Tax Scandal's Mystery Man

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Staggl client: heir to the Tesco grocery fortune Dame Shirley Porter Martin Stenning/Rex Features

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Coming Up with the Cash

In 2002, Porter wrote to her son, John R.C. Porter, explaining that she needed cash. Shortly thereafter Staggl authorized changes in a loan made by Zollikon to Telos, a U.S. defense contractor owned primarily by Porter's son. The deal allowed Telos to get a new loan and funnel nearly $3 million to the Porters, according to regulatory filings. John Porter didn't respond to requests for comment.

Around that time, Staggl was also working with Claude Greaves, a penny stock promoter and tax cheat convicted in an unrelated matter. New Haven was the Liechtenstein affiliate of ICM International, a consortium of tax consultants and offshore incorporators organized by Greaves, a native of Grenada. People familiar with the company say Greaves and his crew turned to Staggl when they needed to squirrel away proceeds from Grenada's defunct Salisbury Merchant Bank and three small British brokerages that sold dubious stocks. Court-appointed liquidators traced the money to three accounts Staggl set up at Liechtenstein's Neue Bank. British authorities investigated, but no charges were filed after Neue agreed to return the money. Neue declined to comment. "I've known Mr. Staggl a long time," says Greaves, who is awaiting trial in London for an unrelated alleged stock scam. "I don't believe what's written about him."

It wasn't the only time Staggl got mixed up in penny stocks. In 2006, he worked with Toronto financier Morrie Tobin to drum up investors for Calibre Energy and Standard Drilling, whose shares soared and crashed within 12 months. Working both sides of the Atlantic, the pair arranged meetings between bankers and prospective investors. Tobin says his "projects [with Staggl] are not related to the indictment."

Perhaps Staggl's most infamous client is Gotthard Lerch, a German engineer on trial in Stuttgart for allegedly supplying sensitive nuclear technology to Libya and the network of Abdul Qadeer Khan, considered by many to be the father of Pakistan's atomic bomb. Staggl managed money for Lerch—but gave up information to German investigators after two rounds of interrogation. In a June 1 article in the Swiss newspaper Neue Zürcher Zeitung, Staggl said he "never noticed anything suspicious" about Lerch's transactions and that they "didn't involve enormous sums." Even so, authorities have asked Staggl to testify in July. It isn't clear whether he'll comply, but the German court could offer Staggl immunity from extradition to the U.S. while traveling to and from Stuttgart to testify.

Patriot Games

Staggl has gotten creative in the wake of the Patriot Act and other laws that empower governments to probe bank accounts more aggressively. In 2002, for example, Staggl established a New Haven office in Denmark. Unlike Liechtenstein, Denmark doesn't have a reputation as a tax haven, giving the accounts an extra layer of respectability. "They were looking for a jurisdiction that was kosher," says a person familiar with Staggl.

Staggl showed some fancy financial footwork in moving money around for Igor Olenicoff, the Russian émigré and California developer at the center of the Florida indictment. As part of his services, Staggl used a shell company known as Landmark Settlement. The entity had a complicated—and therefore difficult to trace—parentage. Headquartered in Denmark, Landmark was owned by a company in the Bahamas but controlled by a Liechtenstein trust, according to incorporation records. Adding to a veneer of propriety, Landmark was audited by BDO ScanRevision, the Danish affiliate of accounting firm BDO International. Among Olenicoff's other repositories: an account at Neue, the same bank used by Greaves. Olenicoff pled guilty to tax evasion in December, agreeing to pay $52 million in back taxes and perform community service.

Now U.S. and European authorities are focusing more intensely on Liechtenstein. As part of a probe into tax cheats, the U.S. Senate's permanent subcommittee on investigations is focusing on Americans with accounts at LGT Group, a bank controlled by Liechtenstein's royal family. Earlier this year, German authorities arrested Deutsche Post Chief Executive Klaus Zumwinkel on tax evasion charges after an LGT insider sold secret records to spies enlisted by the German government. Zumwinkel denies the accusations. "LGT does not encourage or aid in tax evasion. It is in contact with the relevant authorities to cooperate," says an LGT spokesman.

With Staggl's fate unclear, a few of his associates are distancing themselves from him. When news of his indictment broke in May, Principle Capital persuaded him to resign his directorships at a number of the European money manager's subsidiaries. Partners at New Haven's Denmark branch say he's no longer involved. BDO, meanwhile, says it quit auditing the Landmark vehicle Staggl set up for Olenicoff. At this rate, Staggl may soon find his bunker in Liechtenstein lonely.

Henry is a senior writer at BusinessWeek. Goldstein is an associate editor at BusinessWeek, covering hedge funds and finance. Ewing is BusinessWeek's European regional editor .