Cities and states suing Purdue Pharma L.P. for its role in the opioid crisis say its family owners withdrew billions in profits. But where is that money and how much should be fair game in ongoing settlement talks?Answers are complicated by the way members of the Sackler family have shielded their wealth in a web of companies and trusts, a review by The Associated Press has found. Some are registered in offshore tax havens far from Purdue’s Connecticut headquarters.The web’s complexity and offshore reach could affect the calculus for government lawyers as they pursue the company, including how to calibrate demands in settlement negotiations.All but two U.S. states and 2,000 local governments have taken legal action against Purdue, other manufacturers and distributors. Sixteen states have sued family members by name.Purdue’s CEO has said the company could file for bankruptcy. And this week, news organizations reported that Purdue, the family and government lawyers are negotiating a possible settlement, valued at $10 billion to $12 billion, that would see the Sacklers give up company ownership and contribute $3 billion of their own money.But AP’s review of court papers, securities filings by companies that have had dealings with Purdue, and documents leaked from an exclusive Bermuda law firm, show how the family has tried to protect its wealth.“The Sacklers allegedly moved significant money offshore, which potentially would make it harder for any judgment creditor to reach,” said Mark Chalos, a lawyer representing counties and cities including Nashville, Tennessee, in suits against opioids makers.“This is the real question and you’re seeing it playing out in a lot of different states in different ways,” said Elizabeth Chamblee Burch, a professor of law at the University of Georgia. “How do you make sure that they (the Sacklers) are not siphoning off those assets and hiding them away?”A representative for the family of Purdue co-founder Mortimer Sackler declined to comment for this story, as did a company spokeswoman. A representative for the relatives of Raymond Sackler, Purdue’s other scion, did not respond to a request for comment.When the Oxycontin maker plead guilty in 2007 to a federal charge it mislead the public about the drug’s risks, it listed 215 companies under its umbrella. But that did not include some companies used to manage property and investments for family members or the trusts, some offshore, set up to administer their fortunes.Some offshore entities “appear to have served as conduits for monies from Purdue,” a lawyer for New York’s attorney general wrote recently to the judge presiding over the state’s lawsuit.Many companies set up limited partnerships and subsidiaries to cap shareholder liabilities and many wealthy individuals manage investments through opaque entities.But an examination of the Sacklers’ web shows striking complexity, while revealing links between far-flung holdings.A British estate owned by Theresa Sackler, widow of one of Purdue’s founders and a former board member, is one example. On paper, it is owned and run by a handful of companies, most based in Bermuda, all controlled by an offshore trust.But documents leaked from Appleby, a Bermuda law firm employed by numerous wealthy clients, show that the companies belong to the Sacklers, among at least 30 island-based entities controlled through family trusts.It has long been known that the Sacklers use Bermuda as a base for Mundipharma, a network of companies set up to do business outside North America. But their island portfolio also includes family foundations and an insurer, according to documents leaked in 2017 to the German newspaper Suddeutsche Zeitung. The documents, among millions known as the Paradise Papers, were shared with the International Consortium of Investigative Journalists which provided access to the AP.The Sacklers’ use of offshore holding companies and trusts is telling, said Jeffrey Winters, a Northwestern University professor whose research focuses on how the powerful protect their fortunes.“One would not put those trusts there if you didn’t see some wealth defence benefit,” Winters said. “It’s very hard to see what’s in there and it’s very hard to seize what’s in there. That’s the purpose.”But David S. Neufeld, an international tax lawyer who works with wealthy clients and closely held companies, said the layered, partly offshore structure used to control Purdue, while not typical, is also not that uncommon.“Somewhere in this picture is a desire to limit exposure to business liabilities. That’s not, in and of itself, a problem. That’s the very nature” of setting up a corporation, Neufeld said.The Sacklers had an estimated net worth of $13 billion as of 2016, making them America’s 19th-richest family, according to Forbes magazine. One of their largest holdings outside pharmaceuticals appears to be an estimated $1.7 billion portfolio in a family company, Cap 1 LLC, that recently sold a stake in 17 U.S. ski resorts.Massachusetts, New York and other states are alleging that the family has worked methodically to move money out of Purdue to insulate their fortune.The family’s withdrawal of substantial sums from Purdue was noted by Dr. Richard Sackler, the former president and chairman, in a 2014 email to his sons, filed as an exhibit in court proceedings.“In the years when the business was producing massive amounts of cash,” he wrote, “the shareholders departed from the practice of our industry peers and took the money out of the business.”He did not need to remind his sons that the only shareholders of Purdue are Sacklers.It is not clear where the money drawn from Purdue ended up. New York’s attorney general alleges that the Sacklers sent it offshore to “unknown trusts, partnerships, companies” and other entities they control.Lawsuits allege that the Sacklers’ money management decisions were framed by their awareness of state investigations of Purdue.