Magazine article Business Credit

IRS Agent Reports: Exporters Loan Corporate Jets to South American Customers "No Questions Asked."

Magazine article Business Credit

IRS Agent Reports: Exporters Loan Corporate Jets to South American Customers "No Questions Asked."

Article excerpt

At a recent NACM Loss Prevention Department meeting, attendees were told by Agent Bill Bruton of the Internal Revenue Service that large corporations in the U.S. have, on several occasions, loaned their corporate jets to customers for unspecified trips. Bruton conceived of, and was operations manager for the recent "Operation Dinero," an undercover bank operated by the U.S. government in the British West Indies.

Astonished attendees, most of whom were experienced security personnel, could barely believe it. Said Bruton to the audience, "we've documented it on more than one occasion, and the companies that went along with this (the loaning of their corporate jets) are well known."

How can this be? The scenario develops like this: A large corporation with U.S. offices is approached by a South American customer, and a relationship begins. The customer begins buying in very large quantities, and eventually becomes one of the largest and most valued of the large company's customers.

One day, the supplier is approached by a representative of their growing customer, and is told: "We'd like to borrow your corporate jet for a trip."

The supplier's representative is stunned by the request. "Absolutely out of the question! You can't borrow our jet. That's impossible!"

"You don't understand," the South American representative replies. "This Friday, we are buying your brand. If you don't comply, on Monday, we will switch to your competitor."

"It's still out of the question," declares the supplier company. "We just can't give you our jet sight unseen!"

"Fine, we will switch immediately if you don't like our request," counters the customer.

At this point, the corporation officials begin to look at the consequences, which can include idling plant capacity and laying workers off. Eventually, they cave in and loan their jet to the customer, rather than turn away millions of dollars in business.

Why would a South American company borrow the corporate jet of a company with offices in the U.S.? The answer is simple: money laundering. Organized crime cartels have a need to get the billions of dollars in cash earned in the U.S. out of the country and convert it into usuable funds. Jets from large corporations routinely fly in and out of the U.S. What better way to launder funds!

"What this means is that those exporters are unwittingly assisting cartel front-businesses in the laundering of their drug profits," said Bruton. …

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