The “45 Offshore Trust Failures” List, Reviewed Case by Case
A widely circulated list claims 45 cases prove offshore trusts fail. Reviewed case by case: courts punished bad facts and bad timing - not properly built trusts.
Attorney Blake Harris· Florida Bar #86486, Colorado Bar #45942This is a living review. As new versions of this list, and new claims about offshore asset protection case law, are published and circulate, our attorneys apply the same process documented on this page - read every cited decision, compare what it held to what is claimed, and record the findings here. If you have seen a newer version of the list, check back; this review is updated to address it.
A widely circulated list, titled "45 FAPT Cases Gone Wrong" and compiled by attorney Steve Oshins, claims to catalog forty-five court decisions proving that foreign asset protection trusts (FAPTs) do not work. It is quoted at seminars, passed around by domestic-trust promoters, and used to talk clients out of offshore planning. Our attorneys reviewed every entry on it, case by case. The list does not hold up.
What the List Claims and What a Case-by-Case Review Shows
The list presents each of its forty-five decisions as an example of an offshore trust failing to protect a settlor's assets from a creditor, a divorce, a bankruptcy trustee, or a government enforcement action. Because it is frequently cited to discourage clients from offshore planning, it deserves scrutiny on its own terms.
A case-by-case review shows a very different picture. Many of the cited matters never involved a properly structured offshore asset protection trust at all. Others involve settlors who retained impermissible control, transferred assets only after a claim had already arisen, concealed assets in bankruptcy, or engaged in conduct that would defeat any asset protection structure, onshore or offshore. Still others resulted in a court holding the debtor personally in contempt or liable, without the offshore trust itself ever being reached.
Conflating those outcomes with "trust failure" overstates the case against offshore planning. The Cook Islands Trust is the structure these decisions most often involve, and the one our firm focuses on, so the record matters to us, and it deserves to be read accurately.
Eight Problems With the List
1. It collapses distinct legal concepts into one category. Adverse events involving offshore bank accounts, self-settled trusts, fraudulent transfers, bankruptcy misconduct, contempt, divorce, tax evasion, and regulatory enforcement are all treated as failures of a properly structured offshore trust. They are not the same thing.
2. Many entries are not offshore-trust cases at all. Chadwick v. Green (annuities and a Panamanian bank account), FTC v. Fortuna Alliance (corporate funds in an Antiguan bank account), U.S. v. Plath (offshore credit-card accounts), SEC v. Cook (accounts and entities the defendant personally controlled), the Jerome Schneider case (sham offshore banks), and In re Omegas Group (a constructive-trust dispute from a commercial deal) involve no offshore asset protection trust being defeated on the merits. Counting non-trust cases as "trust failures" inflates the number and obscures the legal issue.
3. Contempt is not piercing. In a contempt proceeding, the U.S. court exercises personal jurisdiction over the debtor and asks whether the debtor can presently comply. A finding of retained control, concealment, or self-created impossibility says something about the debtor's conduct and credibility. It does not show that the foreign trustee was compelled to distribute assets or that the trust corpus was reached. It often proves the opposite: the court resorted to coercion against the settlor precisely because it could not directly reach the trust.
4. The fraudulent-transfer cases are ordinary debtor-creditor law. A transfer made after a claim has arisen, after litigation has begun, after judgment, or while an injunction is pending, is vulnerable whether the recipient is an LLC, a spouse, a domestic trust, or an offshore trust. The legal problem is bad timing and badges of fraud, not "offshore trust failure."
5. The retained-control cases are examples of what not to do. Settlors who served as protectors with repatriation powers, kept trustee-appointment and beneficiary-control powers, directed distributions, or used the trust as a personal checking account built structures fundamentally different from a properly formed offshore trust with genuine divestiture.
6. The divorce cases are mischaracterized. Decisions like Riechers, Westrate, and Breitenstine involve marital-property division and in personam remedies against a spouse. Courts made equitable-distribution awards enforceable against the spouse personally; they did not bind the foreign trustee or invade the foreign trust corpus.
