “You’re
shorter than I thought you were,” Oesterlund told Fisher. But for the
rest of the deposition, Oesterlund was studiously restrained. He
answered most questions in a monotone, rarely meeting Fisher’s eye.
Fisher tried repeatedly to get Oesterlund to list his assets. “I owned
lots of assets, different assets, various assets,” Oesterlund said
vaguely. He had “things that most people would have, like a watch.” Was
he really worth $401,769,834, as his accountants once thought?
Oesterlund waved the question away. “I don’t know where these numbers
are taken from,” he said, staring fixedly at the table. How did the
penthouse end up in a Cook Islands trust? It was “a transaction between
me and my attorney.” Which attorney? “I can’t remember,” Oesterlund
retorted. “I have too many.”
But
bit by bit, Fisher began to connect Oesterlund back to his own wealth.
Oesterlund admitted that he had signed a rental agreement to live in the
Toronto penthouse now owned by the trust. In that case, Fisher asked,
was Oesterlund paying rent? Oesterlund looked up at the ceiling. “It’s
being accrued,” he replied; no money was actually changing hands. Under
orders from Rosen, one of his lawyers, Oesterlund refused to say who was
paying the utilities and maintenance at the penthouse. But he admitted
that the trust was paying to fuel, maintain and crew the Déjà Vu — a
boat that he was the only person permitted to use, according to a copy
of the boat’s insurance contract.
Documents
accompanying the deposition provided further evidence that there was
little distance between Oesterlund and the theoretically independent
trusts holding his former property. The trusts were paying to furnish
Oesterlund with a private helicopter and even fund his trips to St.
Maarten.
In
court papers filed that spring and summer, Fisher and Pursglove’s
Toronto divorce lawyer, Harold Niman, sharpened their attacks.
Oesterlund was “a highly successful internet swindler,” engaged in
“internet scams, forgeries, tax fraud, bank fraud, HUD fraud,
immigration fraud, fraudulent overseas transfers and other misconduct,”
Fisher told a Florida judge. They also moved to freeze even more of
Oesterlund’s income, and not just to make him suffer personally. Fisher
and Potter estimated that Oesterlund was burning through about a million
dollars a month, much of it going to pay the lawyers and accountants
keeping his maze of trusts and shell companies in working order.
In
March, Fisher went after Wells Fargo, Oesterlund’s main link between
the name-brand financial-services world and the gray market of offshore
shell companies and trusts. The Wells Fargo accounts, they believed,
were still accumulating revenue from some of the old Xacti businesses —
the ones selling travel deals or DVDs or antivirus toolbars — some of
which had been reconstituted under new, offshore corporations. Fisher,
citing Pursglove’s possibly forged signature removing her from the
accounts, threatened to sue Wells Fargo, asserting that the bank had
allowed Oesterlund to defraud his wife of millions of dollars. Because
of the competing claims to the accounts, Wells Fargo quickly froze them
until the dispute could be settled. Now neither Oesterlund nor the
trusts could access the money.
An
even bigger threat to Oesterlund began taking shape in June 2015, when a
Florida judge ruled that Pursglove was entitled to view thousands of
pages of emails and documents exchanged by Oesterlund and other
executives at Xacti with their lawyers. Oesterlund’s attorneys had tried
to keep the documents out of court, arguing they were protected by
attorney-client privilege. Fisher was certain the privileged documents
would contain what he called a “smoking gun.” He wouldn’t just see where
the money was hidden, Fisher believed. He would see Oesterlund plotting
how to hide the money. He would get not only direct evidence of fraud
against Pursglove and others, but also emails and memos that might
implicate many of the lawyers and accountants who had helped him. The
whole thing could be laid bare.
A few days later, Oesterlund’s
lawyers asked for a meeting, hinting that if Fisher got the privileged
documents, their client would go on the run. Whatever Oesterlund was
hiding, it was so damaging that he was willing to live in virtual exile
in order to keep it from his wife.
Fisher
and Potter strolled down the block in West Palm Beach to the offices of
Squire Patton Boggs — a well-regarded multinational firm that
represents Oesterlund’s Florida companies — to hear them out. The
suggestion made everyone wary. Pursglove could lose by winning: If her
husband went into hiding, it would be hard to wring money out of him.
But it would also be bad for Oesterlund’s lawyers, particularly for the
Americans. For one thing, Potter would later realize, Oesterlund now had
large unpaid legal bills. And beyond the financial risk was a
reputational one. It was one thing to defend a businessman in a civil
suit. It was another to defend a fugitive.
Documents
turned over at the June meeting and subsequent ones that summer laid
out Oesterlund’s position. Most of his net worth was tied up in the
value of his companies, and they were worth less than his accountants
once claimed. He didn’t actually have enough wealth to give his wife
half of a $400 million estate — the sort of net worth he once declared
in order to secure loans for a jet or Georgia real estate. But now the
baroque complexity of Oesterlund’s finances had become a noose around
his neck. To prove that Oesterlund’s fortune was much smaller, his
lawyers had to reveal where and how he had hidden it. If they refused,
and a judge decided to award Pursglove $200 million, Oesterlund wouldn’t
have enough liquid wealth to pay up. He could be ruined.
Trapped,
Oesterlund’s lawyers were now doing Fisher’s work for him, providing
documents that suggested further violations of the Judge Gillen’s
original asset injunction, Potter told me. One trust had recently sent
Oesterlund’s lawyers more than $1 million to cover legal fees. In
Potter’s opinion, Oesterlund had no choice. He “had to decide whether to
pay the lawyers, and expose that he could get cash from the trust
whenever he wanted,” Potter says, “or not pay them, and not be able to
fight the suit.”
