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Vatican Bank Being Investigated for Money Laundering

Comment: For many years, we’ve looked at the Vatican Bank–the IOR (Institute for Religious Works.) Long a vehicle for the financing of fascism and criminal undertakings, the institution has FINALLY come under investigation for money laundering. (The Vatican Bank was discussed at length in AFA #18.)

“Vatican Bank ‘Investigated over Money Laundering”; BBC News; 9/21/2010.

The head of the Vatican Bank, Ettore Gotti Tedeschi, is under investigation as part of a money-laundering inquiry, police sources say.

Prosecutors also seized 23m euros ($30m; £19m) from the bank’s accounts with another smaller institution.

The inquiry was launched after two suspicious transactions were reported to tax police in Rome.

The Vatican said it was “perplexed and astonished”, and expressed full confidence in Mr Tedeschi.

The Vatican Bank, known officially as the Institute for Religious Works (IOR), was created during World War II to administer accounts held by religious orders, cardinals, bishops and priests.
Police intervention

Rome magistrates are looking into claims that Mr Gotti Tedeschi and the bank’s chief executive Paolo Cipriani violated laws that require banks to disclose information on financial operations.

The BBC’s David Willey in Rome says the Bank of Italy’s financial intelligence unit tipped off Italy’s tax police last week, after two suspicious transactions were reported between the Vatican Bank and two different Italian banks.

The tax police seized 23m euros that the Vatican Bank had tried to transfer from a small Italian bank called Credito Artigianato.

Some 20m euros was destined for JP Morgan in Frankfurt, with the remainder going to another Italian bank, Banca del Fucino.

Reports say the Vatican Bank had failed to inform the financial authorities where the money had come from.
Past scandal

In a statement, the Vatican strongly defended its record.

“The Holy See is perplexed and astonished by the initiatives of the Rome prosecutors, considering the data necessary is already available at the Bank of Italy,” the statement said.

And the Vatican also gave its backing to the two officials under investigation.

“The Holy See wants to express the maximum confidence in the president and in the chief executive of the IOR,” it said.

Mr Gotti Tedeschi, who is an expert on financial ethics, has been in charge of the bank for a year. He was formerly head of Spanish bank Santander’s Italian operations.

The Vatican Bank was last mired in scandal in 1982 when its governor Archbishop Paul Marcinkus was indicted over his involvement with the collapse of what was then Italy’s largest private bank, Banco Ambrosiano.

Although he was never arrested, the fallout from that scandal took a darker turn when two of its top executives, one of them its chairman, Roberto Calvi, were murdered.

Calvi, known as God’s Banker because of his close ties to the Vatican, was found hanged under Blackfriars Bridge in London.

Discussion

10 comments for “Vatican Bank Being Investigated for Money Laundering”

  1. “The papacy was now financially secure. It would never be poor again.”:

    How the Vatican built a secret property empire using Mussolini’s millions

    Papacy used offshore tax havens to create £500m international portfolio, featuring real estate in UK, France and Switzerland

    David Leigh, Jean François Tanda and Jessica Benhamou
    The Guardian, Monday 21 January 2013 15.23 EST

    Few passing London tourists would ever guess that the premises of Bulgari, the upmarket jewellers in New Bond Street, had anything to do with the pope. Nor indeed the nearby headquarters of the wealthy investment bank Altium Capital, on the corner of St James’s Square and Pall Mall.

    But these office blocks in one of London’s most expensive districts are part of a surprising secret commercial property empire owned by the Vatican.

    Behind a disguised offshore company structure, the church’s international portfolio has been built up over the years, using cash originally handed over by Mussolini in return for papal recognition of the Italian fascist regime in 1929.

    Since then the international value of Mussolini’s nest-egg has mounted until it now exceeds £500m. In 2006, at the height of the recent property bubble, the Vatican spent £15m of those funds to buy 30 St James’s Square. Other UK properties are at 168 New Bond Street and in the city of Coventry. It also owns blocks of flats in Paris and Switzerland.

    The surprising aspect for some will be the lengths to which the Vatican has gone to preserve secrecy about the Mussolini millions. The St James’s Square office block was bought by a company called British Grolux Investments Ltd, which also holds the other UK properties. Published registers at Companies House do not disclose the company’s true ownership, nor make any mention of the Vatican.

