The Heiress, the Queen, and the Trillion-Dollar Tax Shelter

Illustrations by Clay Rodery

Illustrations by Clay Rodery

An ugly family battle on the island of Jersey spills into the open.

In 2012, American heiress Tanya Dick-Stock and her husband discovered an enormous trove of documents while clearing out space ahead of their lavish wedding.

In a locked, indoor squash court of the bride’s palatial, 58-acre manor house on the island of Jersey, off the coast of France, they stumbled upon hundreds of bank boxes haphazardly stuffed with more than 350,000 confidential papers from her father’s offshore trust business.

“We walked in and were like, ‘What is this?’” says Dick-Stock. “The files had been there for years and no one had ever touched them. We had no idea what we were sitting on.”

Over time, the couple started sifting through them and gradually realized the magnitude of what they had on their hands.

“If you saw what was in these documents, you’d never keep them,” says Darrin Stock, Dick-Stock’s husband. “It was explosive. This trust company was nothing but a massive fraud machine.”

What followed was even more startling. The couple, along with Dick-Stock’s father, 83-year-old Canadian millionaire John Dick, filed reports with the Jersey police detailing what they described as decades of financial fraud perpetrated through an offshore trust company called La Hougue, a name derived from the ancient Jersey-French word for mound or heap, harking back to the island’s long history of pagan burial mounds. When police officers arrived at the family home, St. John’s Manor, which also served as La Hougue’s opulent headquarters, to seize the pile of documents in March 2015, they needed a truck to haul all 333 bank boxes away. Dubbed Operation Scarlet in Jersey police records reviewed by Institutional Investor, the investigation sought to uncover the mastermind behind La Hougue and the extent of its alleged global financial crimes.


Yet nearly a decade since the documents were unearthed, no criminal charges, prosecutions, or regulatory penalties have been imposed by Jersey’s authorities and questions about the probe have been met with hostility, silence, and even threats. In addition, Institutional Investor has learned most of the 350,000 documents at the center of Operation Scarlet have been handed over by police to Jersey law firm Garfield-Bennett, which at the time of the 2015 investigation was still representing Dick. The firm, which declined to explain why it is holding the documents, confirmed it has them locked in a safe indefinitely, but denies it has ever had any relationship with La Hougue and says it has no current relationship with Dick.

The discovery of the documents has created a firestorm on both sides of the pond. After reading through the La Hougue files, Dick-Stock says she came to believe her father led the fraud and now is suing him for allegedly looting and pilfering assets, resulting in massive losses to her family trusts, once estimated to be worth $500 million. These allegations are consistent with a complaint Dick-Stock filed in a district court in Colorado, where she is originally from, in a pending action against her father. A trial is scheduled for August.

“We have taken this to the U.S. courts and the Jersey courts,” says Stock. “We’ve repeatedly won our cases in the U.S. But in Jersey, they refuse to even look at it. Instead of investigating, they are attacking us. The judges have fined Tanya more than a million dollars of court costs and one of them told her, ‘I have the power to throw you in jail.’ All they want is for this to go away.”

Frustrated, the couple began sharing their cache of unearthed documents, which they’d scanned before turning over to police, with select members of the international press, including the German-based European Investigative Collaborations network and roughly a dozen other media outlets, including Institutional Investor. Stretching from the 1980s to around 2010, La Hougue’s files reveal the deep inner workings of the rarely glimpsed shadowland of offshore finance, where wealthy clients in the U.S., U.K., and Europe engaged in elaborate schemes to minimize their taxes through legal loopholes, avoidance measures, dummy accounts, ginned-up debt, bogus client names, and painstakingly crafted document forgeries — an apparent specialty of La Hougue’s.

Filled with the private information of hundreds of people, the boxes also contain secrets about Dick-Stock’s life, including how various strategies were allegedly used by La Hougue to drain her family’s trusts. Reached by Institutional Investor, her father declined to comment for this story, but his spokesman, Julian Pike, characterized Dick as a victim of fraud, stating that Dick “had no oversight or involvement in the day-to-day operations of La Hougue” and is seeking legal remedy.