7. The bankruptcy cases turn on disclosure misconduct. Brennan involved concealment and bankruptcy fraud. Colburn lost his discharge for false oaths, while the court found the trust's assets were not proven to be property of the estate. Portnoy involved sweeping retained control and non-disclosure. Debtors must disclose their interests truthfully; none of these cases shows that fully disclosed, properly timed offshore planning is ineffective.
8. The count includes duplicates and entries that cannot be found. Morris v. Wroble arises from the same dispute as Morris v. Morris. In re Brooks duplicates Sattin v. Brooks. In re Steering Committee and In re Tinsley could not be located despite extensive research. The list's rhetorical force depends heavily on the number forty-five; the number does not survive scrutiny.
The Cases, Category by Category
The list organizes its entries into the categories below. Here is every case, what actually happened, and why it is not a failure of a properly formed offshore asset protection trust. The full review (PDF) carries the complete facts and analysis for each.
Contempt of Court
The pattern in this category: a U.S. court orders repatriation, the settlor's own conduct (retained control, concealment, non-credible impossibility claims) leads to a contempt finding, and the trust assets stay offshore.
| Case | What happened | Why it is not a trust failure |
|---|---|---|
| FTC v. Affordable Media | Telemarketing-scheme defendants were held in contempt after refusing to repatriate; they were the trust's protectors with power to force repatriation, had pulled over $1M from the trust, and tried to resign as protectors only after the FTC exposed their role. | A properly structured trust would never leave the settlors holding protector powers that let them force repatriation. Retained control, not structural failure. |
| In re Lawrence | Trust funded two months before a $20.4M arbitration award the settlor plainly anticipated; he kept the power to appoint trustees and exclude or reinstate beneficiaries; held in contempt. | A fraudulent, settlor-controlled trust, funded on the eve of a known award with retained powers the court used to reject his impossibility defense. |
| SEC v. Bilzerian | Contempt turned on his refusal to provide a sworn accounting after a $62M judgment; the court froze proceeds of his U.S. mansion. | The court never reached the offshore corpus. The one reachable asset was U.S.-situs real estate, a vulnerability of holding domestic property, not a defect in the trust. |
| BankFirst v. Legendre | Nassau trust created shortly after a $650k judgment; the trust paid his personal bills; jailed five days for withholding information. | A textbook fraudulent conveyance, post-judgment funding, retained beneficial use, and the assets and key players never left U.S. reach. |
| Barbee v. Goldstein | Colorado RICO case; the settlor was jailed for non-compliance and secured release by paying ~$586k; his trustee and protector then consented to winding up the trust. | The offshore barrier was never tested on its own terms: the trustee consented to liquidation. A structural failure of that trust, not one inherent to a correctly implemented offshore trust. |
| Chadwick v. Green | Fourteen years of confinement for refusing to return ~$2.5M to a divorce court. | No trust was involved at all: the money sat in offshore annuities and a Panamanian bank account he controlled and simply refused to repatriate. |
| SEC v. Solow | After a securities verdict, assets moved to his wife, who settled a Cook Islands trust; he was held in contempt for making no reasonable effort to recover what he had transferred to her. | The court never tested the Cook Islands trust itself. The contempt addressed his post-verdict transfers to his wife, not her trust. |
| Morris v. Morris | Post-nuptial forfeiture dispute; by her own account she was jailed for indirect criminal contempt, failing to appear in court. | The contempt was for failing to appear, not for the trust, which (administered by Southpac) was never set aside. The parties settled. |
| Morris v. Wroble | Counted as a separate failure. | It is the same Merry Morris dispute, a duplicate entry. |
| Eulich v. U.S. | IRS document-production fight over a Bahamian trust; escalating fines until he produced the documents. | He was ultimately able to obtain and produce every requested document, exactly what a properly structured trust allows, while the underlying assets stayed protected. |
| FTC v. AmeriDebt | Trusts in Delaware, Nevis, and the Cook Islands created within two months of FTC Civil Investigative Demands; the defendant was later jailed for concealing other assets. | Trusts created in the teeth of an investigation, and the contempt turned on concealment of other assets, not any failure to repatriate the Nevis or Cook Islands trusts. |
