Peter Schiff Has a Deal With Puerto Rico to Liquidate His Euro Pacific Bank, He Says

Libertarian economist and money manager Peter Schiff, who has fought with Puerto Rico’s banking regulator, said on Tuesday an agreement had been reached to liquidate the troubled bank.

Schiff, 59, owns Euro Pacific Bank, a San Juan-based boutique online bank. In 2020, Euro Pacific was at the center of an international investigation into whether it performed due diligence on account holders. His international group of tax authorities, known as J5, which includes the Internal Revenue Service, investigated whether the bank served as a suspected vehicle for tax evasion and money laundering.

In late June, Puerto Rico’s banking regulator suspended Euro Pacific, citing “serious bankruptcy” problems. In a settlement reached Tuesday, Schiff agreed to return a $66.7 million deposit, using millions of gold to cover the cash shortfall. He also agreed to pay a $300,000 fine, according to a copy of the settlement.

A spokesman for Puerto Rico’s bank commissioner declined to comment, saying the authorities would issue a statement in the coming days.

The bank had about 8,000 depositors and $140 million in deposits until the New York Times, in collaboration with Australian news outlets, reported an investigation known as Operation Atlantis. Schiff said the bank had approved less than half of the applicants and he had closed more than 5,000 accounts, citing compliance issues and red flags. He also said media reports had made it impossible for Euro Pacific to do business because companies like American Express refused to cooperate with banks.A defamation lawsuit is pending in Australia .

“These claims couldn’t have been true, but when these stories spread, the bank’s business fell apart,” Schiff said in an interview.

He claimed that the bank’s compliance with suspected money laundering was so strict that it rejected more accounts than it opened. said.

He admitted that two years ago the bank was about $4 million short. He said it was because it inadvertently used customer deposits for operating expenses. He said he solved the problem by putting $7 million of his own money into the bank.

“I invested $10 million in this bank,” he said. “I have lost everything.”

But in Schiff’s view, the settlement is more like a settlement because it’s not accused of money laundering or other allegations swirling around news of Operation Atlantis.

His attorney, Lanny Davis, said Mr. Schiff had not been informed that he was a subject or target of a federal investigation.

Justin Cole, a spokesman for the IRS’s Criminal Investigations Division, said during the investigation it became clear that the “most appropriate course of action” was to deregister Schiff’s bank.

Mr. Schiff tried to sell the bank, but Puerto Rico’s banking regulator did not allow the sale.

An economic adviser to former Texas Rep. Ron Paul and a former senator, Schiff became famous for predicting the 2008 financial meltdown and said, “Dr.

Mr. Schiff’s no-nonsense aversion to paying taxes is well-known, and he lives in Puerto Rico. In Puerto Rico, many wealthy Americans benefit from special tax incentives known as Act 60.

“The federal government has never been satisfied with this Act 60 regime. As they see it, tax evaders are leaving the United States and not paying their fair share in the United States. Center for a New Economy , a Puerto Rican think tank.”They never liked it, so Puerto Rico’s banking regulators are getting a lot of questions from federal regulators about these foreign banks operating in Puerto Rico.

“They seem to be keeping an eye on the situation here.”