FROM: U.S. JUSTICE DEPARTMENT
Tuesday, November 12, 2013
Court Authorizes IRS to Issue Summonses for Records Relating to U.S. Taxpayers with Offshore Bank Accounts
Five Banks Directed to Produce Records for Accounts at Zurcher Kantonalbank, The Bank of
N.T. Butterfield & Son Limited and Affiliates
U.S. District Judge Kimba M. Wood of the Southern District of New York entered an order on Nov. 7, 2013, authorizing the IRS to issue summonses requiring Bank of New York Mellon (Mellon) and Citibank NA (Citibank) to produce information about U.S. taxpayers who may be evading or have evaded federal taxes by holding interests in undisclosed accounts at Zurcher Kantonalbank and its affiliates (collectively, ZKB) in Switzerland; and U.S. District Judge Richard M. Berman of the Southern District of New York entered an order today authorizing the IRS to issue summonses requiring Mellon, Citibank, JPMorgan Chase Bank NA (JPMorgan), HSBC Bank USA NA (HSBC), and Bank of America NA (Bank of America) to produce similar information in connection with undisclosed accounts at The Bank of N.T. Butterfield & Son Limited and its affiliates (collectively, Butterfield) in the Bahamas, Barbados, Cayman Islands, Guernsey, Hong Kong, Malta, Switzerland, and the United Kingdom. U.S. Attorney for the Southern District of New York Preet Bharara, Assistant Attorney General for the Justice Department’s Tax Division Kathryn Keneally, and Acting Commissioner of the Internal Revenue Service (IRS) Danny Werfel made the announcement today.
In these actions, the Court granted the IRS permission to serve what are known as “John Doe” summonses on Mellon, Citibank, JPMorgan, HSBC, and Bank of America. The IRS uses John Doe summonses to obtain information about possible tax fraud by individuals whose identities are unknown. The John Doe summonses approved today direct these five banks to produce records identifying U.S. taxpayers with accounts at ZKB, Butterfield and their affiliates, including other foreign banks that used ZKB and Butterfield’s U.S. correspondent accounts at Mellon, Citibank, JPMorgan, HSBC, and Bank of America to service U.S. clients.
“These cases once again demonstrate the department’s resolve to uncover and identify taxpayers who tried to hide money overseas as a way to avoid federal taxes,” said Assistant Attorney General Keneally. “These John Doe summonses will provide information about individuals using financial institutions from Switzerland to the Cayman Islands to Hong Kong to avoid their U.S. tax obligations. U.S. taxpayers still holding accounts who have not come clean should come forward and do the right thing before it’s too late.”
“Today’s action show that the use of foreign banks for tax evasion remains a high investigative priority of this office and U.S. citizens should understand that loud and clear,” said U.S. Attorney Bharara. “By issuing these John Doe summonses, we continue our joint efforts with the IRS to identify and hold accountable those who try to evade their legal responsibility to pay taxes.”
“International issues remain a major focus for the IRS, and we are continuing our efforts to fight tax evaders who use offshore accounts to skirt the law,” said IRS Acting Commissioner Werfel. “These John Doe summonses for correspondent account records show our determination to pursue evaders using offshore accounts, even if the person hiding money overseas chooses a bank that has no offices on U.S. soil.”
IRS Offshore Voluntary Disclosure programs and initiatives enable U.S. taxpayers to resolve their tax liabilities and minimize their chances of criminal prosecution by voluntarily disclosing previously undisclosed foreign accounts and income. To date, U.S. taxpayers have identified 371 previously undisclosed accounts at ZKB and 81 such accounts at Butterfield. In addition, a number of U.S. taxpayers with beneficial ownership and control over funds held in accounts at ZKB and Butterfield have admitted failing to report income earned from their offshore accounts on their federal tax returns. The IRS has reason to believe that other U.S. taxpayers who held or presently hold similar accounts at ZKB, Butterfield, and their affiliates have done the same in violation of federal tax law. In December 2012, three employees of ZKB were indicted for conspiring with U.S. taxpayers and others to hide at least $423 million from the IRS in secret Swiss bank accounts.
Federal tax law requires U.S. taxpayers to pay taxes on all income earned worldwide. U.S. taxpayers must also report foreign financial accounts if the total value of the accounts exceeds $10,000 at any time during the calendar year. Willful failure to report a foreign account can result in a fine of up to 50 percent of the amount in the account at the time of the violation.
These cases are being handled by the Office’s Tax and Bankruptcy Unit. Assistant U.S. Attorney Tomoko Onozawa is in charge of the Butterfield case and Assistant U.S. Attorney Christopher B. Harwood is in charge of the ZKB case.
Showing posts with label IRS. Show all posts
Showing posts with label IRS. Show all posts
Wednesday, November 13, 2013
Saturday, November 9, 2013
OHIO COURT SHUTS DOWN NATION'S FOURTH LARGEST TAX PREPARER
FROM: U.S. JUSTICE DEPARTMENT
Thursday, November 7, 2013
Federal Court in Ohio Shuts Down Nation’s Fourth-Largest Tax-Preparation Firm and Bars CEO from Tax-Preparation Business
Judge Finds that Instant Tax Service Franchisor Defrauded Customers, Obstructed the IRS and Violated Court Orders on Lending Practices
A federal court has entered a permanent injunction ordering ITS Financial LLC, the parent company of the Instant Tax Service franchise, to cease operating, the Justice Department announced today. The injunction order, which was signed yesterday by Judge Timothy S. Black of the U.S. District Court for the Southern District of Ohio, also bars Fesum Ogbazion, the sole owner and CEO of ITS Financial, from operating or being involved with any business relating to tax-return preparation. The court issued the order following a two-week trial in Cincinnati in June 2013.
Instant Tax Service, which is based in Dayton, Ohio, claimed to be the fourth-largest tax-preparation firm in the nation. According to the court, ITS Financial had about 150 franchisees that filed over 100,000 tax returns each year in 2011 and 2012. Two other entities owned by Ogbazion, Tax Tree LLC and TCA Financial LLC, were also defendants in the case and were also ordered to cease operating.
