Thursday, April 30, 2020

Authoritarian Regimes Are Not Your Friend.

Berkman Klein Center – Skills for a Digital World: “If you or a young person you know is isolated in their digital world, why not use this time to understand it better? Want to take action effectively on COVID-19 safety or other societal issues? Want to get credit for the photos, music, or creative art you share? Unsure of how to best share your data with others? Need to create a resume for a job in the fall?  Explore the 24 new activities the Youth and Media team created for young people! The 24 activities have already been grouped in four collections so young people can engage as deeply as they like: (1) Building and Protecting Your Online Presence, (2) Crafting a Successful Resume, (3) Sharing Your Work Online — What License to Use?, and (4) Creating the Change You Want.  While we encourage young people to engage with a collection, activities can also be done individually. In addition to youth, we especially invite parents/caregivers and educators to explore them!…”

The contrast was jarring. A Melbourne press conference featuring Health Minister Greg Hunt, billionaire philanthropist Andrew Forrest and the Chinese consul-general in Victoria was an enthusiastic celebration of the friendship between China and Australia, allowing delivery of 10 million vital Chinese coronavirus testing kits.
This started late because it overlapped with a prime ministerial press conference in Canberra where Scott Morrison airily dismissed China’s fury at Australia’s “commonsense” call for an international inquiry into the genesis and handling of the virus.
The disconnect reflects the risks being willingly taken by Australia in an increasingly acrimonious confrontationwith China. Although it’s impossible to argue with the need for an international independent investigation into what went so disastrously wrong, the timing, tone and obvious target in Australia’s call guaranteed an angry response from China.
Beijing’s return loudspeaker came in an interview by China’s ambassador, Cheng Jingye, with The Australian Financial Review this week, predictably backed up by vehement attacks in state-controlled media outlets. The ambassador’s threat of economic retaliation inevitably led to outrage-in-kind from the Morrison government about such “coercion”. It included a formal bollocking of the ambassador from the Secretary of the Department of Foreign Affairs and Trade, which the embassy immediately disparaged in a statement.
Yet while the Prime Minister sounds sternly resolute as he insists the need for an inquiry is completely “unremarkable” and in Australia’s national interest as well as the world’s, the government knows its own China problem has gotten a whole lot worse.
Andrew Forrest mines his own diplomatic lode with China

Questions have been raised over the fact that the American cloud provider Amazon Web Services, which was given a Federal Government contract to store data collected by the government's COVIDSafe app, is using a data centre in Sydney which is fully owned by a Chinese company.
Labor MP Ed Husic, who raised the issue on ABC News' afternoon briefing on Tuesday, said he had been informed that the Australian Signals Directorate was also concerned about this aspect of AWS' functioning in Australia. His comments were first reported by the website InnovationAus.
COVIDSafe app: AWS using Chinese-owned data centre in Sydney, says Husic

Availabilityof COVID-19 related products on Tor darknet markets

The Australian Institute of Criminology has released a new paper on the availability of COVID-19 related products on Tor darknet markets.

  • The Australian Institute of Criminology commissioned the Australian National University Cybercrime Observatory to undertake a rapid census of COVID-related medical products and supplies being sold on the darknet as at 3 April 2020.
  • There were 645 listings and 222 unique listings for COVID-related products across 12 omnibus darknet markets. Unique listings exclude those listings duplicated within or across markets. 110 active vendors were identified; of these, eight were active in multiple markets. The estimated value of unique product listings was A$369,000.
  • Personal protective equipment (PPE) was the most commonly listed item, accounting for about half of all unique listings, most often surgical masks, hand sanitizers and gloves. Anti-viral and repurposed medicines were the next most common products, accounting for one third of unique listings, and most often included the malaria treatment Chloroquine and antibiotic Azithromycin.
  • Supposed COVID-19 vaccines and antidotes, and COVID tests and diagnostic instruments each made up less than 10 percent of unique listings. One listing for a ventilator and five listings of a COVID-19 Handbook were also identified.
  • Darknet market Agartha had the largest market share, accounting for more than two-thirds of all COVID-19 product listings, followed by DarkBay (20%). Three markets accounted for 84 percent of all unique listings identified – Agartha, DarkBay and Empire. A small proportion of vendors accounted for most of the listings and potential profit—17 of the 110 vendors had more than 4 listings each and an overall value greater than A$5000.
  • Three listings claimed to be shipped from Australia (less than one percent), while more than sixty-percent of all listings claimed to be shipped from the United States.
  • On darknet forums, vendors and buyers are stating that lockdowns are creating delays in the shipping process of all products. Some vendors anticipate halting their operations due to ceasing postal services, while others are informing their customers of a 6 week wait for packages that usually take 10 days.

