Centuries ago, you could easily recognize pirates by the patches on their eyes, the bandanas around their heads, the swords dangling from their hips and the ships they captained. They plundered and pillaged to their hearts’ content throughout the Caribbean, taking coin, gold and property rightfully belonging to others for their own enjoyment and pleasure.
Today’s pirates may look far different than the pirates of old, yet they continue the time-honored tradition of plundering and pillaging to their hearts’ content. And the wealth they take today is the wealth of the people of the Virgin Islands.
Pirate #1: Jeffrey Epstein, Southern Trust Company
Thanks to the diligence and persistence of V.I. Attorney General Denise George, Jeffrey Epstein’s estate could be liable to repay the Government of the Virgin Islands $144,000,000 or more in tax breaks he and his various companies received through programs offered by the V.I. Economic Development Administration (EDA). In exchange for the tens of millions of dollars in tax breaks Epstein received each year from the EDA, he was obligated to make $150,000 in charitable donations.
EDA beneficiaries pay no gross receipts taxes, no business property taxes, no excise taxes and no withholding taxes. They also pay only 10% of their corporate income taxes and 10% of their personal income taxes. To date, the EDA refuses to disclose how much its 72 beneficiary companies receive in tax breaks each year. But some of the numbers in Jeffrey Epstein’s case have come to light through court filings, and they are staggering.
From 2014-2017, just one of Epstein’s many St. Thomas companies, Southern Trust Company, reportedly generated $656,000,000 in “aggregate income” and $142,000,000 in “net income.” Without the benefit of EDA tax exemptions, Southern Trust Company would have owed the Government of the Virgin Islands over $32,000,000 in gross receipts taxes alone and tens of millions of dollars more in personal income taxes, corporate income taxes and property taxes. And this is for just one of Epstein’s various companies operating in the V.I. over the course of four years. Epstein began receiving V.I. tax benefits in 1999 from the EDA’s predecessor, the Virgin Islands Industrial Development Commission.
Pirate #2: Gary Engle, CBI Acquisitions LLC
In 2004, Gary Engle, through his CBI Acquisitions LLC, acquired the remaining 19 years of the 40-year retained use estate to operate Caneel Bay Resort on St. John. The retained use estate was originally granted to Laurance Rockefeller in 1983, in exchange for his donating the approximately 170-acre property to the United States of America. Engle’s right to occupy Caneel Bay Resort will end when the retained use estate expires on September 30, 2023.
Today, Caneel Bay Resort remains closed and in ruins. Following hurricanes Irma and Maria in September 2017, Engle kept nearly three dozen rooms open to house residents and relief workers in desperate need of housing. Soon thereafter, however, those rooms were also closed. Despite what are reputed to be substantial insurance payments, Engle has stated he has no intention to rebuild any of Caneel Bay Resort without a 60-year extension to operate the facility.
Like Southern Trust Company, CBI Acquisitions LLC was also an EDA beneficiary. In a post-hurricane interview with The Daily News, Engle disclosed that in a typical year Caneel Bay Resort generated $45,000,000 in revenue and $9,000,000 in profit. For his 13 years of operation, that amounts to $585,000,000 in revenue and $117,000,000 in profit. Based on his own numbers, Engle’s EDA beneficiary status saved him over $28,000,000 in gross receipts taxes alone. Again, like Epstein and Southern Trust Company, Engle saved tens of millions of dollars more in additional tax breaks as an EDA beneficiary.
A report recently published by the University of the Virgin Islands Institute for Leadership and Organizational Effectiveness revealed that the territory lost “approximately $1 Billion” in tax revenue as a result of tax breaks given EDA beneficiaries from 2013 to 2015 alone. According to the numbers provided in Governor Bryan’s 2020 budget, collecting just half those lost taxes would have provided sufficient revenue to abolish the gross receipts tax entirely and still left nearly $30 million more to help fund GERS. If the people of the Virgin Islands ever hope to achieve financial stability and economic prosperity, the V. I. government must find a way to collect taxes from the largest and most profitable businesses in the territory that currently do not pay anywhere near their fair share of the tax burden that everyone else is forced to bear.