PRIVACY TACTICS THAT CAN USE TODAY There are a number of little things that can help you to protect your privacy. This chapter highlights several little-known options that you may find useful. Gold Certificates Provide Portable Privacy A gold certificate provides you with an attractive alternative to investing in physical metal, and offers a way to transfer assets out of the country. The Mocatta Delivery Order (MDO) is a title document representing ownership of a specific, numbered unit of gold, silver or platinum. With origins dating back to 1671, Mocatta is the oldest bullion trading firm in the world. As one of the world's most experienced precious metals organizations, Mocatta created the MDO to satisfy the highest criteria of privacy, safety, liquidity and flexibility. You can choose storage in either Wilmington, Delaware or Zurich, Switzerland. During the storage the metal is fully insured under a Lloyds of London insurance policy. The certificate is issued in your name (or the name of a corporation or trust, if you prefer) and identifies the physical gold, silver, or platinum owned. MDOs offer transfer of ownership features that enable the owner to sell, assign or collateralize the metal easily, yet provide the protection of non- negotiability, since a lost document can be replaced, unlike a bearer security. Since the order is non- negotiable, it does not have to be reported if it is taken in or out of the United States. There is no reporting of the purchase to the IRS. An MDO can be issued in the name of a family limited partnership or offshore trust, or assigned to one of them as a means of transferring ownership of the metal when the asset protection entity is created. For more information on the MDO contact International Financial Consultants Inc., Suite 400A, 1700 Rockville Pike, Rockville MD 20852; (800) 831- 0007. Use A Stand-Alone Telephone Calling Card Intended for travelers who use calling cards frequently, there is a discount telephone calling card that has a flat rate of 17.5 cents per minute for interstate calls, anytime, anywhere in the United States including Puerto Rico, Hawaii, Alaska, and the U.S. Virgin Islands. There are no surcharges, no monthly fees, no minimum monthly billings, and international calling is also available. The calling card is free, and is a stand-alone card, meaning that a person using the card does not have to change their long distance service. It saves up to 68% over the leading competitors, including prepaid phone cards (most of which are around 40 cents per minute). But it is the "stand-alone" part that makes us mention it here. Because the card can be applied for without having to subscribe to a new long distance service, one can use the card for things like calling overseas banks, and pay the separate calling card bill from a different bank account, or by money order. The record of calls made won't be showing up on your home or office phone bill, so there's no easy to follow trail of calls to an offshore bank or money manager. And since the separate calling card bill can be paid by money order, it doesn't create a credit card charge record which is one of the problems in recharging prepaid phone cards. (And you don't get an embarrassing "out of time" recording and cut-off, which can easily happen on a prepaid card when a $10 card is being used for an expensive overseas call.) For an application form, send a stamped, addressed reply envelope to Center for Business Information, Attn: Phone Card Applications, 816 Elm Street, Suite 187, Manchester NH 03101-2101. How to Keep The IRS -- and Other Snoops -- Out of Your Safe Deposit Box A safe deposit box is a veritable necessity for keeping things like offshore bank books, precious metals certificates, bearer securities, cash, coins, etc. Yet a safe deposit box can create its own problems. One obvious problem is that upon death of the boxholder, the bank is required to deny access to the box until a properly appointed executor and an IRS agent open the box. The IRS will presume that all assets are the property of the deceased, so that if you are holding assets that you have given in trust to your children, they will become part of the taxable estate - - or worse, they may be applied to some debt of the estate. Unreported foreign accounts could even be seized as being part of a crime. IRS agents tend to assume criminality, and you are no longer available to provide an alternative honest explanation. But there are other safe deposit box problems that are at least as important as dealing with the box upon death. For example, if the box is in one name only, many banks will not honor a power of attorney to let somebody else have access to the box in an emergency, unless the power of attorney is signed in person in the bank. If you are in a foreign hospital, and need to authorize your spouse to open the box, this could become a major problem. Even if the bank will accept a notarized power of attorney, there may be problems in arranging for a foreign notary to visit, then having the notary certificate authenticated by the U.S. Embassy or Consulate, and sending it to the bank. The solution is to form a corporation to hold your principal safe deposit box. The corporation can change the names of the people authorized to access the box simply by furnishing the bank with an updated resolution form. And a box belonging to a corporation is not frozen by a bank because of the death of a natural person, even if that person is the sole person then having access to the box. To do this properly, we recommend that the corporation be used only to hold the safe deposit box. This provides the maximum privacy, because the corporation has no activities to cause it to be audited or investigated. Under federal law, even an inactive corporation must file a tax return, but a corporate return showing no income can be filled in each year without