An Australian judge is ordering two media outlets to pay American economist Peter Schiff more than half a million dollars for defaming him.
It’s the latest fallout in a bizarre scandal in which the IRS and the governments of five other countries joined together to target Schiff, a frequent guest on conservative media, with the “biggest tax evasion investigation in the world.”
Despite poring over every detail of a bank he ran in Puerto Rico, authorities failed to come up with a single charge. But government agents apparently leaked the existence of the investigation to the New York Times and Australian media outlets The Age and 60 Minutes, both of which are owned by Australian media giant Nine. The journalists took Schiff’s advocacy for low-tax policies as evidence that he would break existing tax law.
The media reporting on the unfounded investigation led to a series of calamities for the bank, culminating in it being shuttered by a Puerto Rican regulator — with the IRS falsely taking credit for the closure and suggesting it was because of money laundering and tax evasion, even though its investigation substantiated neither of the charges.
Tax agents appeared to work closely with the media on that infamous press conference. The New York Times learned that the bank was being shuttered, purportedly because of the criminal probe dubbed “Operation Atlantis,” before Schiff did.
Officials may have violated the law by disclosing the existence of a grand jury to reporters. But with little recourse against the U.S. government, Schiff sued the journalists who seemed to be in cahoots with the agents in Australian court.
He named The Age, 60 Minutes, as well as two reporters — Charlotte Grieve and Nick McKenzie — who worked on an over-the-top video segment as well as an article. An Australian judge ruled that the television segment was defamatory, but the article was not.
The Australian journalists strongly suggested that Schiff was guilty of money laundering and tax evasion crimes, and that the case showed the need for more financial regulation. The story came as some Australian politicos were pushing a law that would give the government new powers to monitor people’s money — Schiff was made to be the poster-child villain.
Discovery in the lawsuit gave insight into the inner workings of major media outlets and suggested that they were determined to make Schiff’s bank, Euro Pacific, play such a narrative role. Interview notes and transcripts showed that their own sources often told them that Schiff’s bank was rigorously compliant. Then they used fast-cut editing to give the impression the witnesses said the opposite.
The Australian 60 Minutes segment suggested that Schiff’s Euro Pacific Bank opened accounts for money launderers, tax evaders, and criminals, and that it was attractive because it did little to vet its clients. But when Grieve asked one confidential source, a former customer, what opening an account was like, he said “it took weeks and weeks and weeks.”
“They were just so careful about making sure who they were dealing with, I’ve never come across anything like it,” the source said, according to interview notes disclosed in a court filing.
Another 60 Minutes source, an anonymous former bank employee, said “in terms of [anti-money laundering], they seemed to be strong. I personally didn’t experience a situation where something out of place was going on.” Another former employee told her that if a prospective customer told them they wanted to evade taxes, it was “good luck with that buddy, but you ain’t getting an account at this bank.”
The documents also show that Grieve attempted to open an account with a financial services company owned by Schiff, and she was rejected as part of the bank’s following of regulations.
The journalists secured an interview with Schiff by lying about their intentions, then took the existence of an investigation into the bank as proof of its guilt. “I’m putting to you that your bank has accounts for organized crime figures,” McKenzie told him.
“Then I have the basis of a lawsuit against you. So are you in fact telling me right now that you know for a fact that this crime syndicate is utilizing Euro Pacific Bank?” Schiff replied.
“I’m the journalist here. I’m asking the questions here, sir,” McKenzie said. “Why is it the tax authorities in Australia, the United Kingdom, Canada, America, and the Netherlands all believe your bank is facilitating tax evasion and serious organized crime? … It’s a fact that organized crime, tax evaders, fraudsters are using your bank,” he added.
The 60 Minutes segment leaned heavily on a former IT employee, John Ogilvie, who was quoted disparaging the bank. But in the transcript of his full interview, it was clear his only grievance was an unrelated personality clash with a manager. “Money laundering, links to organized crime. Did you see any?” a journalist asked.