Another
bank statement they handed over showed that on a single day in 2014,
Oesterlund transferred $48 million into one of the Cook trusts. It was
the same day, Fisher quickly realized, that Pursglove discovered
Oesterlund with his new girlfriend. Fisher believed this would be strong
evidence in court that the trust had been set up in anticipation of
owing his wife money, which even in most offshore jurisdictions is
against the law.
Hundreds
of thousands of dollars had been drawn out of one trust each month to
operate the Déjà Vu. Fisher’s paralegal hunted for the boat in
Oesterlund’s usual haunts. Using public webcams at ports around the
French Rivera, she discovered the Déjà Vu anchored in the middle of the
harbor in Saint-Tropez. Potter took a working vacation to France and,
after a few days of carefully planned sightseeing, found the boat
anchored in Nice. Halfway through a meal at the Grand-Hotel du
Cap-Ferrat, he also found Oesterlund himself, who strode out onto the
dining patio with the interior decorator. Potter’s own girlfriend
snapped a picture on her cellphone. They left quickly, before Oesterlund
noticed them.
In
Florida, Oesterlund’s lawyers were again running out of time.
Oesterlund was now subject to an increasingly stern series of court
orders that he turn over the privileged documents, regardless of any
potential settlement.
This
didn’t just threaten Oesterlund’s fortune. It also had the potential to
carve open a portal into the world of offshore finance, a place that
the global elite has spent hundreds of millions of dollars to build and
defend. In the offshore archipelago, their interests are hidden behind
shell companies and trusts, their anonymity guaranteed under the law,
from Delaware to the Bahamas to the South Pacific. James S. Henry, a
former chief economist at McKinsey, calls the offshore financial world
the “economic equivalent of an astrophysical black hole,” holding at
least $21 trillion of the world’s financial wealth, more than the gross
domestic product of the United States.
This
darkness shields the tax-averse businessman and the criminal alike.
Dictators use the offshore system to loot their own countries. Drug
lords use it to launder money. As Gabriel Zucman, a University of
California economist and an offshore expert, puts it: “They use the same
banks, they use the same incorporation agents to create shell
companies, they send money in the same ways.”
But
when the wall of secrecy is breached, the distinction between upright
global citizen and criminal can quickly grow indistinct. In April, media
outlets belonging to the International Consortium of Investigative
Journalists published a trove
of confidential records leaked from the Panamanian law firm Mossack
Fonseca, exposing the offshore financial holdings of various kleptocrats
and forcing the resignation of the prime minister of Iceland. Leak the client files of a single middling law firm in Panama City, and you can take down governments half a world away.
If
Fisher could prove that one Cook trust was a sham, then the settlors
and administrators of other Cook trusts could have a harder time
defending them in reputable courts. For attorneys and accountants
working in the offshore industry, having private correspondence with a
client entered into a public court record would be a disaster. Anybody
could see what they were doing and how they did it. Fisher’s legal
assault now presented Oesterlund’s helpers with a painful choice:
Protect one client, or protect the system.
Soon, the tangle
of defenders who had once guarded Oesterlund’s wealth started to turn
against him. One rainy Friday in July 2015, after losing an appeal on
the treasure trove of privileged documents, Oesterlund’s entire team of
lawyers at Squire Patton Boggs abruptly quit. Oesterlund, Potter
learned, had ordered them to ignore the court’s order to turn over the
documents, a serious violation for which the lawyers, all American
citizens, could have been disbarred.
They
rejoined the case within days, after Oesterlund agreed to let them
release a portion of the files. But it was a sign that Oesterlund had
begun pushing his camp into dangerous territory, both professionally and
legally. The wall of secrecy around Oesterlund’s offshore holdings
began to collapse. The first batch of documents, five or six notebooks’
worth of emails arrived last fall. More would soon follow.
When
I spoke with Fisher by phone in February, he sounded confident.
Oesterlund appeared to be running out of cash, Fisher told me; he was
missing payments on the loan from C1 Bank. In August, after further
delays in producing the documents, Judge Gillen held Oesterlund and his
companies in contempt of court, dangling the prospect of criminal
penalties. Soon after, Oesterlund’s personal lawyer in the case quit,
citing “irreconcilable differences” with his client. Court filings this
fall suggested that the civil litigation was drawing to a close, though
both Fisher and Oesterlund’s remaining lawyers said they were barred
from discussing any final settlement.
More
even than the laws of the world’s tax havens, the offshore financial
system is kept afloat by the legions of professionals — accountants,
lawyers, incorporation agents — who are paid well to service it. But the
people who work to dismantle that system also have to be paid. If the
case Fisher had constructed against Oesterlund was correct, I once
proposed to him, then at least some of the money coming to him and
Pursglove would seem to be tainted. Fisher disagreed, and unspooled an
intricate accounting of his own. When he cracked open the Cook trusts,
Fisher argued, the money would come back home. Whatever liabilities
Oesterlund had to consumers would be payable by what remained of the
businesses. Pursglove and her payout would live in Boca Raton, within
easy reach of United States law. “I would always view the dollars that I
get to be legitimate dollars,” Fisher said.
But
this would be a justice of wealth battling wealth, hammering through
the veneer of trusts and shell companies to serve private ends. Fisher’s
own role as public crusader would end, circumscribed by Pursglove’s
interests. He and Potter had sent packages of evidence to the Palm Beach
sheriff’s department, the inspector general of HUD, and the United
States attorney’s office. Those authorities might take a hard look at
Oesterlund’s business dealings and the well-paid professionals who made
them all possible. Or they might lay the packages aside, alongside other
complex cases that take extraordinary amounts of time and money to
pursue. “In the end, I’m not a private attorney general,” Fisher mused.
“I’m a private attorney.”
Nicholas Confessore is a national political reporter for The Times.
Article copied from: The New York Times Magazine
Article copied from: The New York Times Magazine