Fraudulent Conveyance
| Case | What happened | Why it is not a trust failure |
|---|---|---|
| Brown v. Higashi | Belize trusts found property of the bankruptcy estate; transfers fraudulent and self-settled; the settlor retained complete control while the foreign trustee was a figurehead. | A properly structured trust vests assets in an independent foreign trustee holding them offshore. Here the settlor controlled U.S.-based accounts himself. |
| Fortney v. Kuipers | Post-accident transfers to family and friends, then bankruptcy. | Domestic transfers only, no offshore trust is involved. |
| Advanced Telecommunications Network v. Allen | Funds wired into two self-settled Cook Islands trusts after suit was filed and while a freeze motion was pending; contempt followed. | Fraudulent-transfer timing, not advance planning. And despite years of repatriation orders, the creditor never recovered the trust funds, the corpus went undisturbed. |
| Rush University v. Sessions | Illinois court held a self-settled trust reachable for a $1.5M pledge. | The trust's assets were all U.S.-situs, Illinois real estate and a Colorado partnership interest, reachable regardless of the Cook Islands governing-law clause. Offshore in name only, and the opinion reflects no actual invasion of the principal. |
| BB&T v. Hamilton Greens (Bellinger) | Creditor moved for contempt after the debtor funded a Cook Islands trust mid-litigation; the court held a hearing and denied the motion. | Actually a win for the offshore trust: the court credited that the debtor could not compel the trustee, and the creditor offered no evidence of retained control. |
Bankruptcy
| Case | What happened | Why it is not a trust failure |
|---|---|---|
| In re Portnoy | Channel Islands trust funded as his loan guarantee was about to be called; he made himself primary beneficiary, kept sweeping control, and failed to disclose it in bankruptcy. | Retained control plus non-disclosure: the two things a properly structured, properly disclosed trust never involves. |
| SEC v. Brennan | Gibraltar trust funded with ~$4M in bearer bonds near the end of his SEC trial; omitted from his bankruptcy petition; he was convicted of bankruptcy fraud. | Intentional concealment on bankruptcy schedules is a crime. It says nothing about lawful, disclosed planning. |
| In re Colburn | Discharge denied for false oaths and concealment regarding a Bermuda trust. | The court found the trust's assets were not proven to be property of the estate, he lost his discharge for concealment, not because the trust failed. |
| In re Brooks | Counted as a separate failure. | A duplicate of Sattin v. Brooks below. |
| In re Rensin | Florida-law ruling that a self-settled discretionary trust's assets were reachable in principle. | The corpus remained undisturbed, the court dismissed the declaratory claim because the trustee, an indispensable party, had never been joined. |
| In re Cyr | Bankruptcy trustee's fraudulent-transfer claims allowed to proceed against a Texas family trust. | A domestic Texas trust created by the debtor's in-laws, and the ruling was a motion to dismiss; nothing was decided on the merits. |
| Sattin v. Brooks | Stock certificates held property of the estate on a choice-of-law ground (Connecticut public policy vs. Bermuda/Jersey law). | The trust corpus remained undisturbed notwithstanding the order, and a properly formed offshore trust would not have left the settlor with such broad beneficiary rights. |
| In re Smith | Cook Islands trust formed three days before a judgment was finalized for appeal; involuntary bankruptcy followed. | The settlor was pushed into involuntary bankruptcy, but no facts suggest the trust corpus was disturbed. (The list cites this entry as "In re Schmidt", no case by that name could be located; this appears to be the matter intended.) |
Divorce
| Case | What happened | Why it is not a trust failure |
|---|---|---|
| Riechers v. Riechers | Cook Islands trust funded almost entirely with marital assets; the divorce court awarded the wife half their value. | The court accepted the trust as legitimate, disclaimed jurisdiction over its corpus, and entered a $2M in personam equitable-distribution award against the husband personally, without invading or setting aside the trust. |
| Westrate v. Westrate | Husband secretly moved 90% of marital assets (~$11M) into a Cook Islands trust that did not name his wife as beneficiary; she learned of it in the divorce. | The case settled and the trust assets remained untouched. A drafting and disclosure failure toward a spouse, not a piercing. |