“I didn’t see any of that,” Ogilvie said.
The efforts to tie Schiff’s bank to criminals were so weak that the journalists resorted to hounding someone who was once questioned by police in Thailand, but was never arrested or charged with anything, and who later used an EUP account for prosaic expenses. That’s despite the customer telling them that EUP vetted him thoroughly and there was no reason they would have, or should have, known about his brief interaction with police in Thailand.
Last week, the media outlets filed for an emergency injunction to prevent the public from seeing what their interviewees actually said in full. But they withdrew it after the judge hinted that it would cause him to put on the record his view of their journalism ethics, and that it would not go well for them, a transcript showed.
Days after the judge entered the defamation damages order, McKenzie was given one of Australia’s top journalism awards, with the Walkley Foundation also naming a new investigative journalism award after him. Grieve also won a journalism award for her coverage of Schiff’s bank.
In a statement to The Daily Wire, Nine Media was unrepentant, saying “60 Minutes accepts that the Federal Court found the program conveyed meanings that were not intended by the program, noting the barriers posed by the current state of defamation law in Australia to important public interest journalism. The Euro Pacific Bank was the target of the world’s largest tax evasion probe” and “was suspended in 2022 amid catastrophic regulatory failures.”
The Puerto Rican regulator said at a bizarre June 2022 press conference that the bank was being taken from Schiff and turned over to a trustee because it was “critically insolvent.” But weeks later, the trustee it appointed said that the opposite was true, writing “as of June 30, 2022, Euro Pacific had an excess cash position to cover all deposits.”
At the press conference, the regulator was forced to clarify that “The action is not based on claims of money laundering or other financial crimes”after the IRS’ Chief of Criminal Investigation, Jim Lee, flew to Puerto Rico to try to take credit and spin its failed investigation as a success.
“In January of 2020, each of the J5 countries participated in a global coordinated day of action to put a stop to the suspected facilitation of offshore tax evasion and money laundering by a suspected bank in Puerto Rico,” Lee said. “The operation from the J5 was dubbed Operation Atlantis, and the bank was Euro Pacific Bank.”
Despite having just said Schiff’s bank was being investigated, he hid behind ethics to refuse to clear Schiff’s name by saying the failed investigation was now closed. When a reporter asked “Is Peter Schiff being investigated?” Lee said. “I’m not at liberty to disclose who’s being investigated.”
In an interview, Schiff told The Daily Wire that the circus showed how the government works with apparatchik media to destroy those who question its ideology. He said the fact that Lee stated that his bank was the target of an investigation at the press conference bolstered the notion that it was IRS that previously illegally leaked the probe to the media.
“If the IRS didn’t leak it or even was mad that it was leaked, why did Jim Lee confirm it at a press conference?” he asked.
He said that criminal investigators were unable to find a single thing to charge him with, then decided to deal a death sentence to the bank through the media anyway. Many customers and business partners fled the bank because of the publicity.
“If it’s the subject of the largest tax investigation in history, then if they would have found the slightest infraction that normally they would have looked the other way, they would have brought that charge. But the bank was so clean that they couldn’t find a single thing,” he said. The Daily Wire asked the IRS if it could point to any convictions from Operation Atlantis–even of minor customers of the bank–and it declined to say.
Schiff said at the moment Puerto Rico shut the bank down, he could have refunded all of the bank’s customers on the spot, but that nearly 18 months after the government took over — purportedly to look out for those customers — no one has received a dime of the $65 million in deposits. That’s partly because the government of Portugal put a freeze on some assets, apparently because of the negative publicity and the ambiguous nature of the press conference.
Schiff said the IRS must be held accountable, and that if it would do this to someone with his resources, it could do it to anyone.
But the accountability from media outlets is a good first step, he said, and people should be shocked at how what they see on TV actually comes together.
“All the information that [Nine] had from their own investigation confirmed that our compliance was very strong, yet they ignored it,” he said. “There’s no pushback or questioning from the editors, it’s just putting it on the air.”