    British wartime records from the National Archives in Kew complete the picture. They confirm Profima SA as the Vatican’s own holding company, accused at the time of “engaging in activities contrary to Allied interests”. Files from officials at Britain’s Ministry of Economic Warfare at the end of the war criticised the pope’s financier, Bernardino Nogara, who controlled the investment of more than £50m cash from the Mussolini windfall.

    Nogara’s “shady activities” were detailed in intercepted 1945 cable traffic from the Vatican to a contact in Geneva, according to the British, who discussed whether to blacklist Profima as a result. “Nogara, a Roman lawyer, is the Vatican financial agent and Profima SA in Lausanne is the Swiss holding company for certain Vatican interests.” They believed Nogara was trying to transfer shares of two Vatican-owned French property firms to the Swiss company, to prevent the French government blacklisting them as enemy assets.

    Earlier in the war, in 1943, the British accused Nogara of similar “dirty work”, by shifting Italian bank shares into Profima’s hands in order to “whitewash” them and present the bank as being controlled by Swiss neutrals. This was described as “manipulation” of Vatican finances to serve “extraneous political ends”.

    The Mussolini money was dramatically important to the Vatican’s finances. John Pollard, a Cambridge historian, says in Money and the Rise of the Modern Papacy: “The papacy was now financially secure. It would never be poor again.”

    From the outset, Nogara was innovative in investing the cash. In 1931 records show he founded an offshore company in Luxembourg to hold the continental European property assets he was buying. It was called Groupement Financier Luxembourgeois, hence Grolux. Luxembourg was one of the first countries to set up tax-haven company structures in 1929. The UK end, called British Grolux, was incorporated the following year.

    While secrecy about the Fascist origins of the papacy’s wealth might have been understandable in wartime, what is less clear is why the Vatican subsequently continued to maintain secrecy about its holdings in Britain, even after its financial structure was reorganised in 1999.

    The Guardian asked the Vatican’s representative in London, the papal nuncio, archbishop Antonio Mennini, why the papacy continued with such secrecy over the identity of its property investments in London. We also asked what the pope spent the income on. True to its tradition of silence on the subject, the Roman Catholic church’s spokesman said that the nuncio had no comment.

    Posted by Pterrafractyl | January 28, 2013, 12:16 pm
  2. @Pterrafractyl–

    Good find! There is a good account of the genesis of the Vatican financial engine in AFA #17.

    This story, like R. Wilson’s find about the Quandt company and the Goebbels family, has profound links with the Bormann milieu.

    Best,

    Dave Emory

    Posted by Dave Emory | January 28, 2013, 9:48 pm
  3. […] Vatican Bank Being Investigated for Money Laundering […]

    Posted by Miscellaneous articles for – Articles divers pour 02-03-2013 | Lys-d'Or | February 3, 2013, 12:11 pm
  4. That’s right Monsignor, you just wanted to build a home for the terminally-ill. Yea, that’s the ticket:

    Top Vatican bank managers resign after Monsignor’s arrest

    By Philip Pullella

    VATICAN CITY | Mon Jul 1, 2013 3:27pm EDT

    (Reuters) – Two top managers of the scandal-plagued Vatican bank resigned on Monday following the arrest of a high-ranking cleric with close ties to the financial institution, in the latest of a string of embarrassments for the Holy See.

    Director Paolo Cipriani and deputy-director Massimo Tulli stepped down three days after the Vatican was rocked by the arrest of Monsignor Nunzio Scarano, who is accused of plotting with two other people to smuggle 20 million euros into Italy from Switzerland.

    Ernst von Freyberg, a German who earlier this year became president of the bank, officially known as the Institute for Works of Religion (IOR), will assume the role of bank director until a permanent replacement is appointed.

    The bank has also established a new position of chief risk officer who will be charged with improving compliance with financial regulations at a bank which has long been a byword for secrecy and lack of transparency.

    The Vatican bank, which has had more than its share of scandals in the past few decades.

    Scarano, 61, who worked as a senior accountant in the Vatican’s financial administration, was arrested along with an Italian secret service agent and a financial intermediary.

    According to transcripts from a judge’s report, Scarano, who is under two separate investigations by Italian magistrates in Rome and Milan, mentioned the director in phone conversations tapped by police investigators.

    The judge’s report, obtained by Reuters, says Scarano controlled vast amounts of money and felt he could act with impunity because of his connections to the Vatican bank.

    Only last Wednesday, two days before the arrests, Pope Francis set up a commission of inquiry into the Vatican bank, which has been hit by a number of scandals in the past decades.