| Breitenstine v. Breitenstine | Bahamas trust funded with marital assets; Wyoming courts found fraudulent conveyance and awarded the wife half the marital estate. | The Wyoming court could not, and did not, directly alter title to the Bahamian res or bind the foreign trustee, it reached the corpus only indirectly through coercive orders against the husband, and recovery still depended on his compliance. |
| Marriage of Harnack | Divorce court awarded shares locked in a Belize trust; the husband was jailed until he transferred the stock or its value. | The court never reached the Belize corpus, the trustee invoked the trust's duress clause and refused. The court coerced the husband personally, finding he had the means and had never claimed poverty. |
Tax Evasion
| Case | What happened | Why it is not a trust failure |
|---|---|---|
| U.S. v. Thompson | The treasure-hunter defendant moved disputed gold coins into a Belize trust, absconded, pleaded guilty to criminal contempt, then broke his plea agreement and was jailed. | Not an offshore-trust-on-the-merits case at all: the trust's validity was never litigated, and he was jailed for refusing to honor his plea agreement. |
| U.S. v. Butselaar | Criminal prosecution of a tax advisor who built offshore structures to conceal over $100M of client income from the IRS. | Not an asset protection case, a criminal tax-fraud prosecution of the advisor for concealment structures, with no creditor or trustee ever trying to reach trust assets. |
| Jerome Schneider case | Criminal prosecution of a promoter who sold sham offshore banks with a "decontrol" process designed to conceal ownership and evade tax. | No offshore asset protection trusts were involved, the structures were sham banks and corporations, and the case is a fraud prosecution of their promoter. |
Regulatory Enforcement
| Case | What happened | Why it is not a trust failure |
|---|---|---|
| FTC v. Fortuna Alliance | Pyramid-scheme funds moved to an Antiguan bank; repatriated under a settlement. | There was no trust at all, corporate funds in an offshore bank account in the company's own name. |
| SEC v. Greenberg | Unpaid SEC judgment; evidence showed he was living lavishly through a Gibraltar trust he treated as his personal account; his impossibility defense failed and he was held in contempt. | Not a failure of an offshore asset protection trust, the sanction ran against Mr. Greenberg personally, and recovery still depended on his compliance. |
| SEC v. Cook | Fraudulent-investment-scheme defendant jailed for failing to repatriate ~$46M from offshore accounts. | Money sitting in offshore bank accounts and entities he personally controlled, not a trust with an independent trustee. |
Piercing Offshore Trusts / Court Orders
| Case | What happened | Why it is not a trust failure |
|---|---|---|
| U.S. v. Grant | $36M tax judgment; the surviving spouse was held in contempt after transfers from the offshore trusts to herself (through her children's accounts) showed she retained the power to reach the assets. | A personal-conduct failure on the settlor's side, her own transfers revealed apparent control, and valid federal tax liens had already attached. Not a structural defeat of the offshore jurisdiction. |
| U.S. v. Plath | Contempt for failing to comply with IRS summonses about offshore accounts. | Offshore credit-card accounts with a Bahamas trust company, no offshore asset protection trust involved. |
| U.S. v. Rogan | $64M Medicare-fraud judgment; Bahamian trusts found to be the debtor's alter ego. | The FBI documented that he directly or indirectly directed ~$8.15M of distributions to himself, retained substantial control, the defining opposite of proper structuring. |
| Indiana Investors (Hammond-Whiting; Fink) | Domestic trusts designed to shift control offshore upon "duress"; restraining orders froze everything before the shift occurred. | The trusts were domestic until triggered, control never left the United States, so U.S. courts retained full authority. An argument against trigger-style structures, not against trusts already offshore. |
| Gilmore Bank v. AsiaTrust | California appellate court held the New Zealand trustee subject to California personal jurisdiction based on its extensive California business contacts. | A jurisdictional holding only, a court finding it has jurisdiction over a foreign trustee does not mean the trust corpus was reached in any way. |
| Bank of America v. Weese | Cook Islands trust funded (~$25M) starting the day arbitration notice was sent; after a $17.6M award, litigation in Maryland and the Cook Islands settled for ~$13M. | The trust corpus remained undisturbed, and the matter concluded with a consensual settlement, which does not alter that conclusion. |
