The Golbert Report

Traveling the world and buying Chagalls with international tax attorney Albert S. Golbert

Published in 2015 Southern California Super Lawyers — February 2015

Q: So it’s Golbert, yes? Silent T?

A: Yes. There’s a funny story about that, actually. When I grew up in Colorado, nobody pronounced my name with a French accent. But after I did my master’s in tax law and international law at the University of Michigan, I had the opportunity to pursue my doctoral studies in Geneva, which is a French-speaking canton. So I lived there, practiced there and of course nobody in that office called me anything but Golbert [silent T]. But when I came back to the States, I partnered up with John I. Forry, and we had a firm, Forry Golbert [hard T]. The Golbert was quite by accident. When the receptionist answered the phone, 50 percent of the time, the [European] caller would say, “Mr. Golbert please?” Pretty soon, she started answering the phone for Golbert. Over the 10 years John and I were together, I became known as Golbert in LA as well as Europe.

 

Q: I suppose the rise of Steven Colbert has helped you in this regard.

A: It has helped. Now when people say, “How do you spell that?” I say it’s the same as Colbert, but with a G instead of a C.

 

Q: The phrase “Become a tax lawyer, see the world” doesn’t trip off the tongue, but you seem to have lived it in the 1960s alone: Geneva, South Africa, Turkey, Japan, Australia. A lot of this was because of Chrysler. How did you hook up with them?

A: When I was in the Air Force, I was stationed in Germany doing NATO claims work. They needed somebody to assist a group coming out from Washington, D.C., to negotiate a bilateral infrastructural agreement with the Italian Ministry of Defense to install Jupiter missiles in Southern Italy—as a measure to control the Soviet Union until the Polaris submarine came on line. This was in 1959. I negotiated that agreement. I remember, if you will believe it, clearing nuclear warheads through Italian customs and explaining to the director of customs at the port that he could not inquire into the contents of the boxes, the crates, because they were classified as top secret and he did not have top-secret clearance. He was very, very flustered.

When I finished my service and came back [to the States], I got a call from the Department of Defense that the Jupiter Missile Group, with whom I’d been working, wanted me to join their group as civilian counsel and DOD employee in Turkey. There, I got to know the Chrysler automotive representative for that part of the world, a fellow by the name of Herb Wasson. He was in Istanbul and I would stay with him from time to time. He had a house overlooking the Bosphorus. From his balcony, you could see all kinds of ships going through: Russian ships, Bulgarian ships, the whole world passed in front of his window.

Shortly before I was finishing up my tour in Turkey, he mentioned a frustration of his. Chrysler was trying to get a permit from the Turkish government to build a truck plant, and had submitted a petition to the Ministry of Commerce and Industry to get a license. Weeks went by and they never heard a yes or a no. It was just lying there somewhere, either in a corner collecting dust or trashed without any response. So I mentioned I had been on good terms with the minister in the government who was in charge of NATO relations, and I was going to be in Ankara soon. I would see what I could find out.

It was a Turkish general. I told him that Chrysler wanted to build a truck plant outside of Istanbul and had sent him a proposal to do so. It went to the minister of commerce and industry and they never heard anything. He said, “Oh, he’s just down the hall. I’ll call him and he’ll come to lunch with us.” So we all went to lunch. The minister said that he’d never seen the proposal but he would find out what happened and get on it straightaway. Herb Wasson called me about a week later and said, “I don’t know what you did in Ankara, but within five days the proposal was approved and Chrysler got its decree.”

 

Q: And there you are.

A: I didn’t think anything more of it. But as I was completing my LL.M. [in Ann Arbor, Michigan], I got a call from Chrysler and they wondered if I would be interested in working for them in Geneva. I said, “Well, I was planning to stay on and do an S.J.D.” They said, “Why don’t you do your doctoral studies in Geneva? We’ll give you whatever time you need to do that.” I said, “That sounds like an offer I can’t refuse.”

I worked very closely with the tax person who was there. I worked on all of the international compliance issues that Chrysler had with the tax authorities—both in the United States, where you’re complying with the new controlled foreign corporation provisions, and also with the tax compliance in the countries in Europe and elsewhere: Turkey, India, South Africa, Australia and then Japan.

I loved the University of Geneva. Their Graduate Institute of International Studies was housed in a huge old villa on the Lake of Geneva. It had beautiful grass around it. We could sit out in nice weather, particularly, with the lake in front of us and Mont Blanc in the distance—the Aiguille du Midi, the midrange before you get to the high alpine mountains with Mont Blanc being the highest, all of that clearly visible from the lakeside where the institute is located.

 

Q: I was in Geneva this summer. Nice, but expensive. Lunch for four turned out to be 160 euros.

A: Oh my. When we lived there, the Swiss franc was about 4 to 1. So, it was quite reasonable. In fact, we bought all of the furniture we live with today, all the good furniture, rummaging around in France and Switzerland and buying antiques for, as it turns out, bargain-basement prices.