    Scarano was for years a senior accountant for a Vatican department known as APSA, whose official title is the Administration of the Patrimony of the Apostolic See.

    SUSPENDED

    Magistrates have said there is no indication so far that the Vatican bank was directly involved in the attempt to bring the money into Italy, but that the investigation was continuing and more searches were under way.

    SScarano was suspended from his duties several weeks ago when he was placed under investigation by magistrates in Salerno.

    In that investigation, his lawyer Silverio Sica said wealthy friends had donated money to Scarano in order for him to build a home for the terminally ill.

    According to Sica, his client wanted to use that money to pay off his mortgage so he could sell a property in Salerno and use the proceeds to build the care home.

    Posted by Pterrafractyl | July 1, 2013, 11:55 am
  5. @Pterrafractyl–

    Before joining the church, this guy worked for Deutsche Bank.

    Recall that, in the early ’80’s, JPII called in Hermann Abs to straighten out the Vatican finances after the Calvi affair and the revelations about the P-2 Lodge.

    Best,

    Dave

    Posted by Dave Emory | July 1, 2013, 3:49 pm
  6. @Dave: It looks like virtually all of the reports on on Monsignor Scarano’s employment past were in error. Scarano work at “Banca d’America e d’Italia” before it was purchased by Deutsche Bank at the end of 1986. The New York Times has a correction on that. They don’t list the bank in the correction but it was “Banca d’America e d’Italia”, Bank of America’s Italian subsidiary. Considering Bank of America’s deep ties to BCCI even after it sold its shares in the late 70’s as well as the key role BofA played in transferring money between BCCI and BNL – Italy’s largest bank at the time – you have to wonder what, if any, special role the Italian branch of BofA could have been playing throughout the early 80’s.

    Posted by Pterrafractyl | July 1, 2013, 7:28 pm
  7. Pope Francis fires all but one cardinals who run Vatican bank

    just 11 months into their five-year termThe cardinals were appointed by Benedict XVI shortly before he resigned

    The Vatican bank was caught in a money-laundering row in 2010

    By Ted Thornhill
    PUBLISHED: 05:05 EST, 16 January 2014

    All but one of a five-member panel that oversees the controversial Vatican bank has been fired by Pope Francis.

    Four cardinals were given their marching orders by Francis on Wednesday.

    Those sacked were former Secretary of State, Cardinal Tarcisio Bertone SDB, Cardinals Odilo Scherer from Brazil, Telesphore Toppo from India and Domenico Calcagno, from within the Vatican.

    More at link:
    http://www.dailymail.co.uk/news/article-2540454/Pope-Francis-fires-one-cardinals-run-Vatican-bank-just-11-months-five-year-term.html

    Posted by Swamp | January 17, 2014, 9:34 am
  8. @SWAMP–

    the background of Cardinal Odilo Sherer of Brazil is interesting:

    http://en.wikipedia.org/wiki/Odilo_Scherer

    “Scherer is German Brazilian and was born in Cerro Largo, Rio Grande do Sul to Edwino and Francisca (née Steffens) Scherer. He is a nephew of the late Cardinal Archbishop of Porto Alegre Alfredo Scherer. The family of his father originated from the town of Tholey in the Saarland in Germany.[2] His mother also descended from immigrants from Saarland.

    …From 1994 to 2001, he was an official of the Congregation for Bishops in the Roman Curia, while serving as a Roman pastor and chaplain during his spare time.[3]

    During those years in Europe Scherer also on various occasions studied the German language at the Goethe-Institut in Staufen im Breisgau.”

    Brazil is a hotbed of Bormann capital network/Underground Reich activity and is home to Citizen Greenwald.

    Goethe Institute is a commonly-used front for the BND (German intelligence).

    One wonders . . . .

    Best,

    Dave

    Posted by Dave Emory | January 18, 2014, 7:46 pm
  9. Here we go again:

    CNN
    Vatican turns to Wall Street to fix bank
    By Mark Thompson @MarkThompsonCNN July 9, 2014: 11:50 AM ET

    LONDON (CNNMoney)
    The Vatican is turning to big-hitting Wall Street players for help as it tries to leave its scandal-tainted banking past behind.

    Pope Francis — a staunch critic of rampant capitalismhas hired veterans of Invesco, Goldman Sachs (GS) and Deutsche Bank (DB) to complete an overhaul of the Vatican bank.

