[arin-ppml] Of interest?

Ronald F. Guilmette rfg at tristatelogic.com
Sat May 18 22:38:16 EDT 2019

In message <BEEB33F0-D800-4099-B5A7-8AD232DC8B5F at arin.net>, 
John Curran <jcurran at arin.net> wrote:

>On May 18, 2019, at 5:06 PM, Ronald F. Guilmette <rfg at tristatelogic.com> wr=
>> And as I have already asserted, ARIN would have done well... and done
>> better than it has done... to have at least made itself aware of these
>> facts.  If it had done so, then perhaps appropriate questions could
>> have been raised about all of this much much earlier, at the outset,
>> some 4+ years ago.
>Ronald -
>However, it is quite likely that the state registration issue would have
>been promptly corrected once raised, at which point we would have ended up
>with the same outcome.

It's an arguably valid point, but I disagree, for the following reasons.

It's one thing to try to run a fraud against a non-governmental private
non-profit organization, like ARIN, which has both a strong incentive
never to litigate and also a strong and widely-known history of vitrually
never doing so.  It is quite another thing entirely to commit a fraud
where the gateway requirement to begin the scam is to perpetrate at least
a portion of the fraud against one or more of these United States.

State attorneys general have rather more financial backing than does ARIN,
and they are, I think, rather entirely less likely to just let stuff
slide, e.g. for fear of being bankrupted as a side-effect of litigation.

Additionally, there are a number of fundamental principals involved here,
and these should not be overlooked.  I'm talking about longstanding
principals of both law and commerce that should never be violated under
any circumstances.

Wherever you are, within the ARIN region, just look down the street at
you local bookshop, your local corner drug store, or your local hair salon.
These businesses are all formally registered to do business in your state,
you province, or your country.  Why then should *any* Internet business
which also and likewise maintains a physical nexus to your state be somehow
magically immune from fufilling this normative legal requirement that
everyone else has to satisfy?  (In fact, under law, they aren't.  All
businesses with a physical nexus must register.  No exceptions.)

More to the point, why should ARIN ever be, in effect, materially aiding
and abetting -any- business in illegally skirting that business' state tax
liability?  And likewise, why should ARIN be, in effect, materially aiding
and abetting any business as it skirts its home state's reasonable state
business regulations?  (You know, the ones that the voters of a given state
have, through their legislatures, adopted for the common good.)

The answer, I think, is that it shouldn't.  ARIN should not be aiding and
abetting tax evasion, money laundering or any of the other myriad crimes
and misdemeanors that the people of your state, or my state, have, in their
wisdom, deemed either criminal or actionable.

A lot of people seem to still be operating under this popular delusion that
"Internet businesses" can and do somehow float freely, somehere in the
intangible ether, totally unmoored from the legal realities that we poor
mere mortals, living here on terra firma, have to contend with every day
of our professional lives.  But through the courts, and largely thanks
to Amazon, we have already had this question asked and answered.  The
answer is no, if you have a physical nexus in a state, you *cannot* simply
or unilaterally elect to *not* register in that state, and likewise you
*cannot* simply duck out on you state tax liability.  (You also have to
obey state labor laws and so forth.)  Using the word "Internet" is not a
magic get-out-of-jail-free card that absolves you from state taxes or
state regulation.

So now, how many dollars did Oppobox pay in state taxes to the state of
Ohio during its alleged four year tenure in that state?  The answer is
self-evidently zero.  But the company did apparently make a good deal of
revenue, over those same four years, from the large chunks of IP address
space that were issued to it.  So it is reasonable to ask: Issued by whom?
Who granted this fiction of an "Ohio" company a nice profitable concession,
from which they made plenty of dough even while never paying a dime in
state taxes?

