Bonds, Offshore Entities and Apache Junction, Arizona–Seriously?

This is a Reuters special report of the twisting path of “$500 million of highly illiquid paper purportedly issued by a company in a
trailer-park suburb of Phoenix, on behalf of a small Australian commodities firm — and
backed by the proceeds from $10 billion of diesel from the tiny autonomous
Russian republic of Bashkortostan.”

The Bonds That Turned to Dust in Reuters

Reuters has followed a paper trail from the fund’s offices in the upmarket
London neighborhood of Kensington to the dusty American southwest, from the
fund’s registered home in a Caribbean tax haven to a suburban house in Canberra,
Australia.

The story’s cast includes an Arizona businessman on the run from U.S.
authorities, a Russian allegedly convicted for fraud, and the Italian at the
center of it all: a 42-year-old specialist in options pricing who teaches
economics at the respected Bocconi University in Milan.

AMERICAN HAVENS

What emerges is a cautionary tale from the wilds of offshore finance, a lesson to investors about
how easy it is to be drawn into a global maze of paper companies with little
substance.

Micalizzi’s saga shows how America’s role in the global proliferation of
anonymous shell companies may enable fictitious assets to be magically
transformed into real ones for a time, siphoning money from unwitting investors
along the way.

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