The court found that Ogbazion and his defendant companies had:
· Filed tax returns for customers without their permission and encouraged franchisees to do the same;
· Clandestinely trained and encouraged franchisees to prepare and file tax returns prematurely with paycheck stubs that omitted and understated income and inevitably resulted in the submission of false federal tax returns;
· Defrauded customers, who were largely low-income, by marketing false and fraudulent loan products to lure them into the tax-preparation offices;
· Defrauded customers by requiring franchisees to charge phony and exorbitant fees;
· Forged customers’ signatures on loan checks and used those forged checks to operate Ogbazion’s businesses;
· Willfully failed to pay over $1 million of their own employment taxes and lied about assets in connection with the collection of those taxes, while hiding money in a secret bank account and defrauding the United States and third party creditors;
· Lied on government forms and encouraged franchisees to do the same;
· Obstructed government agents and materially assisted franchisees in circumventing Internal Revenue Service (IRS) law-enforcement efforts involving the suspension of electronic filing identification numbers; and
· Told franchisees to lie to government agents in connection with IRS compliance visits.
The court credited an IRS study concluding that the tax harm caused by Instant Tax Service franchisees in five cities in a single tax-filing season was between $10 million and $25 million.
“Defendants’ harm to the public is extensive and egregious, indeed appalling,” the court stated. “This is especially so given the nature of Instant Tax Service’s core customer – the working poor – who are particularly vulnerable to [the] Defendants’ fraudulent practices.”
The court further stated: “Defendants’ repeated attempts at trial and in argument to downplay the gravity of their lawlessness was stunning. The court concludes that even today [the] Defendants have not fully recognized their culpability. Ultimately, the nature, scope and gravity of [the] Defendants’ offenses, and the unrepentant attitude toward their commission, demonstrate the necessity for a complete injunction putting the Defendants permanently out of business.”
The court also concluded that Ogbazion and ITS Financial violated the terms of a preliminary injunction order that the court had entered in October 2012 with their consent. The court found that, despite their agreement to obey various lending and consumer-protection laws during the 2013 tax filing season, they violated several of those laws by discriminating against active-duty military personnel on loan applications and by failing to obtain a state lending license in a timely manner. The court determined that they violated the preliminary injunction by causing their franchisees to provide tens of thousands of customers with Truth-in-Lending Act disclosure forms falsely stating that the loans carried no finance charges and an annual percentage rate (APR) of zero.
“We are gratified by the court’s decision, which serves to protect hard-working taxpayers who were targeted by Instant Tax Service, and also safeguards all honest taxpayers from the harm done by fraudulent tax filings,” said Assistant Attorney General Kathryn Keneally of the Justice Department’s Tax Division. “As described by the court, this company grew large through abhorrent means – filing returns without customer authorization, forging customer signatures, pushing fraudulent loan products, and much more. As the court’s decision recognizes, a business model based on false and fraudulent conduct cannot be allowed to prevail.”
“The court's decision sends a clear message to those who might be tempted to abuse the public trust provided to the tax preparer community,” said Acting IRS Commissioner Danny Werfel. “Those who deceive their customers and defraud the U.S. Treasury will face swift legal action that puts an end to their corrosive conduct."
Assistant Attorney General Keneally thanked former and current Tax Division trial attorneys Nathan Clukey, Sean Green, Russell Edelstein, Jose Olivera and Gregory Van Hoey, along with paralegal Mahana Karimi, for their efforts on the case. She also thanked the many IRS attorneys and agents who participated in the investigation.
Return preparer fraud is one of the IRS’s Dirty Dozen Tax Scams for 2013 . The Internal Revenue Service has tips for choosing a tax preparer: www.irs.gov/Tax-Professionals/Choosing-a-Tax-Professional . In the past decade, the department’s Tax Division has obtained injunctions against hundreds of unscrupulous tax preparers.
Thursday, November 7, 2013
Federal Court in Ohio Shuts Down Nation’s Fourth-Largest Tax-Preparation Firm and Bars CEO from Tax-Preparation Business
Judge Finds that Instant Tax Service Franchisor Defrauded Customers, Obstructed the IRS and Violated Court Orders on Lending Practices
A federal court has entered a permanent injunction ordering ITS Financial LLC, the parent company of the Instant Tax Service franchise, to cease operating, the Justice Department announced today. The injunction order, which was signed yesterday by Judge Timothy S. Black of the U.S. District Court for the Southern District of Ohio, also bars Fesum Ogbazion, the sole owner and CEO of ITS Financial, from operating or being involved with any business relating to tax-return preparation. The court issued the order following a two-week trial in Cincinnati in June 2013.
Instant Tax Service, which is based in Dayton, Ohio, claimed to be the fourth-largest tax-preparation firm in the nation. According to the court, ITS Financial had about 150 franchisees that filed over 100,000 tax returns each year in 2011 and 2012. Two other entities owned by Ogbazion, Tax Tree LLC and TCA Financial LLC, were also defendants in the case and were also ordered to cease operating.
The court found that Ogbazion and his defendant companies had:
· Filed tax returns for customers without their permission and encouraged franchisees to do the same;
· Clandestinely trained and encouraged franchisees to prepare and file tax returns prematurely with paycheck stubs that omitted and understated income and inevitably resulted in the submission of false federal tax returns;
· Defrauded customers, who were largely low-income, by marketing false and fraudulent loan products to lure them into the tax-preparation offices;
· Defrauded customers by requiring franchisees to charge phony and exorbitant fees;
· Forged customers’ signatures on loan checks and used those forged checks to operate Ogbazion’s businesses;
· Willfully failed to pay over $1 million of their own employment taxes and lied about assets in connection with the collection of those taxes, while hiding money in a secret bank account and defrauding the United States and third party creditors;
· Lied on government forms and encouraged franchisees to do the same;
· Obstructed government agents and materially assisted franchisees in circumventing Internal Revenue Service (IRS) law-enforcement efforts involving the suspension of electronic filing identification numbers; and
· Told franchisees to lie to government agents in connection with IRS compliance visits.
The court credited an IRS study concluding that the tax harm caused by Instant Tax Service franchisees in five cities in a single tax-filing season was between $10 million and $25 million.