The La Hougue documents expose an intricate network of dubious characters, many of them associates of Dick, including American porn king Eddie Wedelstedt, convicted of tax fraud and obscenity charges in 2006; Israeli art dealer Ronald Fuhrer, who is linked to a Sandro Botticelli masterpiece thought to be the missing 1485 Madonna and Child painting, which hasn’t been seen for the past six years; and, notably, individuals thought to be behind the offshore smuggling of more than $100 million during the U.S. savings-and-loan crisis of the 1980s. Other big names appearing on La Hougue’s client list include the former head of Glencore in Russia, Igor Vishnevskiy; British millionaire property tycoon Elliott Bernerd; and Alexander Zhukov, former father-in-law of Russian-Israeli billionaire Roman Abramovich. “Names on the client lists are coded,” says Dick-Stock, “and we are still learning who’s on them as we go through the process of decoding them.”

La Hougue is no longer based on the island or at St. John’s Manor, which sold last year for £14 million ($19.4 million). The trust company moved to Panama in 2008, according to the Operation Scarlet police statement from Dick, and was renamed Pantrust International. Regulators there pulled its license in 2015. Earlier this year, La Hougue Trustees was reportedly in operation in the British Virgin Islands, but the firm’s registered ownership is nonpublic information, so its owners are unknown.

Stock told Institutional Investor that — unlike in past offshore document leaks, such as the Panama Papers and the Paradise Papers — he and his wife did not want to stand behind a curtain of anonymity. “We figured out early on the anonymity that comes with these situations doesn’t help if you really want to effect change,” he says. That exposure isn’t always easy: Stock says he has had to go through multiple vettings by international journalists exposing his own past, including allegations of fraud and his own fight over an unpaid U.S. tax bill.

The five-by-nine-mile island where the documents were found is a pivotal part of the story. A fiercely private tax shelter with a population of around 100,000, Jersey is the largest of the Channel Islands and, in many respects, a world unto itself. The island’s roots go back to Neolithic times, with some of its families tracing their lineage for thousands of years. A so-called “peculiar possession” of the British Crown, Jersey in many ways acts like an autonomous country, with its own parliament, judiciary, and treasury that prints Jersey money bearing the visage of the queen, pegged to the British pound. Jersey has constitutional rights separate from the U.K. dating back to the year 1204, but does not answer to the U.K. It responds solely to the authority of the queen.

Known for its history of Viking and German invasions, Victorian castles, Jersey cows, Jersey cream, and Jersey potatoes, the island has, over the last half century, become the stomping grounds for a staggering A-to-Z list of top banks, financial institutions, and hedge funds amassing an estimated $2 trillion of the world’s wealth. Nearly every big-name financial institution has an office in Jersey, from ABN AMRO to State Street Corp., which boasts beachside offices at Havre des Pas, which faces east toward France, in Jersey’s bustling capital of St. Helier.

In addition, Jersey hosts a branch of Coutts Crown Dependencies, the global offshore wealth manager that is private banker to the queen. Prominently, the queen herself was exposed by the Paradise Papers, as the leaked records showed her partaking of her far-flung offshore empire as Duchy of Lancaster. The monarch’s representatives were forced to admit for the first time in 2017 that she not only was investing in offshore financial vehicles but was well aware of it.

Nearly two decades ago, Jersey reduced its corporate tax rate from 20 percent to zero, with the exception of finance, which pays 10 percent. In doing so, it became a lightning rod for discerning clients in search of lower tax rates. Among some of the major firms on the island are Swiss trading firm Glencore, founded by the late Marc Rich; Brevan Howard Asset Management, one of Europe’s most successful hedge funds; Swiss energy and commodities trading company Vitol; and Goldman Sachs, which arranged the Abacus deal that made hedge-fund manager John Paulson billions in Jersey (and led to the bank paying half a billion dollars in a settlement with the Securities and Exchange Commission). With the release of the Paradise Papers in 2017, Apple also found itself in the Jersey spotlight for quietly shifting a large swath of its hundreds of billions of offshore untaxed dollars to the island.

