WILMINGTON, Del. — Joe Biden’s tailor does not like to boast that he is Joe Biden’s tailor. Yes, Biden occasionally orders custom shirts from Wright & Simon, a narrow shop on Market Street.
And yes, Leonard Simon, the shop’s proprietor, has selfies with Delaware’s most famous resident, the president-elect of the United States.
Might a journalist, visiting from out of town, see Simon’s pictures with the future president of the United States? You know, just a peek?
Start the day smarter. Get all the news you need in your inbox each morning.
“The pictures are in my phone. That’s where they will stay,” said Simon, 71, whose father, Morris Simon, cofounded Wright & Simon in 1935. “I’m a small store in a small state. I have to have discretion.”
Suits at Wright & Simon are fancy, but not so fancy. Wilmington is not a $3,000-suit kind of town. Here a customer can buy a suit — complete with custom fit and press performed in the tailoring shop above the store — for $795.
Every customer also receives the affable attentions of Simon, an expert at moving things along. Unlike upscale clothing retailers in upscale cities, which pamper guests on thick-pile carpets and comfortable settees, at Wright & Simon the lights are fluorescent, the floors are off-white linoleum, the fitting rooms are small and the only seat available is a worn-out desk chair.
“My clients are busy. They’re don’t come here to chit-chat,” Simon said. “They want to come in, order what they need, and get back to work.”
Onshore haven, offshore secrecy
Discretion. Affordable prices. Speed. Leonard Simon offers professionals in Wilmington precisely the services they market to Fortune 500 companies and the rich — be they Americans or not. Wilmington is home base for President-elect Joe Biden, whose transition team is waging an uphill fight from this city to overcome President Donald Trump’s refusal to concede. Biden’s operatives, stuck in Delaware, want to be in D.C. They need access to the office space, security clearances and $6.6 million in federal money to accomplish a smooth transfer of power.
Over the last century, Delaware’s largest city quietly has built an international reputation as a haven of banking secrecy, an attractive destination for legal businesses and criminals alike.
“Delaware is known worldwide for its judicial system and the expert and impartial judges that decide its corporate cases,” says a website run by Delaware’s Division of Corporations titled “Why Businesses Choose Delaware.”
Like Panama and the Cayman Islands — Delaware’s offshore competitors — this little state offers a suite of secrecy services, including the ability to quickly and cheaply create anonymous shell corporations that cannot be traced back to their owners, said Gary Kalman, U.S. director of Transparency International, a Berlin-based anti-corruption nonprofit. Unlike Panama, Delaware is decidedly onshore. Business disputes are tried before a specialized chancery court with five expert judges and a body of case law dating back to 1792, said James S. Henry, formerly the chief economist at McKinsey & Co. who now investigates international fraud rings.
That’s why Delaware, a state with 740,000 registered voters, is home to 1.7 million companies, according to its Division of Corporations. Incorporation fees netted Delaware $1.375 billion in 2019, enough to cover 30% of the state’s operating budget.
“It’s easier to get an anonymous shell company in Delaware than to get a library card,” said Casey Michel, a journalist and researcher who studies how international criminals use havens like Delaware to launder stolen money. “You don’t have to live there. You never have to visit. But you get all the privacy and property protections of the United States government.”
Keandra McDole finds this arrangement curious. In September 2015, four Wilmington police officers shot and killed her brother, Jeremy McDole, a paraplegic confined to a wheelchair. His sister has spent the last five years demanding police reform. She has protested in downtown Wilmington and outside the home of Mayor Mike Purzycki, demanding a meeting to discuss police reform. She was rebuffed.
Wealthy investors from around the globe can park their assets in Delaware within minutes. Meanwhile McDole won a legal settlement against the city in early 2017 that requires leaders of the Wilmington police department to negotiate de-escalation training for officers.
Nearly four years later, she’s still waiting.
