150
E. J. Bean
We also interviewed two U.S. billionaires who’d purchased the tax shelter, Haim Saban and Robert Wood Johnson IV, both of whom traveled to our conference room in Washington to answer questions. During his interview, Mr. Saban, who’d earned his initial wealth from marketing the popular action figures the Mighty Morphin Power Rangers, explained that he had sold his interest in the Fox Family Channel to Disney for a $1.5 billion profit. His longtime tax attorney had then advised him that he could effectively avoid paying any tax on that profit by engaging in a POINT transaction that would generate losses to offset his gains. Mr. Saban told us that his tax adviser had attempted to explain POINT to him, but it was too complex for him to follow. Mr. Saban said he’d instead asked his attorney two questions: whether the arrangement was “kosher,” and whether a reputable law firm would say so in writing. After being told yes, Mr. Saban said he purchased the tax shelter for about $50 million. During his interview, Woody Johnson explained he’d sold a large block of stock in his family’s company, Johnson & Johnson, to finance his purchase of the Jets football team. His profits totaled about $143 million. To avoid paying tax on his stock gain, he’d engaged in a POINT transaction that allegedly generated stock losses to offset his gain. He said that he, too, paid Quellos a multi-million-dollar fee to purchase and execute the POINT transaction. Finally, we contacted the European American Investment Group— Euram—a financial services provider involved with the POINT transactions. Euram was headquartered abroad, operated in major financial capitals around the world, and employed professionals formerly with top banks and firms.30 The Euram employees who handled POINT lived outside of the United States and so were beyond our subpoena power. While Euram declined to make them available for an interview, the firm did agree to allow them to answer written questions. Eventually, Euram sent us an email with explosive information about how phony POINT really was.
L earning the Scam Together, the interviews and documents laid bare how POINT worked. At the heart of the scam were two shell companies, Jackstones and Barnville, formed in the Isle of Man and capitalized with less than £2, or about $5, each. Since neither company had employees or a physical presence, we were unable to discover how to contact them. More, no one would tell us who owned the companies. The Isle of Man agents responsible for forming the companies explained that the country’s secrecy laws barred them from