| Netsphere v. Baron | In a bankruptcy fight, the sole beneficiary of a Cook Islands trust (trustee: SouthPac) directed a $330k distribution to a court officer as security; the Fifth Circuit later reversed the receivership and ordered ~$1.6M released back to him. | The $330k was a voluntary beneficiary distribution, precisely what a properly formed trust permits, not a coerced extraction. No other trust asset was reached, and on appeal the corpus and trust-owned entities remained beyond the court's grasp. |
Other Notable Outcomes
| Case | What happened | Why it is not a trust failure |
|---|---|---|
| In re Omegas Group | A bankruptcy court imposed a constructive trust over $302k from a commercial deal; the Sixth Circuit reversed. | No offshore asset protection trust exists in this case, it is a constructive-trust dispute. |
| FDIC v. Lewis | $66M in judgments; creditors traced a St. Vincent trust and Isle of Man company and moved for repatriation, which the court denied, directing them to exhaust other remedies first. | The court left the trust intact. And the structure was post-claim fraud on creditors, not bona fide advance planning. |
| In re Steering Committee | Counted among the 45. | The case could not be located despite extensive research; the search is ongoing. |
| In re Tinsley | Counted among the 45. | The case could not be located despite extensive research; the search is ongoing. |
So, Will You Go to Jail for Setting Up a Cook Islands Trust?
This is the question behind the list's scare value, and the honest answer comes straight from the cases above: no one in these cases was jailed for setting up a trust. The incarcerations were for contempt grounded in concealment, defiance of court orders, retained control, or transfers made after a claim, judgment, or investigation already existed. Several defendants were engaged in outright fraud that no structure, onshore or offshore, protects.
Lawful offshore planning looks nothing like those facts. A properly established Cook Islands Trust is funded before any claim arises, administered by a genuinely independent licensed trustee, fully disclosed to the IRS on the required annual filings, and operated without retained settlor control. Every consequence cataloged on the list attaches to the opposite conduct.
The Real Patterns of Failure
Read together, the cited cases reflect execution and conduct failures, not failures of offshore trust law:
- Retained control / self-created impossibility. Settlors who kept protector powers with repatriation authority (Affordable Media), trustee-appointment and beneficiary powers (Lawrence), or de facto direction of distributions (Rogan, Grant) gave courts the very handle used against them.
- Transfers after legal trouble. Funding a trust after a judgment (Legendre, Solow), during litigation (Allen, Weese), or amid an investigation (AmeriDebt) invites ordinary fraudulent-transfer law, offshore or not.
- Concealment and false statements. Bankruptcy fraud and non-disclosure (Brennan, Portnoy, Colburn) carry their own severe consequences, and are the opposite of how legitimate planning works, in the open.
- Criminal conduct. Tax evasion and fraud prosecutions (Thompson, Butselaar, Schneider) involve crimes, not asset protection.
The Jurisdictional Advantage the Cases Actually Demonstrate
A common misconception holds that U.S. courts can compel a foreign trustee to release assets. They cannot, and the contempt cases on the list prove it. When a U.S. court jails a debtor, it is pressuring the person precisely because it cannot reach the trust. In case after case reviewed above, the corpus remained offshore and undisturbed while the fight played out over the settlor's personal conduct.
That is the structural difference between domestic and offshore planning. A domestic asset protection trust's trustee sits inside U.S. jurisdiction and can be ordered to turn assets over. An independent Cook Islands trustee, governed by Cook Islands law, cannot. The case law does not contradict the strength of properly built offshore trusts, it reinforces that timing, structure, disclosure, and genuine divestiture are what determine whether the protection holds.
Update: Steve Oshins Responds
After we published this review, we shared it publicly and Steve Oshins, the attorney who compiled the "45 FAPT Cases Gone Wrong" list, responded on LinkedIn. His reply reinforces two of the central points above: he acknowledged that he has not read all of the cases, and he agreed that some of them are not actual trust cases. In his own words, "I haven't read them all," and "some of them aren't actual trust cases."