    The bank — whose functions include providing financial advice and services to the Catholic Church — has been hit by a criminal investigation, high-level resignations and international accusations that it wasn’t doing enough to prevent money laundering.

    A report in 2012 by European experts found that the threat of financial crime at the Vatican was low. But the bank’s global reach, high volume of cash transactions and a lack of information about some non-profit organizations could make it a target for money launderers.

    Under new management, the Institute for the Works of Religion — as the bank is formally known — spent the last year shedding hundreds of customers, dealing with investment losses from the past and improving transparency.

    “Our ambition is to become something of a model for financial management rather than a cause for occasional scandal,” Vatican economics chief Cardinal George Pell told reporters.

    Taking charge at the bank is Jean-Baptiste de Franssu, a former CEO of Invesco’s European business and founder of an M&A advisory firm. His predecessor, German lawyer Ernst von Freyberg, was unable to commit full time to the role, the Vatican said.

    De Franssu will be joined on the board by Michael Hintze, who began his career at Salomon Brothers in 1982. Hintze was head of U.K. trading at Goldman, ran convertible bonds in Europe for Credit Suisse (CS), and went on to found hedge fund CQS.

    Former Deutsche Bank chairman Clemens Boersig has also been appointed to the board, alongside Mary Ann Glendon, Harvard law professor and former U.S. ambassador to the Holy See.

    Their task will be to introduce a new business model that will see the bank focus on its work for the Church, its clergy, congregations and Vatican employees. Its asset management function will be transferred to a new Vatican body.

    Posted by Pterrafractyl | July 9, 2014, 9:32 am
  10. This was probably inevitable: a group of relatively high-profile American Catholics decided to get into the cryptocoin business. Cathio coin is being peddled as a new system for enabling donations to Catholic organizations using a company that adheres to conservative Catholic values, unlike companies like PayPal which support Planned Parenthood. The company’s CEO, Matthew Marcolini, is the son-in-law of hard-right former Republican Senator Rick Santorum. Santorum himself is also sitting on the advisory board. Recall that Santorum is vocal supporter of the fascist Opus Dei cult and even sponsored Sam Brownback’s conversion by way of Opus Dei in 2002.

    Also sitting on the board of Cathio are former US ambassador to the Vatican Jim Nicholson, and former head of the US Mint Ed Moy. Moy was an advisor for “bitcoin IRA”, an investment fund encouraging people to put their retirement savings in cryptocoins. Matt Schlapp, the American Conservative Union chair and husband of White House Strategic Communications Director Mercedes Schlapp, is also involved. The co-founder of the company is Cameron Chell. As we’re going to see, Chell has a history of involvement with financial frauds. Because of course.

    So why is Cathio taking the approach of going with a blockchain when there are plenty of non-blockchain options that could facilitate giving to Catholic organizations? The company’s explanation is a bit confusing. At first, Marcolini claimed that it was interested in giving “permissioned visibility”, so donors to organizations could see where the money is coming from. This is presumably in reference to the fact that a blockchain is publicly available even if the identities of the donors is potentially anonymous but not necessarily anonymous. When asked about the fact that donors might want to keep their donations anonymous, Marcolini replied that, when “somebody’s doing the wrong thing, or if the government has a question, or If there’s any investigation into any wrongdoing, being able to track that information could be helpful for the Church.” When the reporter pointed out the contradiction of keeping donor information anonymous at the same time that information is made available for investigations, Marcolini shifted the explanation and asserted that, the “better question to ask isn’t so much about tracking and visibility and everything. But it’s focusing on how to bring millennials and Gen Xers into the fold to help them cultivate a culture of philanthropy or a culture of giving.”

    So Cathio appears to have not yet arrived at a coherent reason for why it should exist. Although the fact that it’s a for-profit company that will be charging a 2 percent fee for transactions gives us an idea of the company’s true purpose:

    Financial Times

    The Rick Santorum-backed coin for Catholics

    By: Jemima Kelly
    June 11, 2019

    Rick Santorum, the former senator for Pennsylvania and two-time Republican presidential candidate, has long been known for his religious zeal. An aide to Santorum told the New York Times back in 2005 that Santorum was “a Catholic missionary who happens to be in the Senate”, and his comments on homosexuality and same-sex marriage once spawned a campaign for the neologism “santorum”.

