Amir Bruno Elmaani of West Virginia, founder of cryptocurrency Oyster Pearl, pled guilty to various tax offenses. The details of the case are astounding because effectively he actually printed his own money.
In 2017, he began promoting a new cryptocurrency named Pearl Tokens. He did this under a pseudonym. Most of the employees working at his company never met him in person or knew his true identity.
Beginning in October 2018, he used access to blockchain technology to create his own money. Although the number of Pearl Tokens was reported fixed, he simply went in and made more. He then converted the Pearl Tokens into other crypto currencies using an online exchange, and transferred the money to friends and family member accounts before moving the funds into his own name.
Emaani then spent over $10M on yachts, $1.6M on a carbon-fiber composite company, hundreds of thousands at a home improvement company, and another $700K on a couple of homes. The total federal tax loss was in excess of $5.5M.
He did this while only showing $15K in income on his 2017 return and didn’t even file one in 2018. Elmaani has agreed to pay full restitution to the Feds and faces four years in the slammer.
Don’t do the crime if you can’t do the time.
Let me leave you with this.
I’ve had several questions in reference to the debt-ceiling fight, so I’ll spend some time describing the problem and its possible implications.
Our government uses tax revenues and debt to fund programs. Without an increase in the debt ceiling, the United States won’t be able to pay its bills.
Part of those bills is interest on existing debt. If it runs out of money and can’t pay that interest, it will default on those loans. If congress doesn’t raise the debt ceiling, which will then allow the Treasury Department to issue more bonds and get the money it needs to pay those bills, the government will default.
Interest rates are based on risk, and the US Treasury bond has always been looked upon as the safest debt in the world. This is why it is considered the benchmark that all other debt instruments are judged against. Other bonds and mortgage rates are all based upon the US Treasury rates.
Several things could happen in the days leading up to a potential default.
1 – Bond traders could become worried that the US will default and would demand higher interest rates on Government Bonds
2 – If the big three credit rating firms also became concerned, they could downgrade the current triple A rating on the government bonds. This happened back in 2011 when Standard & Poors downgraded their rating to double A.
This would in turn, raise the interest rates that we pay on just about everything else.
The worst case scenario would be if congress doesn’t raise the debt ceiling and the government defaults. If that were to happen,
1 – The value of bonds would go down. In lock step, the value of every other bond sitting in banks, pensions funds, and individual portfolios would decrease as well.
2 – Investors would demand higher interest rates for their higher risk. That would raise interest rates for everyone on their home loans, car loans, business credit, and every other type of loan.
3 – It could potentially ruin our already fragile economy. When there’s financial instability, companies lose money and lay-off workers.
At that point, the question would become how long the stand-off would continue.
If it was short-lived and the treasury prioritized interest payments ahead of other programs like social security or medicare, then the recession would be short lived. Economists estimate that about 1M jobs would be lost.
If the stand-off went on for as long as 5 or 6 weeks, then the incumbent recession could be like the ’06 – ’08 nightmare. In that possibility, economists expect that 7M jobs would be lost.
We’ve all gone through dozens of these over the past few decades but this one seems different. Both sides are really dug in.
We can only hope that our elected officials will come together to save the economy.
We’re all going to get through this. Let’s get through it together.
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