The paper is available for free download on the AIC website:

ABC - Dark Net Covid-19

Even by the Chinese government’s own numbers, they’re producing jaw-dropping quantities of medical equipment that aren’t up to the right standards: “As of last Friday, China’s market regulators had inspected nearly 16 million businesses and seized more than 89 million masks and 418,000 pieces of protective gear, said Ms Gan Lin, deputy director of the State Administration of Market Regulation, at a press briefing.”
And that’s just the stuff they’re catching before it goes out the door.
Almost every country that is dealing with the SARS-CoV-2 outbreak has ordered masks, tests, or personal protective equipment from China, only to open the boxes and find that the deliveries are unusable. In some cases, the equipment was distributed and used before the poor quality was discovered — offering false protection to medical personnel and exacerbating the spread of the virus instead of mitigating it.

Previous epidemics might have prepared us for Covid-19 — if only their histories were better remembered and their victims duly honored. We could have been more like Venice, a city defined by disease 

When his "theory of the firm" went bust, the economist Michael Jensen needed a scapegoat. He found one in basic Human Irrationality 

One reason death can seem freshly invented in loss is because the death we find in our philosophies is not the one we find in life” — Amy Olberding (Oklahoma) on meditates on the “the stuff of lives that have no more use for stuff

Bullshit Shelter Taxpayers Continuing FOIA Litigation to Identify Informants Turning Them In to IRS

District Court Muddles an FBAR Willful Penalty Case 

Bullshit Shelter Taxpayers Continuing FOIA Litigation to Identify Informants Turning Them In to IRS 

FOIA requests and litigation have not been featured prominently on this blog.  For this entry, FOIA litigation is front and center, but interesting for a tax crimes blog because of what the FOIA requesters (in the role of taxpayers in this case) seek from the IRS – the identity of the whistleblower, if one exists, who turned them in for attempting a raid on Treasury via a bullshit tax shelter.  InUnited States v. Montgomery (D. D.C. No. 17-918 (JEB) Memo Op. Dtd 3/25/20), here, the Court starts:

This Freedom of Information Act dispute represents the latest round in Plaintiffs Thomas and Beth Montgomery’s never-ending heavyweight bout with the Internal Revenue Service over their multi-billion-dollar tax-shelter scheme. After settling various financial disputes with the agency, Plaintiffs submitted FOIA requests to Defendant in order to discern whether a whistleblower had incited the agency’s investigation. The Service’s responses, however, did not bring Plaintiffs any closer to discovering the source of their woes. Frustrated in their pursuit of this information, they filed suit in this Court. 

In response to the previous round of summary-judgment motions, the Court held that Defendant had appropriately invoked Glomar with respect to one category of Plaintiffs’ requests but had failed to conduct an adequate search as to the other. History repeats itself here in regard to the current dispositive Motions. Once again, Defendant has justified its invocation of  Glomar as to certain potential documents, but it has otherwise not conducted an adequate search. The Court will therefore grant in part and deny in part the parties’ Motions for Summary Judgment and direct the IRS to renew its search.

