The Erich von Hoffen case is only too good evidence of a long tradition of delinquent trustees in Liechtenstein. Involvement of the highest circles, money laundering and widely ramified, interwoven structures, a pattern that almost all criminal proceedings, in which Liechtenstein trustees play a central role, have in common.
Eugen von Hoffen is a dazzling character: expensive cars, a boat, a villa on Fuerteventura and convictions for serious fraud & embezzlement. The Liechtenstein native was 36 years old when he set up his own business in the international tax haven, where there are about 80,000 letterbox companies for every 33,000 inhabitants. Von Hoffen managed – according to the trustee model typical for Liechtenstein – mainly foreign investor funds, including the notorious Colombian Cali drug cartel.
Von Hoffen allegedly laundered a total of €1.1 million of the drug cartel in 1998 and 1999 with another trustee. The duo is said to have received drug money from South America and hidden it in anonymous foundations in order to disguise their criminal origins.
In September 1998, one of their employees drove to Spain to collect money from suspected drug deals. The courier rented an unsuspicious VW Golf with Austrian registration plates. In the lobby of a Madrid hotel, he accepted a travel bag full of pesos from a Colombian. The contact person told him that the money was commission from commercial transactions. The pesos were to disappear into a Liechtenstein foundation, whose money he would then reinvest through a brokerage house. The trick: After this procedure, nobody could tell whether the invested millions came from laundered Colombian drug money. Back in Vaduz, the courier delivered the pesos to the bank of the Princely House of Liechtenstein. When asked by the judge whether anyone at LGT Bank was surprised – in Germany the deposit would have triggered a money laundering report – the courier laughed: “They took the money with thanks. That’s how they earn money”. 24 foundations were managed by the Ritter/von Hoffen duo. One of them belonged to the daughter-in-law of Gilberto Rodriguez Orejuela, the founder of the Cali Cartel. The wife of co-founder Josè Santacruz Londono, who was shot dead in 1996, also received remittances from the companies and foundations administered by the Liechtensteiners. The team of trustees even invented people with access rights whose identity should be proven by stolen blank passports. However, the judges were unable to convict them of money laundering because they could not prove that the money was actually the proceeds of cocaine sales.
However, the trustee duo was found guilty on charges of embezzlement. The court sentenced Eugen von Hoffen to another year in prison – in addition to the eight years imprisonment he had already received last year for serious fraud. He has already spent three years of that time behind bars.
An article in the NZZ in 2001 vividly reported on the process:
“On 29 May 2001, the 49-year-old Liechtenstein trustee had to answer for investment fraud at the Regional Court in Vaduz. The offense amounted to 13 million Swiss francs. He was arrested in May 2000 together with his business partner Rudolf Ritter, the brother of the former Liechtenstein Minister of Economic Affairs, and Member of the Liechtenstein Parliament Gabriel Marxer, at the instigation of the Innsbruck Public Prosecutor Kurt Spitzer, who was acting as a special investigator for the Ländle after the German Federal Intelligence Service (BND) had made serious money laundering accusations against the Principality of Liechtenstein in a secret dossier published by the news magazine “Spiegel” in November 1999.
The trustee is specifically accused of having attracted thousands of investors, mainly from Germany and the USA, with promises of astronomical profits. According to the indictment, he has fraudulently diverted the money. He is said to have operated with various false names and forged passports and to have controlled a whole conglomerate of companies for his machinations. But he does not want to remember this.
The connection to the trustee is said to have been through the Allied Banking Corporation (ABC), which specializes in offshore banking. ABC had its headquarters in the Seychelles and branches in Germany. ABC was founded by von Hoffen in the early nineties. It was described by the prosecution as a sham company set up to deceive the Swiss Federal Banking Commission (SFBC). The SFBC, which had been called in after the disaster of the Swiss company Mercantus AG, had suspended its investigations when ABC took over the investors. In the 1980s Mercantus had incurred losses in the double-digit millions in speculative transactions. ABC is said to have recommended itself as a private bank and offered not only tax exemption but also disproportionate returns”.