“People talk of the Caymans and Panama and the British Virgin Islands, but Jersey is one of the most significant tax shelters in the world,” says former Jersey senator Stuart Syvret, who is retired from public service but still lives on the island. “It was a natural transition for Jersey to become a tax shelter, because the power families of the island tend to be involved in law or finance and money is passed down from generation to generation.” Syvret, who served in Jersey’s parliament for two decades, says he learned during his time in office that the island has two sides to it. “Because of the amount of money at stake in Jersey, you are dealing with a coercive system that is both carrot and stick,” he says. “You can see people getting really good jobs, big money, get promoted up the ladder, get a house in the countryside, go to all the best parties, and have a wonderful life. But if you speak up about corruption, you will have a very hard life. It’s made easy for you to do the wrong thing and your life is made very hard if you do the right things.”

While it may seem a bridge too far to claim anyone objecting to the world’s system of sophisticated offshore financial centers faces personal risk or ostracism, it is not difficult to find people from the island of Jersey who can readily attest to the fact. Backed by well-paid armies of lawyers, lobbyists, and accountants, these offshore ecosystems often become so profitable and so deeply entrenched on the tiny islands they inhabit that it can be next to impossible to change them, says John Christensen, head of London’s Tax Justice Network, which spun off the Nobel-nominated Global Alliance for Tax Justice in 2013. A forensic auditor and investigator, Christensen was economic adviser to the island’s government from 1987 to 1998. “During my time in Jersey, the financial sector became so vast on the island,” he says. “An oversized financial sector can kill the rest of the economy. We saw it with housing prices and inflation across Jersey. It’s a process known as the ‘financial curse.’”

Christensen grew up in a manor house in Jersey — in fact, just a mile down the road from Dick-Stock’s estate. During his time as Jersey’s economic adviser, he says, he felt crushing pressure to align with the will of the island’s ruling establishment, particularly when it came to presenting an eminently rosy picture of Jersey to the world. Charged with oversight of the island’s data and statistics branch as part of his job, he says, he was leaned on heavily by his superiors to downplay rising prices across the island. “It is always very worrisome when governments try to alter their data,” he says. “It undermines the public confidence in facts, research, statistics, and all the things that allow us to form opinions based on accurate information.” In his post, objections and debates were not welcome. “Breaking the omertà,” he says, raised “the temperature to uncomfortable levels.” Christensen says he left the island to work on tax justice issues after realizing, “If I stayed any longer, I would be seen as part of the problem.” He says leaving his home and speaking out against the corruption he witnessed has been “gut-wrenching,” but he felt he had no choice. “On a small island, you can’t go against the establishment, particularly very senior politicians, without having to leave. If you do, the atmosphere immediately becomes toxic for your job, family, and children.”

A major challenge for Jersey is that it frequently operates as a closed-circuit system where any issues that arise can be swiftly quashed by a tightknit group of unelected crown officers, appointed by the queen, who effectively control the power levers of the island. Jersey does not have the same separation of powers as most other democracies: The bailiff, appointed by the queen, heads the parliament, judiciary, and appeals court, while the island’s parliament itself is a unicameral chamber where political parties, opposition, and dissidents are neutralized quickly.

On paper, it’s a charmingly antiquated system, with lots of robes and rituals. In practice, it can be a terrifying place to seek accountability, prompting the islanders to give this state of affairs its own label: the “Jersey Way.”

With the advent of Brexit, Jersey is now facing increased headwinds to reform not only its archaic government, but also its tax regime. In late January, the European Parliament voted to add Jersey, along with a number of other so-called “secrecy jurisdictions,” to its tax haven blacklist, decrying zero percent tax regimes. Describing the EU’s list of tax havens as “confusing and inefficient,” the parliament’s chair of the subcommittee on tax matters, Paul Tang, said the list was a good tool, but “member states forgot something when composing it: actual tax havens.” While Jersey vehemently denies it is a tax haven, the island plans to strongly advocate for its regime through the Channel Islands Brussels Office and in Amsterdam, says Joe Moynihan, chief executive of Jersey Finance, the leading group representing the finance industry on the island. “For Jersey, being outside the EU, we can easily adapt to the market conditions and we will be able to work well with both the City of London and EU member states,” he said in an emailed statement.

