QUEENS, NY – Here, behind one of the doors, John F. Near Kennedy International Airport, in Brink’s Global’s unnamed warehouse, are approximately $ 30 million worth of gold bars.
A group of investment advisers stopped by in suburban Pennsylvania last May after buying gold from a seller in Europe. And they chose this place – the typical warehouse of Springfield Gardens, most of the city is black, part of the lower middle class – for a very specific reason: a provision on tax cuts Trump offers of concessions to investors starting businesses. In poor neighborhoods.
“We’re really doing business in economically difficult areas,” Bob Enk, CEO and Business Founder, boasted in a promotional video. He called his scheme the US Opportunity Gold Fund.
Gambit relies on Opportunity Zones, a controversial federal program that honors wealthy businesses and individuals with drastic reductions in capital gains in exchange for investments in a troubled company. Thanks to the 2017 Tax Reduction and Works Act, investors who sell financial assets such as stocks can defer and reduce their capital gains tax – which can be up to 40% – if they use the income to build a business or home in the federal government. state. government. The low -income district was approved.
If the business lasts more than 10 years, the income from the new business will be completely free.
The program contains very few requirements to show that new projects will benefit existing communities. As a result, capacity zones have increased construction Luxurious home, self-contained unit And also a Marina for superyachtsAnd it helped Trump gain a reputation as ultra rich.
But even in that regard, experts at HuffPost say the U.S. Gold Capacity Fund is one of the bravest programs they have encountered.
“How can you not create social value? Brett Theodosius, a senior fellow at the Urban Institute, said he criticizes the excessive use of opportunity zones.
And they don’t know if the foundation is deceptive or clever.
After all, the IRS has established several basic conditions for the use of capacity zones: a set of technical rules and a rule aimed at businesses that meet all technical rules but are clearly contrary to the spirit of the law. . As well as the agency Examples offered Companies fail in the so -called. One scenario involves converting a vacant lot into a self-contained parking lot as investors rely on increasing land values.
Another example is a sole proprietorship that holds gold deposits while investors expect the price of gold to rise.
This presents a clear challenge for the US Gold Capability Fund: a Two– The activity of a person collecting gold in a warehouse while investors are hoping that the price of gold will increase.
In any case, the same applies to potential investors in the marketing of the fund’s founding fund. Enk did not respond to numerous calls and emails for this story. But in a series of undated videos on the company’s website, it puts potential investors in a business model with a surprising similarity that the IRS has declared inappropriate: stay in gold for at least 10 years and then will sell it tax -free.
“We want to drive economic growth in areas of opportunity and, as part of that construction, we offer a fund that invests in physical gold,” Enki said in a video. “If anyone has an interest in stimulating economic activity and if you want gold as an investment, we need to talk.” The ideal investor, he says in another video, is to “sell the thesis that gold is a good long -term investment”.
Foundation He raised $ 30 million By anonymous investors in December 2020, the group according to information submitted to the Securities and Exchange Commission. Six months later, he signed a contract with StoneX, a global freight carrier, to buy and deliver $ 30 million worth of gold bars from a European seller to a warehouse in Queens. Manager of StoneX Welcome delivery As “an integral part of our broader social responsibility initiatives”.
“How can you not create social value?
– Brett Theodosius, Senior Fellow of the Urban Institute
“Oh, for God’s sake,” Theodosius said as he listened to a description of the U.S. Gold Capability Foundation and the gold warehouse near his airport.
For Theodosius, such a wild method exists because the government has lost its ability to control the wealthy taxpayers and because Congress had almost no disclosure when it created the Opportunity Zone program.
“We need adequate IRS resources,” he said. “We need to know where Opportunity Zone projects are taking place, where they are in real time, to understand and test what this program is doing. [And] We need a legitimate certification process that Treasury can now implement to limit the program to mission-minded investors. “
Other experts agree that the funding goes exactly in line with what IRS rules allow for opportunity zones, unless it just goes beyond it.
“My first thought was, ‘Wow, there’s someone who’s really shaping up and learning directly from the example of anti-violence. It’s an exciting choice!” Said Jessica Milett, a law firm based in New York. York investing in the Duval and Stachenfeld opportunity zones.
The IRS defines gold buying activities in its regulations because, in the agency’s words, they are “simple speculation. [and] “The increase in economic activity is not expected”. Millet suggests that the U.S. Gold Opportunity Fund offers something other than physical gold, such as financial advice, to remain qualified as an asset in an opportunity zone.
But the line that the foundation runs on is very good, Miletus says.
“They really say, ‘Look, you own all the gold if you invest in a fund!’ He said. “It gives me a break.”
Perhaps to avoid this criticism, Enk said the company’s acquisition of gold actually helps to revive economic activity in weak areas.
“We’re really trying to make sure we make economic growth,” Enki said in another promotional video. “We will bring back gold from other countries [and] The whole economic activity already [goes] din. “Storage, protection, protection, testing, weighing, all sorts of things that have to happen with gold bars, will now be done, in the United States, in OZ.”
But the economic impact is hard to see in Springfield Gardens, a small neighborhood surrounded by several small parks, the Belt Parkway and the barbed wire fences that surround JFK International.
From the curb, the Brink warehouse gold origin looks like it hasn’t had a recent upgrade or expansion. (And why, when the $ 30 million gold bar is on the kitchen table?) The reporter walked away, the driver of the idle Brink truck shook hands in anger, and went back to eat.
“We really do business in economically difficult areas.
– Bob Enk, CEO and founder of Opportunity Gold Fund USA
Much of the economic impact likely went to those who gave Enk and his team $ 30 million. Since special tax liabilities for investors using the Opportunity Zone program have been reduced through 2021, the fund may have already helped consumers avoid more than $ 1 million in federal taxes.
The foundation had a total of two employees initially: Enki and its chief operating officer Scott Victor. Its website also lists the president, John Palat, and affiliate member, Alex Joslin.
All four men previously worked at Equinox Funds, an investment manager of which Enki was CEO and President from 2007 to 2021. In 2016, the SEC Equinox funds were authorized For a misconception of how its administration fee is calculated, among other “material errors and omissions” that allow Equinox to pay users $ 5.4 million. Equinox fee A $ 400,000 fine and more than $ 5 million in compensation Investors and the Fund since then Reorganization Under the new guidance.
For the Gold Fund firm, Enki and its partners receive legal assistance from the White Shoe Dechert law firm and are controlled by Novogradac, a reputable accounting firm. Novogradac did not respond to a request for comment. DeChertt did not answer HuffPost’s questions, nor did he advise the lawyers who advised the Gold OZ Fund to comment. A few hours after HuffPost first contacted DeChart and Brink, the entry in the About Us section of the Gold OZ Foundation disappeared.
A spokesman for Brink did not answer questions about whether it is hiring additional staff or making physical improvements to its warehouses when handling a particularly important warehouse, in this case or in general.
HuffPost then asked people at Springfield Gardens if they had a new neighbor – $ 30 million in gold bricks – that had a positive impact.
“I can’t really say,” said David Mendes, owner of Bugging Out 4 Burgers, when asked if there was a big increase in traffic at his restaurant. “Most of our customers come from the community.”
Source: Huffpost
