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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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