That is exactly the problem this review identifies. The list is presented as forty-five offshore-trust failures, yet its own author confirms he has not reviewed every case and that several are not offshore-trust cases at all. Counting them together is what overstates the point.
We have since documented a second instance of the same pattern - a claim presented with more authority than its source supports. Two "Most Influential" banners on the same attorney's homepage trace back to an anonymous ChatGPT transcript, not to any organization. We examine that transcript, and what AI-generated titles actually measure, in our review of AI-generated attorney rankings.
We take the underlying concern seriously. Adverse cases exist and are worth understanding, which is why we reviewed all forty-five. His response also pointed to other compilations of "failed" offshore trust cases as support. We committed to reviewing those with the same method — that review is now complete, and it follows below.
The 20- and 28-Case "FAPT Failure" Lists, Reviewed the Same Way
The forty-five-case list reviewed above is not the only compilation of its kind. Three earlier lists circulate in the same discussions and are often cited alongside it — one of roughly twenty cases, two of roughly twenty-eight. Between them, they cite substantially the same decisions: Portnoy, Lawrence, Affordable Media, Bilzerian, Weese, Brennan, Grant, Solow, and the rest of the familiar roster, with a handful of additions.
We have now reviewed each of those lists entry by entry, against the underlying decisions, using the same method applied above. The findings are the same:
- None of the cited cases involves a properly structured offshore asset protection trust failing on the merits. The outcomes turn on the settlor's retained control, transfers made after claims arose, nondisclosure or concealment in bankruptcy, or structures that were not offshore asset protection trusts at all.
- The contempt cases follow the pattern documented above — the debtor sanctioned personally while the trust corpus was never reached.
- Several entries cut against the lists that cite them. In In re Colburn, the debtor lost his discharge to concealment and false oaths — yet the court held the creditor failed to prove the trust's assets were property of the estate.
Because the same case summaries circulate secondhand from list to list, the same misreadings replicate with them — we found identical characterizations, and identical errors, repeated across compilations that appear independent. That is not an accusation of bad faith against any author; it is how citation without verification behaves, and it is exactly why this article checks every entry against the decision itself.
We have prepared case-by-case corrections for each list's author and are providing them directly, with an invitation to tell us where they believe our reading of any decision is wrong. That conversation is open, and if any of it changes our analysis, this article will say so.
Our full redlined corrections are available for review:
- Lee McCullough's list — redlined corrections (DOCX)
- Darren Joseph's article — redlined corrections (DOCX)
- Paul Deloughery's list — redlined corrections (DOCX)
For the complete facts and analysis of every entry, read our full case-by-case review.
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Frequently asked
Frequently asked questions
No. A case-by-case review of the widely circulated “45 FAPT Cases Gone Wrong” list shows it includes cases with no trust at all, duplicate entries counted twice, entries that cannot be located, and many matters where the trust corpus was never reached. None of the 45 shows a properly formed, timely funded offshore trust with an independent trustee being defeated on the merits.
No. A contempt order is an in personam sanction against the debtor, not an in rem seizure of trust assets. Courts jail debtors for retained control, concealment, or self-created impossibility. In several of the most-cited contempt cases, the settlor was sanctioned while the trust assets remained offshore and undisturbed - which is evidence the structure held, not that it failed.
Setting up and properly disclosing a Cook Islands Trust is legal. In the cases critics cite, no one was jailed for creating a trust - they were jailed for concealing assets, defying court orders, retaining control while claiming compliance was impossible, or transferring assets after a claim arose. Lawful, timely, fully disclosed planning presents none of those facts.
Four patterns recur: funding the trust after a claim, judgment, or investigation already existed; the settlor retaining control (trustee-appointment powers, protector powers, or de facto direction of distributions); concealment or false statements in bankruptcy and discovery; and underlying criminal conduct. Each is an execution or conduct failure - not a defect in the structure itself.
The reviewed cases do not show one. Where courts acted, they acted against the person - contempt, equitable-distribution awards, denial of discharge - or reached U.S.-situs assets the trust never truly moved offshore. In multiple cases the courts expressly acknowledged they could not compel the foreign trustee, and the trust corpus remained intact.
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