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The Revolutionary Guru of Offshore Banking: Four Important Lessons from the Marc Harris Case
By admin | February 9, 2009
Last night I finally got to watch a TV show that has already aired a few times on CNBC’s American Greed series entitled “Revolutionary Guru of Greed”. Besides some nice shots of Panama City, it talked about the crazy offshore guru Marc Harris who is now in a Federal Corrections Institution (Club Fed) in Fort Worth, Texas. An interesting reminder of what not to do if you go offshore!
I first met Marc Harris at a seminar in London, where I always remember him being rather peeved that he had to pay for his own conference room, as if that was some kind of insult. Harris had some excellent ideas – basically his plan was to put offshore banking and investing within the reach of the masses, or shall we say the middle classes. He was keen on the Perpetual Traveler theory. Many of the same ideas I write about today in fact, though e was more than a decade ahead of me. I liked his ideas enough that I decided to do some due diligence on his company.
In fact, it was Marc Harris who brought me to Panama for the first time, as I was mainly European based back then. I remember flying into Panama City airport and being greeted by a uniformed hostess who whisked me through customs into the VIP room. I was then swiftly picked up in a Jaguar and driven to the Miramar Intercontinental Hotel where reservations had been made for me.
After spending the whole of the next day in Harris’ office, including a meeting with the guru himself, I wasn’t so impressed. Good ideas, yes, but everything was too vague. Some things rang alarm bells in my head. I remember, for example, commenting on the wide range of mutual funds the Harris Organisation apparently administered. A member of staff admitted to me that most of these so-called mutual funds with exotic names did not actually have any money in them, and had been set up simply in case some random investor decided one day to invest by ticking the box for such-and-such a fund. Apparently, the plan was that once the money was in, they would figure out what to do with it.
Somehow I just didn’t have the right feeling about investing my money, even less my clients’ money, with Marc Harris, despite the very generous commissions I was offered. But he did take me out partying. Fortunately that was the extent of my connection with Marc Harris. I still don’t believe he was so much of an intentional scammer, as just somebody who was truly completely and utterly bonkers, but had the personality to convince investors with hundreds of millions of dollars to play along with him.
Watching the CNBC documentary last night, though, brought to mind four important lessons we can learn from the Harris case and apply to our offshore businesses today:
- It’s good to put your funds with a proper bank or fund administrator. Harris’s outfit never was a bank neither did it have any kind of financial services license.
- Due diligence is often just a matter of asking a few probing questions and judging not the response itself, but how the other party responds. Understand exactly what you are investing in. I wrote a more in-depth article on due diligence for High Yield Investments and avoiding offshore banking scams here.
- Offshore financial institutions should maintain a low profile. Harris was not toppled from his pedestal because he was a scammer. He was not brought down, as the CNBC program suggested, because of his involvement with a freon tax evasion scheme in Florida – that was just a convenient excuse for the prosecutors at the time. He was toppled because he became a real pain in the butt for the IRS and the US government. I remember his frequent emails promoting investments in Cuba explicitly to Americans (forbidden fruit) for example. Don’t deal with offshore banks that like poking sticks at poisonous snakes.
- Diversification, diversification and diversification. Don’t put all your eggs in one basket. Don’t have one company or bank managing your entire portfolio.
If you are interested in learning more about the right way to go about offshore banking, investing, asset protection and wealth creation, then if you haven’t already signed up for our free five part Secrets of the Super Rich course, please use the signup box to the right of this page to register for your free copy. Please remember you will need to confirm your email by receiving an automated e-mail and clicking on the link before you will be able to receive the course.
From the lobby of a private bank somewhere offshore, this is Peter Macfarlane signing off!
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Topics: Cautionary tales and real cases | 1 Comment »
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February 14th, 2009 at 9:13 pm
[...] Venezuela, a Venezuelan commercial bank. They also own a coin and bullion dealership. But, like the Marc Harris Organisation ten years ago that I wrote about just a few days ago following a CNBC documentary that visited [...]