“Defendants’ harm to the public is extensive and egregious, indeed appalling,” the court stated. “This is especially so given the nature of Instant Tax Service’s core customer – the working poor – who are particularly vulnerable to [the] Defendants’ fraudulent practices.”
The court further stated: “Defendants’ repeated attempts at trial and in argument to downplay the gravity of their lawlessness was stunning. The court concludes that even today [the] Defendants have not fully recognized their culpability. Ultimately, the nature, scope and gravity of [the] Defendants’ offenses, and the unrepentant attitude toward their commission, demonstrate the necessity for a complete injunction putting the Defendants permanently out of business.”
The court also concluded that Ogbazion and ITS Financial violated the terms of a preliminary injunction order that the court had entered in October 2012 with their consent. The court found that, despite their agreement to obey various lending and consumer-protection laws during the 2013 tax filing season, they violated several of those laws by discriminating against active-duty military personnel on loan applications and by failing to obtain a state lending license in a timely manner. The court determined that they violated the preliminary injunction by causing their franchisees to provide tens of thousands of customers with Truth-in-Lending Act disclosure forms falsely stating that the loans carried no finance charges and an annual percentage rate (APR) of zero.
“We are gratified by the court’s decision, which serves to protect hard-working taxpayers who were targeted by Instant Tax Service, and also safeguards all honest taxpayers from the harm done by fraudulent tax filings,” said Assistant Attorney General Kathryn Keneally of the Justice Department’s Tax Division. “As described by the court, this company grew large through abhorrent means – filing returns without customer authorization, forging customer signatures, pushing fraudulent loan products, and much more. As the court’s decision recognizes, a business model based on false and fraudulent conduct cannot be allowed to prevail.”
“The court's decision sends a clear message to those who might be tempted to abuse the public trust provided to the tax preparer community,” said Acting IRS Commissioner Danny Werfel. “Those who deceive their customers and defraud the U.S. Treasury will face swift legal action that puts an end to their corrosive conduct."
Assistant Attorney General Keneally thanked former and current Tax Division trial attorneys Nathan Clukey, Sean Green, Russell Edelstein, Jose Olivera and Gregory Van Hoey, along with paralegal Mahana Karimi, for their efforts on the case. She also thanked the many IRS attorneys and agents who participated in the investigation.
Return preparer fraud is one of the IRS’s Dirty Dozen Tax Scams for 2013 . The Internal Revenue Service has tips for choosing a tax preparer: www.irs.gov/Tax-Professionals/Choosing-a-Tax-Professional . In the past decade, the department’s Tax Division has obtained injunctions against hundreds of unscrupulous tax preparers.
Wednesday, November 6, 2013
LA MAN PLEADS GUILTY TO TAX CRIME RELATED TO CONCEALING BANK ACCOUNTS IN ISRAEL
FROM: U.S. JUSTICE DEPARTMENT
Monday, November 4, 2013
Los Angeles Businessman Pleads Guilty to Conspiring to Defraud the United States by Concealing Israeli Bank Accounts
Defendant is Latest in a Series of Defendants Charged with Failing to Report Income from Undeclared Accounts in Israel
David Raminfard of Los Angeles pleaded guilty today in the U.S. District Court for the Central District of California to conspiracy to defraud the United States, the Justice Department and Internal Revenue Service-Criminal Investigation (IRS-CI) announced.
According to court documents, Raminfard, a U.S. citizen, maintained undeclared bank accounts at an international bank headquartered in Tel Aviv, Israel, identified in court documents as Bank A. The accounts were held in the names of nominees in order to keep them secret from the U.S. government. One of the accounts was held in the name of Westrose Limited, a nominee entity formed in the Turks and Caicos Islands. To further ensure that his undeclared accounts remained secret, Raminfard placed a mail hold on his accounts. Rather than having his account statements mailed to him, Raminfard would receive them from an international accounts manager with Bank A in Israel, who brought the statements to Los Angeles and reviewed them with Raminfard during meetings at a hotel.
In or about 2000, Raminfard began secretly using the funds in his undeclared accounts as collateral for back-to-back loans obtained from the Los Angeles branch of Bank A. Raminfard used one of the loans to purchase commercial real estate in Los Angeles. By using back-to-back loans, Raminfard was able to access his funds in Israel without the U.S. Government finding out about his undeclared accounts. These loans also enabled Raminfard to claim the interest paid on the loans as a business expense on his companies’ business tax returns, while not reporting the interest earned in Israel as income on his individual income tax returns filed with the IRS. For tax years 2005 through 2010, Raminfard failed to report approximately $521,000 in income. The highest balance in Raminfard’s undeclared accounts was approximately $3 million.
Raminfard is the latest in a series of defendants charged in the U.S. District Court for the Central District of California with conspiring to defraud the United States in connection with using undeclared bank accounts in Israel to obtain back-to-back loans in the United States.
U.S. citizens and residents who have an interest in, or signature or other authority over, a financial account in a foreign country with assets in excess of $10,000 are required to disclose the existence of such account on Schedule B, Part III, of their individual income tax returns. Additionally, U.S. citizens and residents must file a Report of Foreign Bank and Financial Reports (FBAR) with the U.S. Treasury disclosing any financial account in a foreign country with assets in excess of $10,000 in which they have a financial interest or over which they have signature or other authority.
Raminfard faces a potential maximum prison term of five years and a maximum fine of $250,000. In addition, Raminfard has agreed to pay a civil penalty to the IRS in the amount of 50 percent of the high balance of his undeclared accounts for failing to file FBARs.
Assistant Attorney General Kathryn Keneally of the Department’s Tax Division and U.S. Attorney for the Central District of California André Birotte Jr. thanked special agents of IRS-CI, who investigated the cases, Tax Division Senior Litigation Counsel John E. Sullivan and Assistant Chief Elizabeth C. Hadden, who prosecuted the cases, and Assistant U.S. Attorney Sandra A. Brown of the U.S. Attorney’s Office, who assisted with the prosecutions.
Monday, November 4, 2013
Los Angeles Businessman Pleads Guilty to Conspiring to Defraud the United States by Concealing Israeli Bank Accounts
Defendant is Latest in a Series of Defendants Charged with Failing to Report Income from Undeclared Accounts in Israel
David Raminfard of Los Angeles pleaded guilty today in the U.S. District Court for the Central District of California to conspiracy to defraud the United States, the Justice Department and Internal Revenue Service-Criminal Investigation (IRS-CI) announced.