Jersey is undertaking a period of soul-searching after a U.K. judge recommended the island examine the Jersey Way. Although the island’s financial sector has long attracted criticism, Jersey managed to remain under the radar until 2008, when police collected testimony from nearly 200 people around the world identifying themselves as victims of child predators on the island. More than 150 suspects were named in the probe, among them Jersey’s elite, yet fewer than a dozen were convicted, leading to widespread outrage across the island. Following a three-year inquiry into the matter, Judge Frances Mary Oldham in 2017 concluded children on the island may still be at risk, specifically citing the Jersey Way, which she described as a “failure to establish a culture of openness and transparency, leading to a perception, at least, of collusion and cover-up.”


Born in Denver, Tanya Dick-Stock, 55, remembers spending her early years in a cramped basement apartment “that smelled funny and had pincher bugs,” until her parents, who invested in a series of Colorado real estate deals, gradually began to reap a fortune that would grow into several hundred million dollars, which they placed in trusts for her and other family members. By the time Dick-Stock was nine years old, she says, her father, a successful lawyer, had begun looking into purchasing a second home where he could set up offshore trusts. “We visited several properties in Bermuda and the Bahamas,” she says. “My family asked, ‘Who is the gold standard for trusts?’ And we were told Jersey. So we went there.”

It wasn’t until finding the La Hougue documents that she and her husband learned the extent of its business practices. “Tanya and I basically locked ourselves in a room for four months and barely left the house until we went through all of the files,” says Stock. “We made thousands of entries into a master timeline until we finally realized this entire operation was built on lies.” According to Operation Scarlet’s police records, Dick-Stock’s father alleged that directors and staff of La Hougue were to blame for what he believed to be fraud perpetrated by the trust. But Dick-Stock and her husband say the trove of internal La Hougue documents, reviewed by Institutional Investor, proves that Dick was the beneficial owner of La Hougue and called the shots. Through his spokesman, Dick vigorously denied any wrongdoing. Multiple ongoing lawsuits in the U.S. and Jersey, which began in 2015, seek to untangle the web of what, exactly, happened and who is to blame. “La Hougue ran the family’s trusts,” says Stock. “And it drained them dry.” Dick-Stock and her father are no longer speaking. Dick, an independent director at London telecommunications company Liberty Global, now lives in Newport Beach, California. Dick-Stock’s mother, Mary Dick, who divorced John Dick in 1981, died in 1997.

Looking back, Dick-Stock says she did see some strange things at the manor. The vault of her father’s office was not filled with cash, but with an eclectic collection of aging office equipment, labeled and dated by year. “There was a walk-in safe with a big metal door, and I remember, as a teenager, seeing all these dusty typewriters, fax machines, old pens, and old paper lined up on the shelves,” she says. “Once, I grabbed some of the old paper, and my dad nearly ripped my head off.”

She now knows why the vault’s contents were never to be touched. According to one leaked memorandum between directors of La Hougue who worked with Dick-Stock’s father, forged documents were to be carefully prepared using printing materials and time stamps reflecting their purported date of provenance. “Remember the paper which is used, the machinery which prepared the documentation, the ink as it relates to preparing the documentation, and the signing thereof as it relates to the date,” the memorandum instructs, adding: “You will need to be careful with regard to soft and hard-copy disks, it being my view that there should be nothing apart from photocopies on your file.” Original copies were not to be retained. Both directors later admitted in a Denver court to forging dozens of backdated documents at La Hougue representing millions of dollars of fake debt. The Denver court sanctioned them for perjury, branding the violations “truly egregious.” But when the same directors attempted to present the bogus documents in a legal proceeding in Jersey, the court did not seem to hold it against them, simply excluding them from the case. According to Jersey law, attempts to commit fraud are an indictable offense.

While these files have made headlines in media outlets around the world, including The Guardian, The Daily Beast, the Toronto Star, Mother Jones, and the London-based nonprofit Bureau of Investigative Journalism, Dick-Stock and her husband say they have been unable to get Jersey’s only newspaper, the Jersey Evening Post to report on it.