“Despite this knowledge, the Sackler defendants continued to vote to have Purdue pay the Sackler Families significant distributions and send money to offshore companies,” Nevada’s lawsuit says.Purdue agreed in March to a $270 million settlement with the state of Oklahoma to avoid going to trial. That included $75 million from the Sacklers.A federal judge in Cleveland overseeing suits by local governments has pushed all parties to work toward a nationwide settlement. The resulting negotiations have included representatives for some of the state attorneys general who have filed suit.The first federal trials are scheduled to start in October. Unless there’s a settlement, family members could face more questions about their decisions to move money out of Purdue, some of it offshore.At trial, lawyers for states and cities would “need to prove that the transfer of the money to these offshore accounts were made with fraudulent intent,” said William J. Moon, a professor of law at the University of Maryland.Getting a judge to seize Sackler assets in the U.S. would require government lawyers to show they’re likely to win the case, Miami attorney Gregory Grossman said. But it would be far easier than getting a U.S. judge to freeze offshore assets, he said.“How comfortable is the court with ordering the seizure of things that are not in their jurisdiction?” Grossman said. “If they are comfortable, will they get co-operation with folks on the other side of the pond?”Adam Geller, The Associated Press
by Stephen OhlemacHer, The Associated Press Posted Jan 26, 2015 2:18 pm MDT AddThis Sharing ButtonsShare to TwitterTwitterShare to FacebookFacebookShare to RedditRedditShare to 電子郵件Email CBO: Growing economy to help budget deficit shrink to lowest level since Obama took office FILE – In this March 4, 2014 file photo, copies of President Barack Obama’s proposed fiscal 2015 budget are set out for distribution on Capitol Hill in Washington. The Congressional Budget Office says the federal budget deficit will shrink this year to its lowest level since President Barack Obama took office. CBO says the deficit will be $468 billion for the budget year that ends in September. That’s slightly less than last year’s $483 billion deficit. As a share of the economy, CBO says this year’s deficit will be slightly below the historical average of the past 50 years. (AP Photo/J. Scott Applewhite, File) WASHINGTON – Solid economic growth will help the federal budget deficit shrink this year to its lowest level since President Barack Obama took office, according to congressional estimates released Monday.The Congressional Budget Office also projects a 14 per cent drop in the number of U.S. residents without health insurance, largely because of Obama’s health law.In a report released Monday, CBO says the deficit will be $468 billion for the budget year that ends in September. That’s slightly less than last year’s $483 billion deficit.The official scorekeeper of Congress projects solid economic growth for the next few years, with unemployment dropping slightly.“In CBO’s estimation, increases in consumer spending, business investment and residential investment will drive the economic expansion this year and over the next few years,” the report said.CBO also cited wage increases, rising wealth and the recent decline in oil prices.For future years however, CBO issued a warning: Beyond 2018, deficits will start rising again as more baby boomers retire and enrol in Social Security and Medicare. By 2025, annual budget deficits could once again top $1 trillion, unless Congress acts.At that point, Social Security benefits would account for one-quarter of all federal spending, said CBO Director Douglas Elmendorf.“The underlying point is that we have a handful of very large federal programs that provide benefits to older Americans,” Elmendorf said. “And with the rising number of older Americans and a rising cost of health care, those programs get much more expensive.”CBO says the number of U.S. residents without health insurance will drop from 42 million last year to 36 million this year, largely because of Obama’s health law. These numbers don’t include people who are in the U.S. illegally, who are ineligible for subsidies under the health law.The report says 19 million people will have health insurance because of the law, which could make it harder for congressional Republicans to make good on promises to repeal it.Obama inherited an economy in recession when he took office. The annual deficit topped $1 trillion for each of his first four years in office, including a record $1.4 trillion in 2009.As a share of the economy, CBO says this year’s deficit will be slightly below the historical average of the past 50 years.The federal budget deficit became a big issue during Obama’s early years in office. In 2011, Obama and congressional Republicans struck a deal that resulted in significant spending cuts at many government agencies. At the start of 2013, Obama persuaded Congress to further address the deficit by raising taxes on top earners.The White House said Monday that Congress still has more to do. “CBO’s longer-term budget and economic projections confirm the need for Congress to act to strengthen our economy for the middle class while putting our debt and deficits on a sustainable trajectory, including by making the investments that will accelerate economic growth and generate good new jobs for our workers to fill,” Deputy Press Secretary Eric Schultz said in a statement.Declining budget deficits, however, could reduce pressure on Congress to continue addressing the government’s finances.