According to court documents, Raminfard, a U.S. citizen, maintained undeclared bank accounts at an international bank headquartered in Tel Aviv, Israel, identified in court documents as Bank A. The accounts were held in the names of nominees in order to keep them secret from the U.S. government. One of the accounts was held in the name of Westrose Limited, a nominee entity formed in the Turks and Caicos Islands. To further ensure that his undeclared accounts remained secret, Raminfard placed a mail hold on his accounts. Rather than having his account statements mailed to him, Raminfard would receive them from an international accounts manager with Bank A in Israel, who brought the statements to Los Angeles and reviewed them with Raminfard during meetings at a hotel.
In or about 2000, Raminfard began secretly using the funds in his undeclared accounts as collateral for back-to-back loans obtained from the Los Angeles branch of Bank A. Raminfard used one of the loans to purchase commercial real estate in Los Angeles. By using back-to-back loans, Raminfard was able to access his funds in Israel without the U.S. Government finding out about his undeclared accounts. These loans also enabled Raminfard to claim the interest paid on the loans as a business expense on his companies’ business tax returns, while not reporting the interest earned in Israel as income on his individual income tax returns filed with the IRS. For tax years 2005 through 2010, Raminfard failed to report approximately $521,000 in income. The highest balance in Raminfard’s undeclared accounts was approximately $3 million.
Raminfard is the latest in a series of defendants charged in the U.S. District Court for the Central District of California with conspiring to defraud the United States in connection with using undeclared bank accounts in Israel to obtain back-to-back loans in the United States.
U.S. citizens and residents who have an interest in, or signature or other authority over, a financial account in a foreign country with assets in excess of $10,000 are required to disclose the existence of such account on Schedule B, Part III, of their individual income tax returns. Additionally, U.S. citizens and residents must file a Report of Foreign Bank and Financial Reports (FBAR) with the U.S. Treasury disclosing any financial account in a foreign country with assets in excess of $10,000 in which they have a financial interest or over which they have signature or other authority.
Raminfard faces a potential maximum prison term of five years and a maximum fine of $250,000. In addition, Raminfard has agreed to pay a civil penalty to the IRS in the amount of 50 percent of the high balance of his undeclared accounts for failing to file FBARs.
Assistant Attorney General Kathryn Keneally of the Department’s Tax Division and U.S. Attorney for the Central District of California André Birotte Jr. thanked special agents of IRS-CI, who investigated the cases, Tax Division Senior Litigation Counsel John E. Sullivan and Assistant Chief Elizabeth C. Hadden, who prosecuted the cases, and Assistant U.S. Attorney Sandra A. Brown of the U.S. Attorney’s Office, who assisted with the prosecutions.
Monday, October 21, 2013
TAX RETURN PREPARERS FACE ADDITIONAL CHARGES IN OFFSHORE ACCOUNT SCHEME
FROM: U.S. JUSTICE DEPARTMENT
Friday, October 18, 2013
Additional Charges Brought Against Tax Return Preparers Previously Charged with Helping Clients Hide Millions in Offshore Israeli Banks
David Kalai and Nadav Kalai face additional charges after a federal grand jury in the Central District of California returned a second superseding indictment yesterday. The superseding indictment charged each with two counts of willfully failing to file a Report of Foreign Bank and Financial Accounts (FBAR). In June 2012, the grand jury charged David Kalai, Nadav Kalai, and David Almog with conspiring to defraud the United States, the Department of Justice and Internal Revenue Service (IRS) announced today.
As alleged in the June 2012 superseding indictment, David Kalai and Nadav Kalai were principals of United Revenue Service Inc. (URS), a tax preparation business with 12 offices located throughout the United States. David Kalai worked primarily at URS’ former headquarters in Newport Beach, Calif., and later at URS’ location in Costa Mesa, Calif. Nadav Kalai, who is David Kalai’s son, worked out of URS’ headquarters in Bethesda, Md., as well as URS locations in Newport Beach and Costa Mesa. David Almog was the branch manager of the New York office of URS and supervised tax return preparers for URS East Coast locations.
U.S. citizens, resident aliens and legal permanent residents have an obligation to report to the IRS on Schedule B of the U.S. Individual Income Tax Return, Form 1040, whether they had a financial interest in, or signature authority over, a financial account in a foreign country in a particular year by checking “Yes” or “No” in the appropriate box and identifying the country where the account was maintained. They further have an obligation to report all income earned from the foreign financial account on the tax returns. Separately, U.S. citizens, resident aliens and permanent legal residents with a foreign financial interest in, or signatory authority over, a foreign financial account worth more than $10,000 in a particular year, must also file a FBAR with the Treasury disclosing such an account by June 30 of the following year.
The superseding indictment further alleged that the co-conspirators prepared false individual income tax returns which did not disclose the clients’ foreign financial accounts nor report the income earned from those accounts. In order to conceal the clients’ ownership and control of assets and conceal the clients’ income from the IRS, the co-conspirators incorporated offshore companies in Belize and elsewhere and helped clients open secret bank accounts at the Luxembourg locations of two Israeli banks referred to as Bank A and Bank B in court documents. Bank A is a large financial institution headquartered in Tel-Aviv, Israel, with branches worldwide. Bank B is a mid-size financial institution headquartered in Tel-Aviv, with a worldwide presence on four continents.
The indictment also alleged, the co-conspirators incorporated offshore companies in Belize and elsewhere to act as named account holders on the secret accounts at the Israeli banks. The co-conspirators then facilitated the transfer of client funds to the secret accounts and prepared and filed tax returns that falsely reported the money sent offshore as a false investment loss or a false business expense. The co-conspirators also failed to disclose the existence of, and the clients’ financial interest in, and authority over, the clients’ secret accounts and caused the clients to fail to file FBARs with the Department of the Treasury.