    Now, he’s backing a project that combines his religious fervour with another area of modern-day fanaticism: blockchainism (thanks to Buttcoin and in particular contributor David Gerard for drawing our attention to this).

    Santorum is sitting on the advisory board of a company and soon-to-be digital coin (stablecoin, specifically) called Cathio. The company describes itself on its website as “a new payment, remittance and funding platform which provides efficient, secure, and transparent movement of funds within the Catholic world”, promising to provide a “turnkey solution for Catholic organizations to bring their financial transactions into alignment with their beliefs”.

    Santorum’s son-in-law happens to be the company’s CEO, so it’s not hard to see how the former senator might have got involved. But there are some other big hitters on the board too, including former US ambassador to the Vatican Jim Nicholson, and former head of the US Mint Ed Moy, who also happens to have been an adviser for “bitcoin IRA”, an investment fund that encourages people to put their retirement savings into crypto (what could possibly go wrong, etc).

    Also on the board — and co-founder of Cathio — is Cameron Chell, chairman of ICOx Innovations, the company that ran Kodak’s infamous “Kodakcoin” ICO, which managed to raise less than 7 per cent of its target.

    Santorum, unfortunately, wasn’t available to talk to us, though he did say the following in a press release:

    Millennials don’t carry cash, they date on apps and watch on-demand entertainment. We have to be there, we have to learn from successful tech companies, and we have to provide a universal solution that makes it easy for younger generations to engage with the Church.

    We did get through to Cathio CEO Matthew Marcolini, however. We suggested to him that Cathio sounded a bit like Venmo for American Catholics, which he said he guessed it was, but that most churches and other Catholic organisations didn’t accept Venmo. Cathio, which since the firm’s inception in January 2018 has signed up four “early adopters” — including the Christian college Marcolini attended — reckons it can be more widely accepted.

    We can see why the Church might want to find a digital way of accepting donations in an age when younger people are carrying less and less cash, even if the barrier to adoption for Venmo — lack of scale — seems like it might be the same for Cathio.

    But we weren’t clear on what the point of using a stablecoin or blockchain-based system was. Marcolini first told us:

    We’ve been researching and figuring out what’s the best way to bring permissioned visibility to the church. We’ve decided to start at the donations side, so the faithful can begin to ask where the money’s come from.

    We suggested to Marcolini that the problem with this “permissioned visibility” was that some of the faithful might want to keep their donations anonymous. Indeed, Christians are told in the first and second verses of the sixth chapter of the Gospel of Matthew to “be careful not to perform your righteous acts before men to be seen by them. If you do, you will have no reward from your Father in heaven.”

    Marcolini agreed with this, but said:

    When somebody’s doing the wrong thing, or if the government has a question, or If there’s any investigation into any wrongdoing, being able to track that information could be helpful for the Church.

    Trying to identify wrongdoers while keeping everyone else’s donations anonymous still sounded a little difficult to us, we said, at which point Marcolini told us:

    The better question to ask isn’t so much about tracking and visibility and everything. But it’s focusing on how to bring millennials and Gen Xers into the fold to help them cultivate a culture of philanthropy or a culture of giving.

    So again, why blockchain? There didn’t seem to be a real answer, though another issue with Venmo is that it is owned by PayPal, which supports Planned Parenthood. Marcolini said this was “antithetical to what the church teaches” so Cathio would provide a way for Catholics to donate money using a company aligned with Christian values.

    Cathio really is all about giving. Apart from giving financial donations, users can also give ratings to Catholic organisations on Cathio:
    [see image]

    With some of us on Alphaville having been brought up as Catholics ourselves, we couldn’t help feeling that all of this seemed a little… uncatholic.

    Cathio is a for-profit company that plans to charge a transaction fee for donations — a “very minimal fee” of close to 2 per cent — and its advisory-board-members all own shares in the company (we weren’t told how many shares each adviser was allocated, but Santorum is being given a “few more shares” than others because he was helping with the company’s fundraising).

    Apart from the contradictions between keeping donations anonymous — as per the teachings of the New Testament — and being able to “ask where the money’s come from”, there’s also the issue of usury (ie the lender making interest, which is effectively what charging a fee on a stablecoin transaction amounts to).

    During the Renaissance period, the Medici — a Florentine banking family which supplied no less than four Catholic popes to the Vatican — managed to get around laws against usury by coming up with a bill of exchange, which allowed merchants to transfer money easily across borders and to skirt currency controls. As one Izabella Kaminska wrote on her personal blog back in 2013, this was effectively the 15th-century equivalent of bitcoin.

