ABC News’ Jake Tapper Reports: In a debate on the floor of the US Senate about the need to close off-shore tax shelters, the ranking Republican on the Senate Budget Committee raised the subject of the work former Sen. John Edwards, D-NC, did for the controversial Fortress Investments — which has such shelters — after the chairman of that committee, Sen. Kent Conrad, D-ND, impugned the tax loophole.
The exchange came after Sen. Kent Conrad, D-ND, showed a photograph of a five-story building in the Cayman Islands where he said 12,748 companies are incorporated.
"It’s remarkable that all those companies, 12,748, are doing business in this little five-story building, but that’s what they claim," Conrad said. "Are they really doing business down there? Mr. President, the only business being done out of this building …is monkey business, because what they’re doing is engaged in an enormous tax scam."
Conrad said that these companies "have entities in the United States that they say are making no profits, and then they move them offshore into these Cayman Islands subsidiaries where there are no taxes, and all of a sudden, they show enormous profits. I mean who’s being fooled by this?"
Then Sen. Judd Gregg, R-NH, took the microphone.
"I noticed the former Senator who is running from North Carolina for president, John Edwards, received $500,000 in payments last year for his work with the Fortress Hedge Fund," Gregg said. "I also noticed that the New York Times reports that the Fortress Hedge Fund is incorporated in the Cayman Islands, probably in that building you’re referring to. Now, I’m just wondering, because you used the term ‘Who is being fooled here?’ Is it the position of the senator from North Dakota that Senator Edwards has been fooled here or that he’s fooling the American people here?"
Conrad demurred, saying he did "not know what the status of that particular hedge fund is. What I do know is that these offshore tax havens are being abused by lots of different entities, not only corporations, but wealthy individuals. I don’t have any evidence that would suggest that that particular hedge fund did anything improper and certainly you can be engaged in business in the Cayman Islands and not be engaged in anything improper."
Sen. Byron Dorgan, D-ND, said that Gregg had asked "a clever question" but "it is not new for us to try to shut these down. And as we’ve tried to shut these down, it is not new either to find that the current White House by and large opposes the legislation on the floor of the Senate to shut down these tax scams."