“Over the last few years as deficits have fallen, so too has the effectiveness of Republican rhetoric about a ‘big government’ boogeyman,” said Sen. Charles E. Schumer, D-N.Y. “Now is the time for Republicans to join with Democrats to invest in constructive programs that help middle-class Americans climb the ladder and achieve the American dream.”Republicans, however, signalled that they aren’t done cutting spending.“Thanks to Republicans’ efforts to cut spending this year’s deficit is projected to be smaller, but in order to balance the budget we must address the true drivers of our debt,” said Cory Fritz, a spokesman for House Speaker John Boehner, R-Ohio. “Real, robust economic growth won’t occur until we solve our government’s spending problem.”CBO projects that the economy will grow at an annual rate of 3 per cent in both 2015 and 2016. In later years, however, CBO projects slower economic growth as more baby boomers retire and the labour force grows more slowly than it did in the 1980s and 1990s.CBO projects the unemployment rate will gradually decrease to 5.3 per cent in 2017. It is now 5.6 per cent.“CBO’s report is important, but it only tells us part of the story,” said Sen. Bernie Sanders, a Vermont independent and the ranking minority member of the Senate Budget Committee. “What we must never forget is that tens of millions of Americans today are struggling to keep their heads above water economically while the disparity between the rich and everyone else is growing wider every day.”The budget agency bases its budget projections on current law, assuming that temporary provisions will be allowed to expire. However, many temporary laws are routinely extended, including dozens of temporary tax breaks and a provision that prevents steep cuts in Medicare payments to doctors.Future budget deficits would be higher if those provisions are continued. For example, if dozens of temporary tax breaks are extended, they would add $1 trillion to the deficit over the next decade.___Follow Stephen Ohlemacher on Twitter: http://twitter.com/stephenatap
The Met Office added that winds are expected to strengthen by dawn and a widespread frost is likely to form.A separate alert covering the North of England and parts of Scotland warned of snow of up to 4in (10cm) in areas above 900ft (300m), with “some drifting in the strengthening winds”.The current lowest temperature this winter was minus 11C (12.2F) which was recorded at Cromdale in Moray, North East Scotland, on December 5.Met Office forecaster Sophie Yeomans said: “The very lowest that we could see – and that’s up Scotland and the mountains up there – we are looking at minus 6C, minus 8C, (21-18F) so pretty cold, but I think pretty widespread across most of the UK we are going to see temperatures dipping below zero.”It should start feeling less cold from Monday, Ms Yeomans said, although maximum temperatures will still only be 5-6C (41-42F). A snowy scene on the North Yorkshire moors on Friday as Britain’s cold snap persistsCredit:Owen Humphreys/PA London and the Home Counties were hit by snow on Friday, during a mini cold snap that will bring a freezing weekend.The Met Office issued a severe weather warning for the capital and the South East for Friday night and Saturday.The alert warns of the risk of “persistent snow” for the region as temperatures are predicted to fall below zero this weekend – and will feel even more raw thanks to winds from Scandinavia. A man walks his dog brave icy conditionsCredit:Owen Humphreys/PA Public Health England (PHE) issued a warning as the temperatures plummeted.Professor Paul Cosford, medical director and director of health protection at PHE said: “With more cold weather across all parts of England now is the time to really think how it could impact you and your family, particularly those who are very young, over 65 or who have heart and lung conditions.” Meanwhile, temperatures could dip to as low as minus 10C (14F) overnight into Saturday in some mountainous parts of Scotland, where as much as 4in (10cm) of snow is expected.Friday was “particularly cold” in England, with temperatures of 2-3C (36-37F) in the Midlands, London and eastern areas, and scattered snow showers. Overnight the mercury will plunge to as low as minus 1C. Walkers in the snow on Friday as the Met Office warned of a sub-zero weekendCredit: Owen Humphreys/PA Elsewhere was a degree or two warmer, with highs of only 5C (41F) in the South West, Wales and western Scotland.The Met Office warned of disruption to transport, as well as slippery conditions on roads and pavements this weekend. “Some disruption to transport is possible as well as slippery conditions on roads and pavements,” the alert said. A grouse navigates a snowy hill on the North Yorkshire moorsCredit: Owen Humphreys/PA The Met Office warned temperatures would be ‘particularly cold’ in England, with temperatures of 2-3C (36-37F) in the Midlands, London and eastern areasCredit:Neil Squires/PA Show more He added: “Try to keep homes heated to at least 18C (64F), stock up on any essential medicine or food that you need before the cold arrives and remember that you will be warmer wearing several thin layers instead of fewer thick ones.” Want the best of The Telegraph direct to your email and WhatsApp? Sign up to our free twice-daily Front Page newsletter and new audio briefings.