    We might think of Cathio, then, as an attempt at setting up the modern-day equivalent of Medici-coin. But big-hitter-backers or not, we highly doubt Cathio will get the kind of traction that allowed the Medici family to become one of the wealthiest families in Europe.

    ———-

    “The Rick Santorum-backed coin for Catholics” by Jemima Kelly; Financial Times; 06/11/2019

    “Cathio is a for-profit company that plans to charge a transaction fee for donations — a “very minimal fee” of close to 2 per cent — and its advisory-board-members all own shares in the company (we weren’t told how many shares each adviser was allocated, but Santorum is being given a “few more shares” than others because he was helping with the company’s fundraising).”

    Profit appears to be the obvious motive here. But we are assured by Cathio’s CEO that the actual motive is “permissioned visibility”, even though that doesn’t actually make sense unless the donations aren’t anonymous. When it was pointed out that “permissioned visibility” implied that these donations aren’t anonymous, the CEO responded that being able to track donation information could be helpful for the church. Keep in mind that, again, any information on the blockchain is inherently available to everyone. With traditional donations, someone could donate to an organization where that organization knows who made the donation but doesn’t release that information to the public. But with a blockchain that’s not really going to be feasible if we’re assuming the identifying information is held on the blockchain. It’s part of why this system seems like almost the worst option in terms of “permissioned visibility”. The donations are either potentially completely anonymous or not anonymous at all. So instead we’re assured that the real reason is engaging younger generations in the culture of philanthropy:


    Santorum, unfortunately, wasn’t available to talk to us, though he did say the following in a press release:

    Millennials don’t carry cash, they date on apps and watch on-demand entertainment. We have to be there, we have to learn from successful tech companies, and we have to provide a universal solution that makes it easy for younger generations to engage with the Church.

    We did get through to Cathio CEO Matthew Marcolini, however. We suggested to him that Cathio sounded a bit like Venmo for American Catholics, which he said he guessed it was, but that most churches and other Catholic organisations didn’t accept Venmo. Cathio, which since the firm’s inception in January 2018 has signed up four “early adopters” — including the Christian college Marcolini attended — reckons it can be more widely accepted.

    We can see why the Church might want to find a digital way of accepting donations in an age when younger people are carrying less and less cash, even if the barrier to adoption for Venmo — lack of scale — seems like it might be the same for Cathio.

    But we weren’t clear on what the point of using a stablecoin or blockchain-based system was. Marcolini first told us:

    We’ve been researching and figuring out what’s the best way to bring permissioned visibility to the church. We’ve decided to start at the donations side, so the faithful can begin to ask where the money’s come from.

    We suggested to Marcolini that the problem with this “permissioned visibility” was that some of the faithful might want to keep their donations anonymous. Indeed, Christians are told in the first and second verses of the sixth chapter of the Gospel of Matthew to “be careful not to perform your righteous acts before men to be seen by them. If you do, you will have no reward from your Father in heaven.”

    Marcolini agreed with this, but said:

    When somebody’s doing the wrong thing, or if the government has a question, or If there’s any investigation into any wrongdoing, being able to track that information could be helpful for the Church.

    Trying to identify wrongdoers while keeping everyone else’s donations anonymous still sounded a little difficult to us, we said, at which point Marcolini told us:

    The better question to ask isn’t so much about tracking and visibility and everything. But it’s focusing on how to bring millennials and Gen Xers into the fold to help them cultivate a culture of philanthropy or a culture of giving.

    So again, why blockchain? There didn’t seem to be a real answer, though another issue with Venmo is that it is owned by PayPal, which supports Planned Parenthood. Marcolini said this was “antithetical to what the church teaches” so Cathio would provide a way for Catholics to donate money using a company aligned with Christian values.

    Also note one of the other features of Cathio: rating Catholic organizations. Given the hard-right nature of the people behind this organization it’s going to be interesting to see how the more progressive Catholic organizations get ranked:


    Cathio really is all about giving. Apart from giving financial donations, users can also give ratings to Catholic organisations on Cathio:
    [see image]

    And as the article reminds us, one of the other obvious potential uses for Cathio is the same thing blockchains are useful for everywhere: skirting currency controls and easily moving money across borders:


    With some of us on Alphaville having been brought up as Catholics ourselves, we couldn’t help feeling that all of this seemed a little… uncatholic.