I had a client from Israel who was a very good friend of Marc Chagall. When my friend was visiting Geneva, we went to the Galerie Gerald Cramer and picked up some monotypes and other things. My wife had just had the first of her miscarriages at that point. She was in a clinic called Bois Gentil, The Gentle Woods, recuperating. I saw a Chagall. It was two heads and they were kissing. One head was in red and the other was in green. It was really quite beautiful.

The owner came up and he said, “I see that you like this painting.” I said, “Yes. It’s absolutely lovely.” I told him that it has very special meaning for me—I mentioned my wife was recuperating at Bois Gentil. He said, “You have to buy this painting if that’s the case.” So, I looked and said it’s 5,000 francs. He says, “No problem. You pay off whenever you feel like it, whenever you have some money.” So I wrote a check for 1,000 francs, which really put a huge burden on my bank account. As we were leaving, he said, “Where are you going?” I didn’t take the painting because I hadn’t paid for it yet. He said, “I need the wall space for other paintings. You take it. Your word is good. No problem.” So that’s how we have an original Chagall.

 

Q: OK, so—and no offense to the U.S.—but what made you return to the States?

A: Without going into a lot of detail, it did not look like we were going to be able to have children. In Switzerland, to adopt a child, both of the parties had to be over the age of 40 and we didn’t particularly want to wait. We could have adopted in Australia, but [my wife] has had Crohn’s since she was about 15 or 16. It created some problems, crazy arthritic problems had settled in her hips. So we decided that our peripatetic days were over and we had to settle down someplace.

 

Q: And LA?

A: I had some interviews in New York and Washington, D.C., lined up as a way of coming back. But the winter of 1969 in New York was horrible. They had snow walls piled up between the streets and the sidewalk. They put holes in the walls like passages for people disembarking from cabs to make it onto the sidewalk. She was on crutches and having a difficult time getting around. The crutches kept flying out from under her when she hit a patch of ice. We decided that New York was probably not going to be a good idea.

At that point, we went to Washington, D.C., where she was even more uncomfortable. There was this wet, cold sleet that just got into her bones. So I said, “We’re going for a trip.” She said, “Where?” I said, “You’ll see.” We went to the airport. We went to the gate for Los Angeles. She said, “Los Angeles? Who wants to go to Los Angeles? I don’t want to be around people with their hair up in curlers and wearing gold lamé pedal pushers. It’s ridiculous.” I said, “Not everybody is that way.”

I took her to LA: January 1970 and it was 74 degrees. I introduced her to some old friends of mine. They were very nice people. After about three or four days, we were driving down PCH and I stopped. They had a cliff overlooking the ocean. We sat there for a few minutes. I said, “Well, do you think you can stand it?” After a moment, she said, “Yes, I think I could stand it.”

 

Q: Since you’ve been back, what’s been the brunt of your practice?

A: It changes. In the ’70s, we were doing a huge amount of inbound investment. We had more Iranian clients than probably any firm west of Tehran. This is before the Shah got deposed. Then in December 1980, Congress passed the Foreign Investment in Real Property Tax Act, which drastically changed the way foreign investment and real property was taxed in the United States.

 

Q: In what way?

A: It changed the whole structure and benefits of taxation. Shortly thereafter, they terminated the protocol extending the benefits of the Dutch Tax Treaty to the Netherlands Antilles because, through that protocol, you could invest in the United States. It was a very attractive structure that we had created for nonresident aliens who wanted to buy a pied-à-terre in the United States. That worked very well until 1980.

A lot of things happened in 1980. In the ’70s, foreign firms and New York firms could not operate in California under their name because all [name partners] had to be members of the California State Bar. That changed by a state Supreme Court decision in about 1976, if I recall. All of a sudden, California looked like an interesting place to set up a branch operation and a lot of the East Coast firms started doing that. By 1980, our little tax group became of interest. So we reluctantly abandoned our boutique and joined some big firms. I was with Bryan Cave for about 10 years. Then I basically went out on my own.

 

Q: What’s the focus of your practice today?

A: Most of the practice is still tax. We do a huge amount of regulatory work. We have people who are referred to us because they decided it was time to reveal their foreign bank accounts. Or they were still partners in the family farm in New Zealand after they immigrated to the United States, and all of these people suddenly discovered they had to disclose this and file amended returns. So we’ve been doing a lot of compliance work since 2009.

 

Q: What happened in 2009?

A: That’s when they had the first Offshore Voluntary Disclosure Program. It’s gotten tougher and more complicated since.

 

Q: Was this a post-9/11 change?

A: You know what I think it’s related to? The government suddenly decided they needed more revenue. It’s been on the books for a while, but nobody had been enforcing it. So they gave it a brief try and it shocked the Treasury Department how much money they took in. Of course, then they actually found and prosecuted some really bad guys who had formed some offshore companies.

 

Q: So are most of your clients foreign-born citizens? Are they American citizens?