Glomar response a FOIA response that “neither confirms nor denies the existence of documents responsive to the request” because it would cause cognizable harm under a FOIA exception.  E.g.,Ctr. for Constitutional Rights v. C.I.A., 765 F.3d 161, 164 (2d Cir. 2014).  Obviously, the IRS does not either want to disclose that there was an informant or the name of the informant if there was an informant.

Then the Court recounts the facts:
The Court has recounted the facts surrounding this prolonged tax saga in several of its prior Opinions, but it will provide a brief recap here. See, e.g., Montgomery v. IRS, 292 F. Supp. 3d 391, 393–94 (D.D.C. 2018). In the early 2000s, Plaintiff Thomas Montgomery helped form several partnerships that were structured so as to facilitate the reporting of tax losses without those entities’ experiencing any real economic loss. Id. at 393. These “tax-friendly investment vehicles” allowed Thomas and his wife Beth, filing jointly, to report the entities’ alleged losses as part of their individual tax returns. Id. (alteration omitted). In other words, Plaintiffs were able to enjoy the tax benefits of experiencing an investment loss without shouldering the consequent burdens of such a loss. Somehow — and the Montgomerys are determined to learn exactly how — the IRS caught wind of their use of these vehicles, setting into motion over a decade of litigation on the issue. 
After examining the structure of the partnerships, the IRS issued “final partnership administrative adjustments” (FPAAs) as to two of them, which resulted in the agency’s imposing certain penalties and disallowing some of the losses the Montgomerys had claimed on their individual returns. Id. at 393–94. Next, the partnerships sued the Service in several separate actions, seeking a readjustment of the FPAAs (for those keeping score at home, this would amount to a readjustment of the adjustments). See Bemont Invs., LLC v. United States, 679 F.3d 339 (5th Cir. 2012); Southgate Master Fund, LLC v. United States, 659 F.3d 466, 475 (5th Cir. 2011). Ultimately, the Fifth Circuit affirmed the IRS’s determination that the partnerships had substantially understated their taxable incomes,Bemont, 679 F.3d at 346, but held that one transaction by the Southgate partnership had a legitimate investment purpose. Southgate, 659 F.3d at 483. With these mixed verdicts in hand, the Montgomerys and the partnerships pursued thirteen separate suits against the IRS, seeking, inter alia, a refund of assessed taxes and penalties. Montgomery, 292 F. Supp. 3d at 394. The cases were ultimately consolidated, and the parties reached a global settlement agreement in November 2014 that entitled the Montgomerys to more than $485,000. Id.

Thus, while the Montgomerys did get a substantial refund, it appears that they lost their claims to even more substantial refunds.  The Montgomerys walked away from the settlement of their tax liabilities with an ax to grind--with an informant causing their woe, if there was an informant.

The Court then addresses the particular skirmish in this long running saga, calling it "Another turn of the hamster wheel."

I don’t know that there is anything more to say about this continuing saga other than that the bullshit tax shelter abusers must have more money than they apparently need.

Cross posted on Federal Tax Procedure Blog, here

Jozef Imrich Moment: Whole lot safer than bleach: Dan Murphy - Even AI Is Done With Games

 The ATO's robust and efficient compliance measures will quickly identify those who try to rort the system.”.

The Inspector-General of Taxation and Taxation Ombudsman (IGTO) :
Register of Potential Review Investigations

Offshore Account Related Plea After Quiet Disclosure 

On April 3, 2020, DOJ Tax issued this press release:  Lake Worth Businessman Pleads Guilty to Evading Taxes on Millions in Income, Stashing Funds in Secret Accounts Around the Worldhere.

Compassionate Release from Incarceration Based on COVID-19 Pandemic 

The Procedurally Taxing Blog has an excellent posting today on the compassionate release of a notorious tax criminal, Morris Zukerman.  Leslie Book, Court Grants Compassionate Release to High Profile Tax Felon Morris Zukerman (Procedurally Taxing Blog 4/20/20), here.  The blog entry discusses the Court’s granting Zukerman release because of his physical characteristics (75 years old, diabetes, hypertension and obesity) and close physical incarceration with other inmates that might make him particularly susceptible to COVID-19 infection and serious consequences.