    Apart from the contradictions between keeping donations anonymous — as per the teachings of the New Testament — and being able to “ask where the money’s come from”, there’s also the issue of usury (ie the lender making interest, which is effectively what charging a fee on a stablecoin transaction amounts to).

    During the Renaissance period, the Medici — a Florentine banking family which supplied no less than four Catholic popes to the Vatican — managed to get around laws against usury by coming up with a bill of exchange, which allowed merchants to transfer money easily across borders and to skirt currency controls. As one Izabella Kaminska wrote on her personal blog back in 2013, this was effectively the 15th-century equivalent of bitcoin.

    We might think of Cathio, then, as an attempt at setting up the modern-day equivalent of Medici-coin. But big-hitter-backers or not, we highly doubt Cathio will get the kind of traction that allowed the Medici family to become one of the wealthiest families in Europe.

    So how likely is it that we’re seeing the formation of a hard-right Catholic money-laundering blockchain entity? Well, as the following article describes, the fact that the company was co-founded by someone like Cameron Chell certainly points in the direction of a shady financial agenda:

    Talking Points Memo
    Muckraker

    Santorum, Schlapp Shill For Catholic Crypto Coin Whose Founder Has Sketchy Past

    By Josh Kovensky
    June 12, 2019 2:31 pm

    Former Sen. Rick Santorum (R-PA) and American Conservative Union chair Matt Schlapp have joined forces for a project that is so deliciously of the moment that it’s hard to believe it’s real: Cathio, a cryptocurrency for the religious right that seems to fuse grift and faith in one.

    Cathio bills itself as a “turnkey solution for Catholic organizations to bring their financial transactions into alignment with their beliefs.”

    According to the Financial Times, which broke the story on Tuesday, Cathio CEO Matthew Marcolini says that because platforms like Venmo and PayPal apparently back Planned Parenthood — an organization “antithetical to what the church teaches” — he founded a cryptocurrency company that offers parishioners a system for giving to churches and other religious organizations in a way that’s in accordance with sacrament.

    PayPal has attracted criticism from anti-abortion advocates in part for a charitable giving program it runs that allows users to donate to Planned Parenthood chapters. Conservative groups have also criticized the payments firm, which owns Venmo, for its corporate support of the Center for Reproductive Rights. The Family Council, an anti-abortion evangelical group, lists PayPal as a corporate supporter of Planned Parenthood.

    To attract members of the religious right put off by those activities, Cathio founder Marcolini enlisted his father-in-law: Santorum.

    The former Pennsylvania senator has a perch on the company’s board that reportedly gives him a stake in the “benefit corporation.” So too does Schlapp, a high-profile Trump administration ally (and husband of White House Strategic Communications Director Mercedes Schlapp).

    Santorum has also been “fundraising” for the project, according to the FT report, which also says that Cathio charges around a 2% transaction fee for “donations and remittances.”

    According to documents reviewed by TPM, the crypto project has another figurehead helping to fulfill the holy mission of eschewing businesses that support Planned Parenthood: Cameron Chell, a Canadian citizen who co-founded and serves on the board of Cathio.

    TPM found that Chell spent much of the late 1990s and 2000s fending off accusations of financial misconduct in the U.S. and Canada, thanks largely to his associations with shady characters. He has been barred from at least one stock exchange and founded a company that was delisted from the Nasdaq after a staffer engaged in fraud.

    Chell first ran into trouble in 1998, when the Alberta Stock Exchange fined him $25,000 and barred him for five years for allegedly violating the exchange’s by-laws, according to Canadian court filings.

    Canadian authorities reportedly charged Chell at the time with directing an assistant to forge a client’s signature to open a bank account, before a judge acquitted Chell in September 1999.

    Chell’s next brush with fraud accusations (and the FBI) came three years later, after he founded a Nasdaq-listed company called Chell Group.

    According to court filings and press reports, Chell Group featured in an Ontario Securities Commission complaint that describes how a broker named Mark Valentine used Chell Group shares to move millions of dollars out of different funds that he was managing as the dot-com bubble popped. The Ontario Securities Commission described Chell as a “known associate” of Valentine, and recounted in the complaint how the Canada-based broker used shares in three separate companies belonging to Chell to conduct manipulative trades.

    Valentine was later arrested in an FBI securities fraud sting.

