Capital, both above-board and otherwise, flooded into these havens from around the world. Financial planners in the United States began selling the idea of hiding money in these countries to avoid taxes or to conceal it from creditors and former spouses. Some sold cookie-cutter trusts for $10,000 each. These one-size-fits-all trust structures, of dubious legal merit, could be set up in a few days. Other pundits, such as Terry Neal, author of The Offshore Advantage, held expensive seminars to teach customers how to hide their money in offshore trusts. (According to his own website, in April 2004 Neal pled guilty to trying to defraud the U.S. government of taxes.) Jerome Schneider was perhaps the most brazen of these gurus. He bought full-page, full-color ads in magazines touting his system for avoiding U.S. taxes. For $100, customers could buy a set of books and tapes called “Finding Your Own Offshore Wealth Haven.” Last December, a San Francisco judge sentenced Schneider to six months in prison for conspiracy to defraud the IRS.

The offshoring frenzy hit a wall in November 1994 when Forbes published an article that described how high-profile American billionaires had surrendered their U.S. citizenship and departed for more tax-friendly nations (see “The Perpetual Traveler,” page 76). Congress reacted with outrage. In 1995, the House Ways and Means Committee proposed legislation to punish U.S. citizens who renounced their citizenship for tax purposes. Larry Heller, partner in the Los Angeles office of the international law firm of Bryan Cave, testified at those hearings, challenging several of the proposed laws, including a hefty exit tax for expatriates. “There was a lot of misinformation about people expatriating for tax purposes. Really, only a handful of people do that,” Heller claims.