having to pay an accountant to do it. (Usually after three years of zero income returns, the IRS sends out a form letter saying there is no need to file further returns unless the corporation begins to have income.) The other obligation that must be met is to ensure that the corporation is in good standing, so that you don't have a crisis in which the corporation no longer exists because the annual reports were not filed. Delaware is the best state for this, because an inactive corporation only needs to file a simple annual return and pay an annual fee to the state (and an annual fee to its Delaware registered agent.) Privacy can be maintained by having the registered agent file the annual return with the state, signing it as "incorporator," which keeps the list of officers off the state records. Most large corporation services will not provide annual report filing services, but the one mentioned below will do so. To be entirely safe, one can even leave the registered agent with funds to prepay the state fees each year, thus ensuring that there is no accidental termination of the corporation because of a late payment. Since the holding of a safe deposit box is not deemed to be conducting business by any state, the Delaware corporation is not required to qualify to do business in the state in which the box is held, thus improving privacy and keeping the existence of the corporation out of the public records in your own state. For information on a service that can form a corporation for you in Delaware (or in any state), write to Incorporation Information Package, 818 Washington Street, Wilmington DE 19801. Keeping the IRS away is not the only reason to have a corporation hold your safe deposit box. It also keeps a personal creditor from being able to have the box frozen by a court for an inspection of the contents, which can easily happen during a lawsuit or other claim against you. Privacy and Data Encryption Your business affairs are your personal matter. Encryption is an electronic procedure that digitally encodes (converts into unintelligible gibberish) and decodes (converts back to readable language). Today any reasonably powerful desktop computer can encrypt and decrypt messages which the most powerful supercomputers in the world, working together, could not decrypt. Programs to do this are very inexpensive, and already available to anyone. Most encryption programs take advantage of a mathematically sophisticated encryption technology that requires two different keys, both of which are necessary to decrypt the message. The sender needs only one to send a message. The receiver decodes the message with the second key -- which never needs to leave his computer, where it can be protected by passwords. Although the mathematics are daunting, the program makes the process simple and straightforward. Examples of everyday uses are a writer who sends chapters of his new book to his publisher; collaborators on an invention working at a distance and needing to keep others from claim-jumping a discovery; paying bills or ordering from mail-order catalogs by sending encrypted credit card numbers over the telephone; an accountant who scrambles backup tapes so that clients needn't worry about lost confidentiality if the tapes are lost or stolen; and attorneys communicating with clients and other attorneys via encrypted documents. At the same time, the costs of international communications and transportation have declined to the point where even the average individual can afford to internationalize. And countries around the world are competing for that business. You can take advantage of what these countries have to offer to safeguard your freedom and privacy using exactly the same techniques as giant multinational companies. Encrypted messages can move across international borders without interference, by telephone, by radio, or by courier. A "message" means anything that can be digitized -- a sequence of words, music, a digitized picture, a forbidden magazine or book, etc. Privacy of electronic communications leads to an ability to do business from anywhere in the world, with anybody in the world. It is technically feasible to use these techniques to create a totally secret banking system, with account owners identities being unknown even to the bank. Credits could be transferred between accounts from anywhere in the world through encrypted communications. In a world where governments are increasingly subscribing to treaties limiting banking secrecy, and requiring identification of depositors, it is unlikely that this technical possibility will actually occur in the near future. But unlikely is not impossible -- and the time may come when some government permits such a service, or when entrepreneurs sneak it in the back door by calling it a barter exchange instead of a bank. Since everything is electronic, such a service could even be operated from a ship, an orbiting space station, or The Moon. It is only thirty years since the first Moon landing -- who knows what the next thirty years might bring. The data haven may eventually supplement the tax haven. Meanwhile, data encryption is available to anybody for whatever use they wish to make of it. A package offering basic information on encryption, including copies of several different computer programs for IBM- compatible computers, is called The Privacy Disk and is available for $49.95 from Noble Software, 51 MacDougal Street, Suite 192, New York, New York 10012. (A 3.5" diskette will be sent unless you specify a 5.25" diskette.) Noble Software doesn't have a catalog or literature about the programs, so don't expect a reply if you write and ask for "more information" about The Privacy Disk. With the government making proposals to outlaw the sale of encryption programs, this is something you might want to buy now and put away even if you have no immediate use for it.