In addition to the earlier charges, yesterday’s superseding indictment alleges that David Kalai and Nadav Kalai each failed to file a FBAR for calendar years 2008 and 2009 concerning a foreign account held at Bank A in Luxembourg. The second superseding indictment alleges that both David Kalai and Nadav Kalai had a financial interest, signature or other authority over a foreign financial account that had an aggregate value of more than $10,000 during 2008 and 2009.
If convicted, each defendant faces a maximum of five years in prison for each count and a maximum fine of $250,000 for each count. The charges contained in the indictment are only allegations. The defendants are presumed innocent and it is the government’s burden to prove guilt beyond a reasonable doubt.
Kathryn Keneally, Assistant Attorney General of the Justice Department’s Tax Division, thanked Tax Division Trial Attorneys Christopher S. Strauss and Ellen M. Quattrucci, who prosecuted the case, and Assistant U.S. Attorney Sandra A. Brown of the U.S. Attorney’s Office for the Central District of California, who assisted with the prosecution. The case was investigated by special agents of IRS – Criminal Investigation.
Friday, October 18, 2013
Additional Charges Brought Against Tax Return Preparers Previously Charged with Helping Clients Hide Millions in Offshore Israeli Banks
David Kalai and Nadav Kalai face additional charges after a federal grand jury in the Central District of California returned a second superseding indictment yesterday. The superseding indictment charged each with two counts of willfully failing to file a Report of Foreign Bank and Financial Accounts (FBAR). In June 2012, the grand jury charged David Kalai, Nadav Kalai, and David Almog with conspiring to defraud the United States, the Department of Justice and Internal Revenue Service (IRS) announced today.
As alleged in the June 2012 superseding indictment, David Kalai and Nadav Kalai were principals of United Revenue Service Inc. (URS), a tax preparation business with 12 offices located throughout the United States. David Kalai worked primarily at URS’ former headquarters in Newport Beach, Calif., and later at URS’ location in Costa Mesa, Calif. Nadav Kalai, who is David Kalai’s son, worked out of URS’ headquarters in Bethesda, Md., as well as URS locations in Newport Beach and Costa Mesa. David Almog was the branch manager of the New York office of URS and supervised tax return preparers for URS East Coast locations.
U.S. citizens, resident aliens and legal permanent residents have an obligation to report to the IRS on Schedule B of the U.S. Individual Income Tax Return, Form 1040, whether they had a financial interest in, or signature authority over, a financial account in a foreign country in a particular year by checking “Yes” or “No” in the appropriate box and identifying the country where the account was maintained. They further have an obligation to report all income earned from the foreign financial account on the tax returns. Separately, U.S. citizens, resident aliens and permanent legal residents with a foreign financial interest in, or signatory authority over, a foreign financial account worth more than $10,000 in a particular year, must also file a FBAR with the Treasury disclosing such an account by June 30 of the following year.
The superseding indictment further alleged that the co-conspirators prepared false individual income tax returns which did not disclose the clients’ foreign financial accounts nor report the income earned from those accounts. In order to conceal the clients’ ownership and control of assets and conceal the clients’ income from the IRS, the co-conspirators incorporated offshore companies in Belize and elsewhere and helped clients open secret bank accounts at the Luxembourg locations of two Israeli banks referred to as Bank A and Bank B in court documents. Bank A is a large financial institution headquartered in Tel-Aviv, Israel, with branches worldwide. Bank B is a mid-size financial institution headquartered in Tel-Aviv, with a worldwide presence on four continents.
The indictment also alleged, the co-conspirators incorporated offshore companies in Belize and elsewhere to act as named account holders on the secret accounts at the Israeli banks. The co-conspirators then facilitated the transfer of client funds to the secret accounts and prepared and filed tax returns that falsely reported the money sent offshore as a false investment loss or a false business expense. The co-conspirators also failed to disclose the existence of, and the clients’ financial interest in, and authority over, the clients’ secret accounts and caused the clients to fail to file FBARs with the Department of the Treasury.
In addition to the earlier charges, yesterday’s superseding indictment alleges that David Kalai and Nadav Kalai each failed to file a FBAR for calendar years 2008 and 2009 concerning a foreign account held at Bank A in Luxembourg. The second superseding indictment alleges that both David Kalai and Nadav Kalai had a financial interest, signature or other authority over a foreign financial account that had an aggregate value of more than $10,000 during 2008 and 2009.
If convicted, each defendant faces a maximum of five years in prison for each count and a maximum fine of $250,000 for each count. The charges contained in the indictment are only allegations. The defendants are presumed innocent and it is the government’s burden to prove guilt beyond a reasonable doubt.
Kathryn Keneally, Assistant Attorney General of the Justice Department’s Tax Division, thanked Tax Division Trial Attorneys Christopher S. Strauss and Ellen M. Quattrucci, who prosecuted the case, and Assistant U.S. Attorney Sandra A. Brown of the U.S. Attorney’s Office for the Central District of California, who assisted with the prosecution. The case was investigated by special agents of IRS – Criminal Investigation.
Wednesday, September 25, 2013
DOMINICAN NATIONAL SENTENCED TO PRISON FOR ROLE IN IDENTITY TRAFFICKING SCHEME
FROM: U.S. JUSTICE DEPARTMENT
Friday, September 20, 2013
Dominican National Sentenced to 42 Months in Prison in Puerto Rican Identity Trafficking Scheme
A Dominican national was sentenced today to serve 42 months in prison for her role in trafficking the identities of Puerto Rican U.S. citizens and corresponding identity documents, announced Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division; U.S. Attorney Rosa E. Rodríguez-Vélez of the District of Puerto Rico; Acting Director John Sandweg of U.S. Immigration and Customs Enforcement (ICE); Chief Postal Inspector Guy J. Cottrell of the U.S. Postal Inspection Service (USPIS); Director Gregory B. Starr of the U.S. State Department’s Diplomatic Security Service (DSS); and Internal Revenue Service-Criminal Investigation (IRS-CI) Chief Richard Weber.
Arelis Abreu-Ramos, formerly of Philadelphia, was sentenced by U.S. District Judge Gustavo A. Gelpí in the District of Puerto Rico. In addition to Abreu-Ramos’s prison term, Judge Gelpí ordered her removal from the United States to the Dominican Republic after the completion of her sentence.