Fifth Circuit Rejects Attorney-Client Identity Privilege for Law Firm Documents 

Making a List and Checking it Twice: Must Tax Attorneys Divulge Who's Naughty and Nice, 38 U.C. Davis L. Rev. 141 (2004), here


How New Zealand responded to the end of lockdown

IT’S COME TO THIS: Hawaiian Brewery Under Investigation for Hand Sanitizer Giveaway. Absurd enforcement of liquor regulations harms public health efforts. “In other words: It’s against the law in Maui to give away hand sanitizer to people who buy liquor from you. And it’s also against the law to give liquor away to people who buy hand sanitizer from you.”
The Big Dog is tonguing for the tannins.

The King himself is bloody dribblin’ for a dram.

Will Professor Peter Doherty, almost inarguably the nation’s foremost expert on the current coronavirus pandemic, ever find his fabled Dan Murphy opening hours? Hard to say. Truly, one of the great mysteries of our time.

*Flings open window shutters*

"You there, boy! What day is this?"

Street urchin:

"Today, sir? Why, it's

— Mark Lankester (@markrlankester) April 28, 2020

A shame there won't be the traditional Ed Balls Day Parade this glorious 28th, but stay safe and celebrate at home. #EdBallsDay
— Mark Worgan (@worgztheowl) April 28, 2020

It seems come round faster each year. Happy #EdBallsDay one and all!
— Zoë Paramour (@ZoeParamour) April 28, 2020

Woke up with a hangover & hadn't got my wife a present, now she's saying I've ruined another#EdBallsDay. Every bloody year we have this.
— Perfectly Healthy Clandango (@Cain_Unable) April 28, 2020

I'm old enough to remember when #EdBallsDay was about family and friends. Nowadays it's become too commercialised. It's almost lost all meaning.
— Mark McFadden (@MarkMcFadden) April 28, 2020
And finally, after nine long years Balls himself finally, brilliantly posted a follow up...

— Ed Balls (@edballs) April 28, 2020
The Office As We Knew It Isn’t Coming Back Anytime Soon. Maybe It’s Changed Forever. I think it’s a long-term hit for commercial real-estate. Some people will like this change and some won’t. Employers will like basically dumping a lot of costs — office rent, utilities, Internet service, printer toner, etc. — off on employees.

MEdia Dragon is renowned for being in wrong applications when taking selfies or self-googling or tracking some matters of concerns.
So even Nobel prize-winners can be considered as unreasonable ;-) in the eyes of human remains or organisation people resources ...
Australian Prof Peter Doherty, whose eponymous institute has led the country’s coronavirus research, lit up the internet with an Ed Balls moment on Monday

If you’ve found yourself needing a stiff drink more often than usual to get you through life in the time of coronavirus, it turns out you are in esteemed company.

Prof Peter Doherty, a Nobel Laureate for his work on immunology and patron of the Doherty Institute, which has been at the forefront of Australia’s response to the pandemic, gave people on the internet a much needed distraction on Monday after he confused the social media site Twitter for Google and inadvertently asked his more than 26,000 followers for the opening hours of the alcohol retailer Dan Murphy’s.

Prof. Peter Doherty(@ProfPCDoherty)
Dan Murphy opening hours
April 27, 2020

The University of Melbourne laureate professor and former Australian of the year, 79, did not shy away from the errant tweet.

After firing off the misguided missive at 1.40pm
on a Monday afternoon, Doherty confirmed to one of a flood of replies that it was a classic case of too many open tabs, before taking the time to riff on everything from the US president Donald Trump and his less-than-scientific musings on a coronavirus cure to the dating app Tinder.

Jokingly asked by one Twitter user whether he was recruiting for a new clinical trial, Doherty mused that alcohol was a “whole lot safer than bleach”. When another follower suggested it was fortunate he hadn’t mistaken Twitter for Tinder, Doherty suggested that would be “profoundly sad”.