A: We do a lot of work with Americans who are being transferred abroad, [or] who have offshore businesses. I work with some interesting young people who decided that China is the next wave, and so they set up operations in China. They’re getting Chinese clients to do EB-5 visas and invest heavily in the United States.

 

Q: How do you keep up with changes in international tax law?

A: I spend about an hour or two every morning going online to see what the government has done to us today. If you don’t do that, you’d be surprised how quickly things pile up.

 

Q: You’ve been doing this for more than half a century. How much more complicated has the tax code gotten?

A: When I started law school, the Revenue Act of 1954 had just been passed. It was one volume and a little over an inch thick. There was one volume of regulations about maybe an inch and a half thick. That was it. Now, we have two really thick volumes of code, each one maybe two inches thick. And we’ve got six volumes of regulations, also on average about two inches thick. And if Congress didn’t do a thing to the code for the next 25 years, Treasury couldn’t catch up on all the regulations they have yet to write with respect to the laws that have been passed. It’s staggering.

 

Q: Why so many changes?

A: People with an axe to grind will study the regulations and look for loopholes and then they’ll test those loopholes. Eventually, a revenue agent will come upon that loophole and say, “What the hell are you doing?” And they say, “Well, it’s not covered by the regs.” And they’ll look up the regs and say, “Damn, they’re right. How can we close this?” And if they can’t find a way to plug it up, then they’ll go back and change the regs or they’ll get the chief counsel to come up with an interpretive release which purports to close the loophole while they’re trying to write new regs. So it’s a cat and mouse game, a constantly changing field.

 

Q: Why law? What did your father do?

A: My father was an engineer. He would have shot me if I had become an engineer.

 

Q: Because he didn’t enjoy it?

A: He loved being an engineer. But he graduated in 1929.

 

Q: Bad time to graduate.

A: Who wanted engineers? The only job he could get was with the Army Corps of Engineers. He was a chemical engineer and he was building roads and bridges across the Rocky Mountains.

 

Q: So what made you choose the law?

A: Well, my debate partner and I were national champions one year.

 

Q: High school?

A: Junior college. Neither of us was wealthy enough to even aspire to a four-year college at that point. This was, I think, in 1952.

One of the judges from the final round was Coach Nichols of the USC debate squad, and he offered us scholarships to come and debate for him at USC. In those days, there was no television, and we didn’t know all that much about big-time football. We thought that the University of Southern California was the southern campus of the University of California. That’s how much we knew.

When we came out here on Route 66—there were no freeways—we found ourselves in downtown LA. We saw a gentleman in a suit on the corner. “Excuse us, can you tell us how to get to the university?” He said, “Which one?” I said, “How many are there?” He said, “Five or six.” We were absolutely dumbfounded. Neither of us could think of the actual name of the university, and we said, “Oh it’s the southern campus of the University of California.” So we ended up at UCLA and found the administration building, gave them our papers. The fellow looked at the papers and he said, “Boys, it’s the right day, it’s the right city, but it’s the wrong university.”

When we finally found USC and found the administration building, it was after 5 and it was closed. The next morning we went in to register and the person behind the desk said, “You boys were supposed to be here yesterday. What happened?” And we told him. He excused himself for a minute, went into a back room. A few minutes later we heard some laughter from the back room and he came back out and said, “We’re going to hold registration open for you today.”

That Friday, the Daily Trojan had this story about these two hicks from Colorado who didn’t know the difference between USC and UCLA.

 

Q: And from there on to law school.

A: The only law school I applied to was USC. When I went to enroll, I had to sign this affidavit that I agree not to work during my freshman year. I said, “I cannot sign this in good conscience.” They said, “What do you mean?” I said, “I have a bad habit. I like to eat. If I don’t work, I’m not going to be able to nurse my habit.” They said, “Well, you can’t work and go to law school.”

I called my father and told him my dilemma. On his own, he called the Denver Law School. I happened to have had a very high LSAT score. It was only the second year they gave the LSAT, and 500 was the highest score you could get. I had a 496. I don’t remember anything about the test. I was unaware that my score was very remarkable at all. But Dean Johnson of the Denver Law School said, “Hell, tell him to come here. If he wants to work, that’s fine. We don’t care, as long as he does his work in the school.”

 

Q: Your talent for foreign languages—where did that come from?

A: My mother spoke a number of languages. My daughter is very, very adept at languages. She’s trilingual in English, French and Russian, and she’s proficient in Mandarin Chinese and Ukrainian.

 

Q: Is this an adopted daughter?

A: No. When we got back to the United States in 1970, we started to look around at adoptions and to get on the lists. In October, my wife was not feeling well and went to the doctor and came back and said, “Guess what? I’m pregnant.” She’d had so many miscarriages that we thought, “Oh well, we’re not going to say a word to our parents.” And then after the first trimester, the doctor said, “If you’d like a trampoline, you can play on one of those. You’re not going to lose this one.”

And that was our daughter. She was born in May of ’71.

 

This interview was edited and condensed.

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