Hal Weitzman - What’s the Matter with Delaware?: How the First State Has Favored the Rich, Powerful, and Criminal―and How It Costs Us All

WHATS THE MATTER WITH DELAWARE?

Whats the Matter with Delaware?

How the First State Has Favored the Rich, Powerful, and Criminaland How It Costs Us All

Hal Weitzman

PRINCETON UNIVERSITY PRESS

PRINCETON AND OXFORD

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For Lorna

1. xi

I grew up in Wales, and observed since childhood that size comparisons often seem to mention my country. We learned in our schoolbooks that the Holy Land was about the size of Wales. Reporting from the Amazon rainforest, a BBC reporter noted in 2006 that an area the size of Wales is chopped down every year. The notion that this reference point would be meaningful to non-Welsh readers always struck me as fanciful.

When satellite images revealed in 2017 that one of the worlds biggest icebergs had broken off from Antarctica, the British media, once again, described it as being about a quarter of the size of Wales. (Which makes Wales four Delawares big, to use my own preferred mnemonic.)

So I discovered that, like my own small country, there is an even smaller US state that seemed to act as a convenient yardstick, usually to measure disasters. A swarm of locusts that hit Argentina in 2016 was about the size of Delaware, according to the New York Times.

This discovery gave me a natural affinity for Delaware. Like Wales, Delaware is small: the second-smallest US state in terms of land mass, measuring just shy of two thousand square miles (about half as big as Connecticut, or twice the size of Rhode Island, if you prefer) and the sixth-smallest in terms of population, with some 974,000 residents in 2019, according to the US Census Bureauabout one-third of one percent of the overall US population.

But unlike Wales, the laws passed in tiny Delaware have global implications. Its part-time legislature approves the legal code that governs the behavior of corporate leaders, both in the United States and overseas. Wales exports celebrities such as Shirley Bassey, Anthony Hopkins, Tom Jones, and Catherine Zeta-Jones. (And, like many noncelebrities, I followed these stars in leaving Wales to live abroad.) Delaware exports corporate laws. Wales famously has more sheep than people. Delaware has more registered companies than people.

During my twelve years as a Financial Times journalist, I often heard Delaware mentioned and never quite understood why. Americas First State (a name it claimed after becoming the first state to ratify the US Constitution in 1787) always seemed to crop up as the location of great corporate legal battlesover mergers and acquisitions, shareholder lawsuits, or bankruptcies. I vaguely understood that Delaware was somehow critical to the infrastructure of global business. It was only when I stepped away from the day-to-day mire of being a news reporter that I found the time to look into why this state, just one-quarter the size of Wales, was of such international importance. And the more I learned, the more questions I had. There was a lot more to Delaware than met the eye.

WHATS THE MATTER WITH DELAWARE?

WILSONS GIFT

John Cassara first became aware that Delaware was a problem around the turn of the millennium.

Commanding, chiseled, and intense, with a thatch of graying hair, Cassara spent twenty-six years investigating international drug traffickers, arms dealers, and terrorist cells for the US government.

Cassara began his career as a CIA operative in the late 1970s, recruiting spies in Angola and writing reports that often found their way into President Ronald Reagans daily CIA briefing. He went on to work for the Secret Service and then the US Customs Service. He went undercover to expose arms dealers trying to break the US trade embargo on apartheid South Africa. He worked with the Italian authorities to investigate money laundering by the Mafia. He worked in the Middle East, probing cases of fraud, intellectual property rights, smuggling, and high-tech crimes.

The United States at that time was a global leader in countering money laundering. In 1986, it became the first country in the world to make money laundering a crime, enacting a powerful law with tough penalties and extraterritorial reach and authorizing civil penalty lawsuits by the government.

These days, Cassara is widely recognized as an expert on the subject. Hes one of very few people to have been both an intelligence agent for the Secret Service and a US Treasury special agent. Hes testified to a string of congressional committees on complex issues such as alternative remittance systems and trade-based money laundering.

In the late 1990s, he was working back in Washington at the US Treasury, in the Financial Crimes Enforcement Network (FinCEN), a somewhat obscure department that had been established a decade earlier to help detect, investigate, and prosecute domestic and international money laundering and other financial crimes. Cassara toiled away in FinCENs small international division, tasked with cooperating with similar agencies in other countries to investigate financial wrongdoing.

In 1995, the United States joined the Egmont Group, an alliance of these agencies from 152 countries that have pledged to share their expertise and financial intelligence to combat money laundering and terrorist financing. The group took its name from the location of its founding meeting: the Egmont Arenberg Palace, an elegant sixteenth-century mansion in Brussels that hosted the fencing events for the 1920 Summer Olympics. Today the palace houses Belgiums Ministry of Foreign Affairs.

FinCEN, which employs a few hundred people, takes in financial intelligence such as currency transaction reports, analyzes that information, and distributes it for law enforcement purposes. The agency shares the information with its colleagues in the Treasury, with other US government departments such as the FBI and the Drug Enforcement Agency, and with states and municipal authorities.

As part of its commitment as an Egmont Group member, FinCEN also shares information with foreign governments, if its working on joint investigations with them. Cassara recalls fielding calls from his law enforcement counterparts in other countries who were on the trail of suspects in a terrorist investigation or a money-laundering probe. When the trail led to the United States, the foreign agency would ask Cassara if FinCEN could supply information to help their investigation. Cassara wanted to help, but often he couldnt. There was no information to be had.