On June 13, 2013, Abreu-Ramos pleaded guilty in Puerto Rico to one count of conspiracy to commit identification fraud and one count of conspiracy to commit human smuggling for financial gain.
Abreu-Ramos was charged in a superseding indictment returned by a federal grand jury in Puerto Rico on March 22, 2012. To date, a total of 53 individuals have been charged for their roles in the identity trafficking scheme, and 42 defendants have pleaded guilty.
Court documents allege that individuals located in the Savarona area of Caguas, Puerto Rico (Savarona suppliers), obtained Puerto Rican identities and corresponding identity documents. Other conspirators located in various cities throughout the United States (identity brokers) allegedly solicited customers and sold Social Security cards and corresponding Puerto Rico birth certificates for prices ranging from $700 to $2,500 per set. The superseding indictment alleges that identity brokers ordered the identity documents from the Savarona suppliers, on behalf of the customers, by making coded telephone calls. The conspirators are charged with using text messages, money transfer services, and express, priority or regular U.S. mail to complete their illicit transactions.
Court documents allege that some of the conspirators assumed a Puerto Rican identity themselves and used that identity in connection with the trafficking operation. Their customers generally obtained the identity documents to assume the identity of Puerto Rican U.S. citizens and to obtain additional identification documents, such as legitimate state driver’s licenses. Some customers allegedly obtained the documents to commit financial fraud and attempted to obtain a U.S. passport.
According to court documents, various identity brokers were operating in Rockford, Ill.; DeKalb, Ill.; Aurora, Ill.; Seymour, Ind.; Columbus, Ind.; Indianapolis; Hartford, Conn.; Clewiston, Fla.; Lilburn, Ga.; Norcross, Ga.; Salisbury, Md.; Columbus, Ohio; Fairfield, Ohio; Dorchester, Mass.; Lawrence, Mass.; Salem, Mass.; Worcester, Mass.; Grand Rapids, Mich.; Nebraska City, Neb.; Elizabeth, N.J.; Burlington, N.C.; Hickory, N.C.; Hazelton, Pa.; Philadelphia; Houston; Abingdon, Va.; Albertville, Ala.; and Providence, R.I.
Abreu-Ramos admitted that she operated as an identity broker in the Philadelphia area, and that she was a manager and supervisor in the conspiracy. According to court documents, in June 2011, an unauthorized alien in Arlington, Va., applied for a U.S. passport using legitimate Puerto Rico identity documents that had been supplied by Abreu-Ramos. Law enforcement agents uncovered the fraudulent application and prevented the issuance of the U.S. passport.
Abreu-Ramos is the 29th defendant to be sentenced in this case.
The charges are the result of Operation Island Express, an ongoing, nationally-coordinated investigation led by the ICE Homeland Security Investigations (ICE-HSI) Chicago Office and USPIS, DSS and IRS-CI offices in Chicago, in coordination with the ICE-HSI San Juan Office and the DSS Resident Office in Puerto Rico. The Illinois Secretary of State Police; Elgin, Ill., Police Department; Seymour, Ind., Police Department; and Indiana State Police provided substantial assistance. The ICE-HSI Assistant Attaché office in the Dominican Republic and International Organized Crime Intelligence and Operations Center (IOC-2) as well as various ICE, USPIS, DSS and IRS-CI offices around the country provided invaluable support.
The case is being prosecuted by Trial Attorneys James S. Yoon, Hope S. Olds, Courtney B. Schaefer and Christina Giffin of the Criminal Division’s Human Rights and Special Prosecutions Section, with the assistance of the Criminal Division’s Asset Forfeiture and Money Laundering Section, and the support of the U.S. Attorney’s Office for the District of Puerto Rico. The U.S. Attorney’s Offices in the Northern District of Illinois, Southern District of Indiana, District of Connecticut, District of Massachusetts, District of Nebraska, Middle District of North Carolina, Southern District of Ohio, Middle District of Pennsylvania, District of Rhode Island, Southern District of Texas and Western District of Virginia provided substantial assistance.
Potential victims and the public may obtain information about the case at: www.justice.gov/criminal/vns/caseup/beltrerj.html . Anyone who believes their identity may have been compromised in relation to this investigation may contact the ICE toll-free hotline at 1-866-DHS-2ICE (1-866-347-2423) and its online tip form at www.ice.gov/tipline . Anyone who may have information about particular crimes in this case should also report it to the ICE tip line or website.
Friday, September 20, 2013
Dominican National Sentenced to 42 Months in Prison in Puerto Rican Identity Trafficking Scheme
A Dominican national was sentenced today to serve 42 months in prison for her role in trafficking the identities of Puerto Rican U.S. citizens and corresponding identity documents, announced Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division; U.S. Attorney Rosa E. Rodríguez-Vélez of the District of Puerto Rico; Acting Director John Sandweg of U.S. Immigration and Customs Enforcement (ICE); Chief Postal Inspector Guy J. Cottrell of the U.S. Postal Inspection Service (USPIS); Director Gregory B. Starr of the U.S. State Department’s Diplomatic Security Service (DSS); and Internal Revenue Service-Criminal Investigation (IRS-CI) Chief Richard Weber.
Arelis Abreu-Ramos, formerly of Philadelphia, was sentenced by U.S. District Judge Gustavo A. Gelpí in the District of Puerto Rico. In addition to Abreu-Ramos’s prison term, Judge Gelpí ordered her removal from the United States to the Dominican Republic after the completion of her sentence.
On June 13, 2013, Abreu-Ramos pleaded guilty in Puerto Rico to one count of conspiracy to commit identification fraud and one count of conspiracy to commit human smuggling for financial gain.
Abreu-Ramos was charged in a superseding indictment returned by a federal grand jury in Puerto Rico on March 22, 2012. To date, a total of 53 individuals have been charged for their roles in the identity trafficking scheme, and 42 defendants have pleaded guilty.
Court documents allege that individuals located in the Savarona area of Caguas, Puerto Rico (Savarona suppliers), obtained Puerto Rican identities and corresponding identity documents. Other conspirators located in various cities throughout the United States (identity brokers) allegedly solicited customers and sold Social Security cards and corresponding Puerto Rico birth certificates for prices ranging from $700 to $2,500 per set. The superseding indictment alleges that identity brokers ordered the identity documents from the Savarona suppliers, on behalf of the customers, by making coded telephone calls. The conspirators are charged with using text messages, money transfer services, and express, priority or regular U.S. mail to complete their illicit transactions.