“A journalist there spoke to us,” Stock says. “But they wouldn’t touch the story.”

In addition to going to the press, the courts, and the police, Dick-Stock and her husband alerted the Jersey Financial Services Commission (JFSC), the island’s sole financial regulator. At the time, the couple spoke to the commission’s head of enforcement, Barry Faudemer, but they say he declined to investigate. In the past, the JFSC had placed La Hougue on its list of “higher-risk” institutions and came close to denying it a license to operate on the island due to what it saw as unorthodox business practices, which the regulator observed were rife with conflicts of interest, compliance issues, and a policy of referring to clients by code names. “There is no doubt your system is extremely unusual and varies significantly from accepted industry best practice,” a JFSC official wrote following an inspection of La Hougue in 2002.

Reached by Institutional Investor, Faudemer — head of Jersey police’s joint financial crimes unit until 2007 and now chief executive of Jersey offshore advisory firm Baker Regulatory Services — declined to comment on why the case had not been pursued, responding in an email, “You are asking me to commit a criminal offense by commenting on such matters to you.” He cited Article 37 of the Jersey Financial Services Law, which states that “restricted information” cannot be released without consent, punishable by a fine and up to two years in prison. Article 37 does not apply to information already known to the public, such as the La Hougue case and its files, but Faudemer did not respond to follow-up inquiries.

The JFSC also emailed a statement calling the probe of La Hougue a “civil dispute over the operation of a family trust” and, alternatively, a “criminal” matter best left to the police. “Our role, as a regulator, is not to investigate allegations of fraud, as it is a criminal offense.”

A Jersey police officer who worked on Operation Scarlet with the Jersey financial crimes unit told Institutional Investor the sheer mass of documents involved in the case, both in quantity and substance, was “overwhelming.” He remembers seeing the squash court on the day the files were hauled away. “The documents were piled up the walls, all the way around,” he says. “It was an extremely complex case, multiple jurisdictions, and a lot of unanswered questions. It was mirrors within mirrors.” The officer estimates Operation Scarlet would have taken around three years to complete, even with a team of accountants to unravel all the strands. In the end, he says, Jersey’s attorney general decided not to devote the resources to the probe. “It was not our decision to drop the case, it was the AG’s decision,” he says. “Fraud investigations take a lot of investment and time. If it’s not in the public interest, they won’t push it.” The police officer asked to remain anonymous for this story, as the island is a punishing place for those who speak out.

Since his election to Jersey’s parliament in 2008, Mike Higgins has been deluged with work helping constituents across the island who have found themselves railroaded or unable to seek justice. One of the hardest things about representing people in Jersey, he says, is that as soon as he starts listening to their problems, he finds they are bottomless. “I would say the crux, generally, is a lack of accountability,” he says. “The system is failing people miserably — the courts, the children’s services, and the police.”

Jersey’s lack of an independent prosecution service and its longstanding tradition of allowing crown appointees — many of whom also run Jersey’s parliament and courts — to maintain a stranglehold on power means that miscarriages of justice and deficits in the island’s democracy frequently go unaddressed. “The system is very hard to crack,” Higgins says. “We’ve got this patronage system where if you become the solicitor general, you can expect to move on to become the attorney general, deputy bailiff, bailiff, and, at the end, you usually get a knighthood.”

The dearth of separation of powers also means there are concerns about serious conflicts at the highest echelons of Jersey’s leadership. In the case of La Hougue, the attorney general at the time of the police raid at St. John’s Manor, Timothy Le Cocq, is now the island’s bailiff, presiding over court cases directly tied to the La Hougue trusts. During his long legal career, Le Cocq provided legal services and advice related to the La Hougue trusts, according to internal records seized in Operation Scarlet and reviewed by Institutional Investor. In addition, another Jersey judge, Julian Clyde-Smith, also has ruled on cases related to the trusts administered by La Hougue, although documents from the company show he was, in fact, a La Hougue founding member. Both judges also conducted legal work for La Hougue or its trusts, but have still ruled on La Hougue-linked cases. Reached by Institutional Investor, Steven Cartwright, chief officer of the Jersey Bailiff’s Chambers, speaking on behalf of both Le Cocq and Clyde-Smith, dismissed any possibility that either judge might be conflicted. “We do not accept that either Commissioner Clyde-Smith or Mr. Le Cocq had a conflict in dealing with any cases over which they have presided as judges,” he said in an emailed statement. When asked if either judge has ever recused himself from proceedings over conflicts of interest or otherwise, Cartwright stated they had, but gave no specific instances.