2020 election: Donald Trump keeps baselessly claiming voter fraud in cities. But suburbs actually lost him the election
Will Biden embrace BLM?: After Biden win, Black activists demand reparations for slavery, police reform
Misinformation: Donald Trump lost the 2020 election, but misinformation will continue to win
“What we see in Delaware over the last century is the legislators do not respond to the constituents who are residents” of the state, said Michel. “Rather, they are responsive to constituents who are the companies in the tax shelter industry.”
Eventually McDole was forced to accept that in many ways, Delaware’s legal system provides stronger protections for rich criminals living in distant countries than it does for Black and poor Delaware citizens.
“If you’re rich, or if you live in another country, you can do whatever you want. The courts in Delaware don’t care,” said McDole, 32. “But I’ve lived and paid taxes here all my life. And I’m afraid of the police every time I walk outside.”
Delaware is a haven — for all kinds
Delaware is famously diminutive, just 30 miles across at its widest point. On a recent Wednesday afternoon, the drive from Wright & Simon in downtown Delaware to Joe Biden’s mansion in the suburb of Greenville took 14 minutes.
The hub of Delaware’s secrecy economy sits even closer. Just 4,000 feet from Biden’s home is the global headquarters of CSC, a company that performs a range of services for 200,000 corporations, including 450 of the Fortune 500, according to its website. CSC’s primary work is to help companies incorporate shell companies in ways that keep their owners anonymous, often for perfectly legal reasons.
Hypothetically, Coca-Cola could keep a new soda brand secret from its rival, PespiCo, by using a Delaware shell corporation to hide the true owners and purpose.
“That’s a legitimate use for an anonymous company,” Kalman said.
Other uses are less legit. All kinds of criminals use anonymous shell corporations incorporated in Delaware and other secrecy havens to launder stolen money and keep their identities secret, Kalman and Henry said. Recent cases include dictators who looted their countries’ treasuries, often called kleptocrats, along with Ukrainian oligarchs who stole natural resources and all manner of smugglers in drugs, weapons and people.
“Delaware qualifies as a leading haven for all sorts of nefarious purposes. If you want to defraud your future creditors, Delaware is a key state for this,” said Henry, a fellow at Yale University’s Global Justice Program. “Every time I investigate a scheme, there’s a Delaware corporation involved.”
Delaware’s powerful court system may be just as attractive to international criminals as its loose corporate laws, experts said. By laundering money through a shell company legally registered in America, criminals can purchase real estate and other assets in the United States, and then rely on America’s robust court system to protect their investments, Michel said. Money laundered through an American shell company allowed the leaders of Iran to evade U.S. sanctions and buy 60% ownership of a skyscraper in Midtown Manhattan; a pair of Ukrainian oligarchs used the same maneuver to purchase 2.8 million square feet of American office space, making them for a time the largest commercial landowners in Cleveland.
“Kleptocrats and arms dealers actually prefer shell companies in Delaware to places like the Bahamas because they’re taking advantage of America’s political stability and property rights,” Michel said. “It’s long past time people in this country understand Delaware’s role as this almost cancerous role on the American body politic.”
Delaware’s leaders know their system is being abused. The state’s political leaders and the directors of its Division of Corporations adamantly fought bills introduced in Congress over the last 15 years to limit anonymous shell corporations, Henry and Kalman said.
Now that’s beginning to change. Last April Jeffrey Bullock, Delaware’s secretary of state, wrote a letter to Congresswoman Maxine Waters, chair of the House Financial Services Committee, pledging his support for legislation banning anonymous corporate filings “to combat money laundering and terror financing.”
The clock starts now: Want to gather with family for Thanksgiving? Experts say you should start quarantining now
Business: As COVID-19 shuts malls and hotels, their owners fall behind on loans, setting the stage for a changed landscape
COVID-19: Infections are soaring. Lockdowns could be coming. A list of restrictions in your state
Even Biden, long known as a powerful supporter of the financial corporations with headquarters so close to his mansion, has signaled his support. Writing this April in Foreign Affairs magazine, Biden pledged, “I will lead efforts internationally to bring transparency to the global financial system, go after illicit tax havens, seize stolen assets, and make it more difficult for leaders who steal from their people to hide behind anonymous front companies.”