One type of business that quite certainly does float freely, unmoored,
most of the time anyway, from terra firma is an airline.  So if, for example,
Southwest Airlines applies for landing rights at the Cincinnati airport,
would airport authorities be acting properly if they didn't even check to
see if Southwest Airlines was or was not even registered to do business
in Ohio?  No, they would not.  And in fact Southwest Airlines *is* properly
registered in the State of Ohio, as it should be and as it must be.  If
Southwest had landed even a single plane at the Cincinnati airport before
the company's Ohio corporate registration was in place, then somebody on
the airport commission would be out of a job by now.

I see no reason why the normal and normative longstanding rules of commerce
and law should be either ignored or flaunted by ARIN.  Before granting a
commercially valuable concession to any arbitrary commercial entity X,
alleged to be located in state Y, it is both normal practice and entirely
appropriate to check that X really is registered to do business in state Y.
The fact that ARIN apparently *isn't* doing these simple checks makes ARIN
an outlier and an anomaly... a quirky bizzare misfit among all of the
eminently reasonable governmental and non-profit entities that have been
doing these simple and appropriate checks, day and and day out, for decades.

Now, in this present Micfo case, the whole thing has blown up in a rather
spectacular fashion.  We have Grand Jury indictments, federal marshals,
the works.  It's certainly an excellent show, and I look forward to the
video(s).  But what about all of the *other* stuff that's still quietly
hiding in the cracks and crevices, even as we speak?  What about all of the
"Internet" businesses that *aren't* suing ARIN and that *aren't* defrauding
ARIN and that are only just off in some quiet corner of ARIN-land someplace,
quietly and only defrauding their home states of tax revenue, even as they
are making money, hand over fist, by reselling various bits of what ARIN
has bequeathed to them?

I know what people here will say.  They will say "ARIN isn't the state tax
police and we adamantly do not *want* ARIN to be the state tax police."
It's an old refrain and I know it well.  But it utterly misses one vital

Nobody wants ARIN to enforce state laws of any kind... tax... labor...
whatever.  Least of all me.  But there's a material difference between
actually being a state attorney general, and doing, or not doing, what
that job demands and, in contrast, doing what ARIN does, i.e. routinely
handing out millions of dollars worth of commercially valuable concessions
to entities that, if you were not deliberately turning a blind eye, could
be seen to be self-evident tax cheats.  (Checking this is free and takes
about five seconds, so the usual excuses of it being either too costly
or too time consuming don't apply.)

To be clear, it is my contention that what ARIN does... or rather, what it
does not do... in the way of vetting is in no sense "normal", and it is
arguably enabling tax fraud.  ARIN may not be driving the getaway car on
these crimes, but I'm not sure that that the distinction is sufficiently
large, in practice, to quibble about.

So, the question is just this:  Why should ARIN be exempt from normal and
ordinary vetting procedures that are routine and commonplace everywhere
else?  If the Cincinnati Airport Authority can do it and does do it, and
if the department within the State of California that awards the concession
for the lemonaid stand in Yosemite Park can do it and does do it, then
what makes ARIN so special that it has to NOT do it?  And wouldn't it be
better, all around, if it did do this minimal checking?  Wouldn't it be
better for both society as a whole and also for the ARIN membership if
ARIN did not let the really really obvious tax cheats into the club in the
first place?

This isn't "policing".  It's just reasonable and minimal club roster hygiene.

And based on this Micfo case, I think that the benefits should by now be
apparent to all.


P.S.  For the benfit of anyone who thinks that I am just spouting pure
hyperbole when I assert that ARIN could be viewed as being in some sense
complicit with tax fraud, if anyone asks I'll be happy to try to get my
old friend Suresh in here.  Then I'll let him tell the story... and provide
the links for... the time when law enforcement descended on RIPE headquarters
in Europe, fully prepared, apparently, to arrest someone for RIPE's apparent
role in money laundering.  Fortunately, it did not actually come to that, in
the end, but the story, which is 100% true, may perhaps illuminate the fact
that I may not be totally alone in attributing some level of culpability to
these RIRs which think themselves too good or too special to fully check
the bona fides of the various people and entities that they allow into their
respective clubrooms.

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