    After the Ontario Securities Commission named Chell in its complaint, he was removed from the board of his eponymous firm and the company was delisted from the Nasdaq. Two of his co-directors at Chell Group also went on to face criminal charges after his July 2002 removal.

    Chell never faced criminal charges during his tenure at Chell Group. Chell did not reply to TPM’s repeated requests for comment.

    He has since moved into the world of crypto currency, founding a company called ICOx in 2011. According to securities filings, ICOx registered Cathio Inc. in Delaware as a subsidiary in November 2018. But there was almost no public mention of Cathio until May 31, when ICOx issued a press release announcing a contract it had signed to develop a “Payment, Donation, and Remittance Platform for the Catholic Economy.”

    Another press release, issued the same day, specifies that the platform will run on blockchain — the technology that underpins cryptocurrencies. The FT reported that it will be a “stablecoin” — a digital currency that aims to be less volatile than other virtual forms of money.

    The company has not explained why it chose to establish itself as a cryptocurrency, rather than a payment system like Paypal or its subsidiary Venmo. It bills itself as a cheaper alternative, but charges around a 2% transaction fee for its services.

    Paypal and Venmo do not generally charge such fees as long as transactions remain within their respective platforms. (Venmo does, however, solicit a 3% charge for certain credit card-related payments, and charges merchants a 2.9% fee when the service is used for a direct transaction with a customer.)

    Nicholas Weaver, a computer science professor at Berkeley who is critical of cryptocurrencies, called the fee arrangement unusual.

    “The whole hype around cryptocurrencies is that you’re trying to keep these costs low,” he told TPM.

    Cathio users who may not appreciate a private company taking a cut of their charitable giving do have access to another platform-specific feature: the ability to bestow a rating on the church that receives their donation.

    ———-

    “Santorum, Schlapp Shill For Catholic Crypto Coin Whose Founder Has Sketchy Past” by Josh Kovensky; Talking Points Memo; 06/12/2019

    “TPM found that Chell spent much of the late 1990s and 2000s fending off accusations of financial misconduct in the U.S. and Canada, thanks largely to his associations with shady characters. He has been barred from at least one stock exchange and founded a company that was delisted from the Nasdaq after a staffer engaged in fraud.

    Getting barred from at least one stock exchange and founding a company that was delisted for fraud. It’s quite a resume for the person who co-founded Cathio:


    Chell first ran into trouble in 1998, when the Alberta Stock Exchange fined him $25,000 and barred him for five years for allegedly violating the exchange’s by-laws, according to Canadian court filings.

    Canadian authorities reportedly charged Chell at the time with directing an assistant to forge a client’s signature to open a bank account, before a judge acquitted Chell in September 1999.

    Chell’s next brush with fraud accusations (and the FBI) came three years later, after he founded a Nasdaq-listed company called Chell Group.

    According to court filings and press reports, Chell Group featured in an Ontario Securities Commission complaint that describes how a broker named Mark Valentine used Chell Group shares to move millions of dollars out of different funds that he was managing as the dot-com bubble popped. The Ontario Securities Commission described Chell as a “known associate” of Valentine, and recounted in the complaint how the Canada-based broker used shares in three separate companies belonging to Chell to conduct manipulative trades.

    Valentine was later arrested in an FBI securities fraud sting.

    After the Ontario Securities Commission named Chell in its complaint, he was removed from the board of his eponymous firm and the company was delisted from the Nasdaq. Two of his co-directors at Chell Group also went on to face criminal charges after his July 2002 removal.

    Chell never faced criminal charges during his tenure at Chell Group. Chell did not reply to TPM’s repeated requests for comment.

    We’ll see if Cathio is merely a for-profit attempt to make some money off of Catholic donations or if money-laundering or some other source of fraud is also part of the plan. But as we saw above, when asked why the company is using a blockchain for a purpose that doesn’t seem to benefit from a blockchain the answers we got were nonsense answers about “permissioned visibility” and an enhanced ability for Catholic organizations to investigate wrongdoing (before the answers shifted to using blockchain to appeal to younger generations). So the ostensible reason for Cathio – making fraud and wrongdoing easier to investigate – appears to be a fraud and the guy who co-founded the company has a history of fraud. In other words, a ‘come-to-Jesus’ moment about money-laundering is probably in order for the people behind this scheme.

    Posted by Pterrafractyl | June 13, 2019, 2:42 pm

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