Court documents allege that some of the conspirators assumed a Puerto Rican identity themselves and used that identity in connection with the trafficking operation. Their customers generally obtained the identity documents to assume the identity of Puerto Rican U.S. citizens and to obtain additional identification documents, such as legitimate state driver’s licenses. Some customers allegedly obtained the documents to commit financial fraud and attempted to obtain a U.S. passport.
According to court documents, various identity brokers were operating in Rockford, Ill.; DeKalb, Ill.; Aurora, Ill.; Seymour, Ind.; Columbus, Ind.; Indianapolis; Hartford, Conn.; Clewiston, Fla.; Lilburn, Ga.; Norcross, Ga.; Salisbury, Md.; Columbus, Ohio; Fairfield, Ohio; Dorchester, Mass.; Lawrence, Mass.; Salem, Mass.; Worcester, Mass.; Grand Rapids, Mich.; Nebraska City, Neb.; Elizabeth, N.J.; Burlington, N.C.; Hickory, N.C.; Hazelton, Pa.; Philadelphia; Houston; Abingdon, Va.; Albertville, Ala.; and Providence, R.I.
Abreu-Ramos admitted that she operated as an identity broker in the Philadelphia area, and that she was a manager and supervisor in the conspiracy. According to court documents, in June 2011, an unauthorized alien in Arlington, Va., applied for a U.S. passport using legitimate Puerto Rico identity documents that had been supplied by Abreu-Ramos. Law enforcement agents uncovered the fraudulent application and prevented the issuance of the U.S. passport.
Abreu-Ramos is the 29th defendant to be sentenced in this case.
The charges are the result of Operation Island Express, an ongoing, nationally-coordinated investigation led by the ICE Homeland Security Investigations (ICE-HSI) Chicago Office and USPIS, DSS and IRS-CI offices in Chicago, in coordination with the ICE-HSI San Juan Office and the DSS Resident Office in Puerto Rico. The Illinois Secretary of State Police; Elgin, Ill., Police Department; Seymour, Ind., Police Department; and Indiana State Police provided substantial assistance. The ICE-HSI Assistant Attaché office in the Dominican Republic and International Organized Crime Intelligence and Operations Center (IOC-2) as well as various ICE, USPIS, DSS and IRS-CI offices around the country provided invaluable support.
The case is being prosecuted by Trial Attorneys James S. Yoon, Hope S. Olds, Courtney B. Schaefer and Christina Giffin of the Criminal Division’s Human Rights and Special Prosecutions Section, with the assistance of the Criminal Division’s Asset Forfeiture and Money Laundering Section, and the support of the U.S. Attorney’s Office for the District of Puerto Rico. The U.S. Attorney’s Offices in the Northern District of Illinois, Southern District of Indiana, District of Connecticut, District of Massachusetts, District of Nebraska, Middle District of North Carolina, Southern District of Ohio, Middle District of Pennsylvania, District of Rhode Island, Southern District of Texas and Western District of Virginia provided substantial assistance.
Potential victims and the public may obtain information about the case at: www.justice.gov/criminal/vns/caseup/beltrerj.html . Anyone who believes their identity may have been compromised in relation to this investigation may contact the ICE toll-free hotline at 1-866-DHS-2ICE (1-866-347-2423) and its online tip form at www.ice.gov/tipline . Anyone who may have information about particular crimes in this case should also report it to the ICE tip line or website.
Tuesday, September 3, 2013
U.S., SWITZERLAND ISSUE JOINT STATEMENT ON TAX EVASION
FROM: U.S. JUSTICE DEPARTMENT
Thursday, August 29, 2013
United States and Switzerland Issue Joint Statement Regarding Tax Evasion Investigations
Switzerland Encourages Its Banks to Cooperate with New Program Which Will Require Significant Financial Penalties and Information Sharing from Banks That Aided Secret Account Holders
The Department of Justice today announced a program that will encourage Swiss banks to cooperate in the department’s ongoing investigations of the use of foreign bank accounts to commit tax evasion. The department also released a joint statement with the Swiss Federal Department of Finance, stating that Switzerland will encourage its banks to participate in the program.
“This program will significantly enhance the Justice Department's ongoing efforts to aggressively pursue those who attempt to evade the law by hiding their assets outside of the United States,” said Attorney General Eric Holder. “In addition to strengthening our partnership with the Swiss government, the program’s requirement that Swiss banks provide detailed account information will improve our ability to bring tax dollars back to the U.S. treasury from across the globe.”
“This program will provide us with additional information to prosecute those who used secret offshore bank accounts and those here and abroad who established and facilitated the use of such accounts,” said Deputy Attorney General James M. Cole. “Now is the time for all U.S. taxpayers who hid behind Swiss bank secrecy laws or have undeclared offshore accounts in other foreign countries to come forward and resolve their outstanding tax issues with the United States.”
Under the program, which is available only to banks that are not currently under criminal investigation by the department for their offshore activities, participating Swiss banks will be required to:
· Agree to pay substantial penalties
· Make a complete disclosure of their cross-border activities
· Provide detailed information on an account-by-account basis for accounts in which U.S. taxpayers have a direct or indirect interest
· Cooperate in treaty requests for account information
· Provide detailed information as to other banks that transferred funds into secret accounts or that accepted funds when secret accounts were closed
· Agree to close accounts of account holders who fail to come into compliance with U.S. reporting obligations
Banks meeting all of the above requirements will be eligible for non-prosecution agreements. Banks currently under criminal investigation related to their Swiss banking activities, and all individuals, are expressly excluded from the program.
The program holds banks to a higher degree of responsibility for opening secret accounts after it became publicly known that the department was actively investigating offshore tax evasion in Switzerland. Under the penalty provisions of the program, banks seeking a non-prosecution agreement must agree to a penalty in an amount equal to 20 percent of the maximum aggregate dollar value of all non-disclosed U.S. accounts that were held by the bank on Aug.1, 2008. The penalty amount will increase to 30 percent for secret accounts that were opened after that date but before the end of February 2009 and to 50 percent for secret accounts opened later than that.