Clyde-Smith also claims no memory of setting up La Hougue or any of its related entities, says Cartwright, but the judge “recalls that he was a subscriber to nearly all of the companies” formed on behalf of clients of his law firm, Ogier & Le Cornu (now Ogier), from the 1980s to the 1990s. A subscriber is one of the first shareholders of a company, and in Jersey, forming a company required subscribers, so lawyers would often temporarily take on this role for their clients, Cartwright said. When asked what due diligence was done by Clyde-Smith, if any, on his clients or their companies, Cartwright wrote Clyde-Smith “is confident that the firm would have complied with all of the regulatory requirements applicable at that time,” without elaborating. “Clyde-Smith had no involvement whatsoever in the activities of those companies,” he said. “To suggest or imply otherwise would be wrong.” Neither Clyde-Smith nor Le Cocq returned calls or emails for comment.

In a new judgment in late February, Clyde-Smith approved the removal of Dick-Stock as a beneficiary of her family trusts, citing her “unreasonable” and “damaging” behavior in attempting to address the alleged fraud within the trusts and her sharing La Hougue documents with members of the media. He noted allegations in the press of his purported conflicts of interest as a judge, but stated he was “satisfied” he has no conflict. Clyde-Smith also acknowledged that Dick-Stock sought proceedings against her father in the Jersey courts “to recover losses arising out of alleged breaches of trust, fraud, and other unspecified causes of action going back decades.” But, he ruled, “no proceedings should be brought.” The judgment, disclosed to Institutional Investor, would normally be posted for public viewing, but has yet to be released.

Higgins says such tactics are commonplace on the island. As a member of Jersey’s parliament representing the island’s capital of St. Helier, he has started working with other elected officials as part of a panel charged with identifying and uncovering ways in which Jersey might attempt to address its systemic failures after the U.K. judge overseeing the child abuse inquiry in 2017 strongly recommended the island address the Jersey Way. “To date, it is clear we have a major problem,” Higgins says. “Our system is broken. It does not work for the ordinary person. And this is hard work because people don’t really want to look at the Jersey Way too closely.” A final report, which he expects will be out before this summer, is likely to be “damning,” he says.

One of the toughest things about addressing the problems of the island is that it’s run by a confoundingly absent queen. “I often look at how we’re governing Jersey and say, ‘This is crazy,’” Higgins says. “There are things going on here that we don’t understand and can’t control. After 12 years in parliament, there are times I still don’t really know who’s running this island.”

Several years ago, Christensen, head of London’s Tax Justice Network, sat down and wrote a letter to the queen, exhorting her to take a stronger role within her sprawling constellation of tax shelters, crown dependencies, overseas territories, and secrecy jurisdictions, which, he noted, are among the most powerful on the planet. He was blunt, if dreadfully polite.

“I urge you,” he wrote, “as head of state of all these territories, to exert all possible influence to address one of the most harmful faultlines in the global economy.”

While his letter acknowledged that the queen, as sovereign, is not supposed to directly intervene in the politics of her realm, Christensen said he hoped she would make her opinion on tax havens known, as “longstanding convention preserves your right to advise, encourage, and warn your prime ministers.”

Extraordinarily, the queen, through a senior correspondence officer, wrote back. “The queen’s position as a constitutional sovereign precludes her from intervening in matters such as this,” the letter stated. “Thank you for taking the time and trouble to write as you did.”

Christensen was not impressed. “These places are undermining the global economy, so she cannot wash her hands of this role as monarch of all these tax shelters and head of state,” he says.

It doesn’t help, he adds, that she’s also directly reaping the benefits of her tax shelters.

“When the head of state is doing nothing and has offshore structures hiding her own money from tax, it does not pass the smell test,” he says. “A fish rots from the head.”