Prof. Peter Doherty(@ProfPCDoherty)
Yes, wires got crossed. Too much time in front of a screen.
April 27, 2020
Prof. Peter Doherty(@ProfPCDoherty)
Whole lot safer than bleach.
April 27, 2020

United States regulators settled a major corruption case with Italian oil company Eni that allegedly bribed Algerian politicians through a middleman who controlled a constellation of shell companies. Its subsidiary company, Saipem, signed “sham contracts” with the intermediary who provided no real services. Eni did not deny or admit the Securities and Exchange Commission’s findings but agreed to pay $24.5 million and to not doctor financial records. But corruption expert Alexandra Gillies said the settlement seemed “frustratingly weak.”

Via Richard Murphy "I  was fascinated by a story in the FT this morning. This does, admittedly, largely relate to the US-based Domino's Pizza, but it's still relevant. As they note: Domino’s Pizza: boxing clever:"

"Let’s just order a pizza.” That Friday night mealtime capitulation has become a much more common refrain these days as government stay-at-home directives keep Americans homebound.
This has positioned Domino’s Pizza well to survive the fallout from the coronavirus crisis. The $14bn company dominates the US pizza delivery industry with nearly 6,000 stores. It said on Thursday that US same-store sales rose 1.6 per cent during the first quarter. That marks the slowest quarterly sales growth in nine years. But it is a more than decent performance. Especially when compared to the sales collapse forecast for chains that rely largely on dine-in customers.

It's confession time: sometimes we have a Domino's. Sometimes a dad needs a night off cooking, and can't face his sons' efforts. That's just the way it is.

But there's a curious fact in play here. Domino's is offering a vastly smaller than normal menu at present, and it's not impacting demand. Now that could just be because they're still open and people are desperate. But they are not the only takeaway functioning around here: I can assure you of that. And still they are seeing demand. Indeed, it's so big that they apparently need a smaller menu.

Now, here's the question: did they ever need the bigger menu in that case? And will they restore it after this is all over? Or have they discovered that people actually don't like that much choice and really don't want to wade through multitudinous, and often quite similar, choices?

If I was Domino's I would be giving serious thought to this. I suspect that there are lessons to be learned by them and many others after this is over. People do not like too much choice. It's why I like restaurants where I do not have to spend hours reading before the evening can begin. Just do something well please, and give me a few options, and I'm happy.

Domino's and others, please take note. This is the way the world may be going. 

AI Is Done With Games (Having Beaten Us). Now On To The Serious Stuff

A 2016 survey of top AI researchers found that, on average, they thought there was a 50 percent chance that AI systems would be able to “accomplish every task better and more cheaply than human workers” by 2061. The expert community doesn’t think of artificial general intelligence (AGI) as an impossible dream, so much as something that is more likely than not within a century. So let’s take this as our starting point in assessing the risks, and consider what would transpire were AGI created. – Nautilus

 Stoicism in a time of pandemic: how Marcus Aurelius can help | Books | The Guardian. (Tomorrow is the anniversary of Marcus' birth in 121.)
With all of this in mind, it’s easier to understand another common slogan of Stoicism: fear does us more harm than the things of which we’re afraid. This applies to unhealthy emotions in general, which the Stoics term “passions” – from pathos, the source of our word “pathological”. It’s true, first of all, in a superficial sense. Even if you have a 99% chance, or more, of surviving the pandemic, worry and anxiety may be ruining your life and driving you crazy. In extreme cases some people may even take their own lives.
In that respect, it’s easy to see how fear can do us more harm than the things of which we’re afraid because it can impinge on our physical health and quality of life. However, this saying also has a deeper meaning for Stoics. The virus can only harm your body – the worst it can do is kill you. However, fear penetrates into the moral core of our being. It can destroy your humanity if you let it. For the Stoics that’s a fate worse than death.