After years of lobbying, Henry said, supporters of shell company reform feel confident the Corporate Transparency Act will be passed by Congress and forwarded to Trump sometime in December.
“It’s been a long, long journey,” Henry said. “But I know many of my friends have champagne on hand to celebrate.”
The fight for police reform in Wilmington began years earlier, said the Rev. Derrick Johnson of Joshua Harvest Church. Black people in this city have demanded a police oversight commission since the 1960s, he said. Another attempt to pass the legislation started in 1995, according to News Journal archives.
Last year, City Councilman Chris Johnson again introduced legislation to create such a commission. Johnson expects a majority of council members to approve the bill next Thursday, and the mayor has said he will sign it.
“It’s been years in the making,” said Johnson. “Justice is never easy. It takes time.”
Yet even if officials in Wilmington create a police oversight board, it may have little power. Delaware is one of 13 states with a “law enforcement bill of rights” written into state law that limits the subpoena power of citizen panels and bans them from interviewing police officers. Chris Johnson said he plans to lobby the state legislature to change the law.
“There are two Wilmingtons. One serves the rich and business owners,” said Derrick Johnson, who is not related to the council member. “And when we who are homegrown American citizens try to use the legal system in our own city, we’re denied. It’s the epitome of taxation without representation.”
Quiet neighborhood, loud protest
A cold rain fell on the long brick driveway to Wilmington Mayor Mike Purzycki’s mansion on Thursday night as Keandra McDole started beating a soup pot with a fat wooden spoon.
It was deafening.
Then she picked up a bullhorn. She hit the siren, blasting the dark streets of the Highland neighborhood at the far western edge of the city.
“HELLO MISTER MAYOR. WE ARE BACK,” shouted McDole, who started conducting this nightly protest outside the mayor’s house on Sunday. “AND WE’RE NOT GOING ANYWHERE UNTIL YOU COME OUT TO TALK TO US.”
It was unclear whether the mayor was home. A few lights on the first floor were illuminated, but the rest of his mansion was dark. Surely he knew the protests were happening, however, as evidenced by the four Wilmington police SUVs idling nearby, aiming their headlight beams at the seven protesters.
“You will get no peace in this goody-two-shoes neighborhood until you meet with us,” McDole said into her bullhorn.
McDole’s demands are various. She wants Purzycki to do a better job cleaning the streets. She wants him to focus less on redeveloping land along the Christina River and more on fighting the city’s current crime spree. Wilmington experienced 155 shootings by the end of October, 26 of them fatal, making 2020 the second worst year for gun violence since 2011, according to delawareonline.com and The News Journal.
She wants to know why police shot her brother, and how the department plans to prevent such unnecessary deaths in the future. It took the Wilmington Police five years to produce a photograph of the pistol that Jeremy McCabe allegedly had in the waistband of his jeans when he was shot. Keandra believes the weapon wasn’t at the scene, and did not belong to her brother.
“So all these companies can get registered in 10 minutes? Then why does it take the police department five years to find evidence like that?” she said. “We pay taxes here. They don’t. That’s not fair.”
The mayor’s mansion sits two-and-a-half miles from Delaware’s Court of Chancery, two and a half miles from Simon’s modest showroom. In those places the service is fast, skilled and discreet.
In Keandra McDole’s neighborhood south of downtown, government service is often slow, unskilled and menacing, she said. There, quiet decorum doesn’t work. So she banged her wooden spoon against her soup pot. She had no idea whether the mayor was listening.
“We are back, mister mayor!” McDole shouted. “Do your job!”
Christopher Maag is a columnist for NorthJersey.com. To get unlimited access to his unique perspective on New Jersey’s most interesting people and experiences, please subscribe or activate your digital account today.
Email: [email protected]
This article originally appeared on NorthJersey.com: President-elect Joe Biden’s hometown of Wilmington, Delaware is a hub for secrets | Maag