Judge acquits all 28 defendants, including Mossack Fonseca lawyers, in Panama Papers case

Acquitted.

This decision was issued by Judge Baloisa Marquinez in the cases related to the “Panama Papers” and the related “Lava Jato” (“Car Wash”) scandals.

Initially, 31 people were charged with financial crimes, including bribery and corruption, in the Lava Jato case, while 28 were charged in the Panama Papers case. Prosecutors accused the law firm and others of engaging in illegal activities related to the car wash corruption scandal — and the charges were consolidated for the trial.

In relation to Lava Jato, the judge found that it could not be proven that money from illicit sources in Brazil had been brought to Panama with the intent to conceal, cover up, disguise or help evade the law. In relation to the Panama Papers, the judge found that evidence collected from Mossack Fonseca computers did not comply with the chain of custody and the rules governing digital evidence – and that the rest of the evidence was not sufficient and conclusive to establish guilt.

Background

The case has been in the news for nearly a decade. Eight years ago, the International Consortium of Investigative Journalists (ICIJ) and its media partners released millions of files revealing the financial secrets of the super-rich. The files, which became known as the Panama Papers, contained assets that were allegedly hidden in offshore companies to avoid taxation.

The Panama Papers were leaked from Mossack Fonseca, a Panamanian law firm that, according to its website at the time, offered “comprehensive legal and fiduciary services.” (The law firm closed in 2018 and its website is now offline.)

Among the defendants were Mossack Fonseca founders Jurgen Mossack and Ramon Fonseca. Fonseca died earlier this year before a judge issued a verdict (the charges against him were dismissed).

The files date back to 1977, when Mossack Fonseca was founded. In 2015, an anonymous source contacted South German Timesa well-known German newspaper, with an offer to hand over emails, photos and other documents from Mossack Fonseca’s internal database. The reason, the source said, was simply: “I want to make these crimes public.”

South German Timesin turn, released the documents to the ICIJ. The ICIJ and hundreds of other journalists from various news agencies examined the documents. Their investigations revealed the offshore financial secrets of world leaders and public figures.

Offshore assets

It’s important to note that it’s not illegal to own an offshore company or create an offshore trust. It’s perfectly fine in most countries, including the United States. However, it is illegal to use offshore trusts to hide assets from known creditors or to avoid taxation – failure to disclose offshore assets and reporting offshore income can land you in big trouble.

The IRS noted that “(dis)scrupulous promoters continue to lure U.S. citizens into placing their assets in offshore accounts and structures by claiming they are beyond the reach of the IRS,” while warning taxpayers that those who “promise tax savings that are ‘too good to be true’… are likely to cause legal harm to taxpayers who take advantage of them.” These schemes were (again) included on this year’s IRS Dirty Dozen list. (“The Dirty Dozen” is an annual list of common scams that taxpayers may encounter.)

When advisors such as attorneys (like me), accountants, and financial advisors work to set up offshore accounts, every effort must be made to ensure that the money is not being transferred for illegal purposes, such as tax avoidance, money laundering, or evading existing creditors (including future ex-spouses or successful plaintiffs). But even legally transferring money out of a jurisdiction does not eliminate compliance obligations. For example, in the United States, you still have to report the existence of the accounts on your tax returns (and in other circumstances, including alimony and other legal proceedings).

Failure to do so can land not only the account owners in trouble, but also the lawyers, accountants and financial advisors who facilitated the opening of the accounts.

Accusations and trial

That, the authorities say, is what happened here. Mossack Fonseca immediately denied any wrongdoing, saying the release of the documents distorted the work that had been done. In 2016, they posted a statement on their website saying, among other things: Recent media reports have misrepresented the services we provide. Despite our efforts to correct the facts, the nature of our work and its role in the global financial markets have been misinterpreted.

The company also indicated that it had no control over how its clients could use the offshore entities created for them. Despite these denials, the Panama Papers ultimately led to the company’s closure. It also led to a money laundering trial in a Panamanian court.

The trial began in April. The judge was initially given 30 days to reach a verdict, but that deadline was extended because of the evidence. The initial leak involved 11.5 million confidential documents, including financial and legal records. The documents take up 2.6 terabytes of computer memory (for comparison, one terabyte of data can be stored on about 1,400 CD-ROMs or 220 DVDs). By comparison, Wikileaks’ 2010 data covered only 1.7 gigabytes.

The verdict was delivered at the end of June.

In 2022, both founders of Mossack Fonseca – Ramón Fonseca Mora and Jürgen Mossack – were acquitted in a separate Panamanian money laundering case. Both have repeatedly denied any involvement in illegal activities.

Database

You can search the database, which contains more than 810,000 offshore companies, foundations and trusts collected as part of the investigation into the Pandora Papers, Paradise Papers, Bahamas Leaks, Panama Papers and Offshore Leaks, here.

You may see names you recognize, but as the database website notes, “The inclusion of an individual or entity in the ICIJ Offshore Leaks database is not intended to suggest or imply that they have engaged in any illegal or inappropriate activities.”

Fall

As mentioned, the Mossack Fonseca law firm closed in 2018 and its website is currently unavailable.

Panama received a lot of negative press immediately after the documents were released. Panama had been struggling for years with its placement on the global Financial Action Task Force (FATF), which did not help it. In 2023, the country was finally removed from the FATF grey list. Furthermore, in 2024, the European Union Commission announced that Panama would be removed from the European Union’s list of high-risk countries due to strategic deficiencies in preventing money laundering and terrorism financing. However, the country remains on the European Union’s blacklist of tax havens, alongside American Samoa, Fiji, Trinidad and Tobago, Anguilla, Guam, Russia, the US Virgin Islands, Antigua and Barbuda, Palau, Samoa, and Vanuatu.

In 2019, a film starring, Launderettestarring Meryl Streep, Gary Oldman and Antonio Banderas hit theaters. The film, directed by Steven Soderbergh, was inspired by a book centered on the Panama Papers. Mossack and Fonseca sued Netflix to try to block the film’s release, claiming, among other things, defamation — to no avail.

The ICIJ issued a statement after the verdict was announced.

“While the court did not hold these defendants accountable, the lasting impact of our investigation remains,” Gerard Ryle, ICIJ’s executive director, said in a statement. By exposing hidden truths, as we did in the Panama Papers, we give the public the information they need to demand accountability and push for reform.”