The program will significantly assist the department’s efforts to investigate and prosecute U.S. taxpayers who, when faced with the risk of detection, chose to move funds away from banks under investigation to banks that they believed might be better havens for tax secrecy. A key component of the program requires cooperating banks to provide information that will enable the United States to follow the money to other Swiss banks and to banks located in other countries.
The program also provides a path to resolution for Swiss banks that were not engaged in wrongful acts with U.S. taxpayers but nonetheless want a resolution of their status. Most banks in this category will be asked to provide an internal investigation report prepared by an independent examiner, as well as any additional information requested by the department. A smaller group of banks will be allowed to show that they met certain criteria for deemed-compliance under the Foreign Account Tax Compliance Act (FATCA). Banks in these two groups will be eligible to receive non-target letters.
The program is intended to enable every Swiss bank that is not already under criminal investigation to find a path to resolution. It also creates significant risks for individuals and banks that continue to fail to cooperate, including for those Swiss banks that facilitated U.S. tax evasion but fail to cooperate now, for all U.S. taxpayers who think that they can continue to hide income and assets in offshore banks, and for those advisors and others who facilitated these crimes.
Since 2009, the department has charged more than 30 banking professionals and 68 U.S. accountholders with violations arising from their offshore banking activities. Fifty-four U.S. taxpayers and four bankers and financial advisors have pled guilty, and five taxpayers have been convicted at trial. One Swiss bank entered into a deferred prosecution agreement, and a second Swiss bank was indicted and pleaded guilty. Currently, the department is actively investigating the Swiss-based activities of 14 financial institutions. The department’s enforcement activities are global and have also included public actions concerning activities in India, Luxembourg, Israel and the Caribbean.
The program does not address current or future investigations and pending cases concerning bank employees, financial advisors and other individuals. The department will address each of these cases only with the individual’s counsel, in a manner that gives consideration to the particular facts and circumstances of each case. In those cases in which indictments are pending, any resolution will also require addressing outstanding issues with the court. Counsel for banks currently under investigation, individuals who have been indicted, or bank employees who are concerned about whether they have potential criminal liability should contact the department’s Tax Division or the prosecutors handling their case if they wish to seek resolution.
The department notes that the joint statement with the Swiss Federal Department of Finance provides that if personal data are provided, they should only be used for purposes of law enforcement, which may include regulatory action, in the United States or as otherwise permitted by U.S. law. Additionally, the department has assured its Swiss counterparts that it understands that simply because the names of individuals are included in the information that it receives from a bank does not necessarily mean that any particular individual is or is not culpable of wrongdoing. The support that Switzerland has shown for this program may also help those banks already under investigation take some of the steps necessary to reach a resolution.
“Banks that come forward under the program that we have announced today have the opportunity to reach a resolution with the United States,” said Assistant Attorney General for the Tax Division Kathryn Keneally. “The program will give us yet more information to pursue U.S. taxpayers who are continuing to hide their assets in offshore accounts, and creates significant risks for those Swiss banks that fail to come forward. We recognize and express our appreciation for Switzerland’s support of the program.”
“The program the Department of Justice announced today is another positive step forward in the U.S. government’s continuing efforts to combat offshore tax evasion,” said Danny Werfel, Acting Commissioner of the Internal Revenue Service. “On behalf of the IRS, I extend my appreciation to both the Justice Department and the Swiss government for developing a way forward that provides the United States with information that will be critical to the enforcement of our tax laws and will bring closure for Swiss banks that meet the requirements of the program.”
Thursday, August 29, 2013
United States and Switzerland Issue Joint Statement Regarding Tax Evasion Investigations
Switzerland Encourages Its Banks to Cooperate with New Program Which Will Require Significant Financial Penalties and Information Sharing from Banks That Aided Secret Account Holders
The Department of Justice today announced a program that will encourage Swiss banks to cooperate in the department’s ongoing investigations of the use of foreign bank accounts to commit tax evasion. The department also released a joint statement with the Swiss Federal Department of Finance, stating that Switzerland will encourage its banks to participate in the program.
“This program will significantly enhance the Justice Department's ongoing efforts to aggressively pursue those who attempt to evade the law by hiding their assets outside of the United States,” said Attorney General Eric Holder. “In addition to strengthening our partnership with the Swiss government, the program’s requirement that Swiss banks provide detailed account information will improve our ability to bring tax dollars back to the U.S. treasury from across the globe.”
“This program will provide us with additional information to prosecute those who used secret offshore bank accounts and those here and abroad who established and facilitated the use of such accounts,” said Deputy Attorney General James M. Cole. “Now is the time for all U.S. taxpayers who hid behind Swiss bank secrecy laws or have undeclared offshore accounts in other foreign countries to come forward and resolve their outstanding tax issues with the United States.”
Under the program, which is available only to banks that are not currently under criminal investigation by the department for their offshore activities, participating Swiss banks will be required to:
· Agree to pay substantial penalties
· Make a complete disclosure of their cross-border activities
· Provide detailed information on an account-by-account basis for accounts in which U.S. taxpayers have a direct or indirect interest
· Cooperate in treaty requests for account information
· Provide detailed information as to other banks that transferred funds into secret accounts or that accepted funds when secret accounts were closed
· Agree to close accounts of account holders who fail to come into compliance with U.S. reporting obligations
Banks meeting all of the above requirements will be eligible for non-prosecution agreements. Banks currently under criminal investigation related to their Swiss banking activities, and all individuals, are expressly excluded from the program.
The program holds banks to a higher degree of responsibility for opening secret accounts after it became publicly known that the department was actively investigating offshore tax evasion in Switzerland. Under the penalty provisions of the program, banks seeking a non-prosecution agreement must agree to a penalty in an amount equal to 20 percent of the maximum aggregate dollar value of all non-disclosed U.S. accounts that were held by the bank on Aug.1, 2008. The penalty amount will increase to 30 percent for secret accounts that were opened after that date but before the end of February 2009 and to 50 percent for secret accounts opened later than that.
The program will significantly assist the department’s efforts to investigate and prosecute U.S. taxpayers who, when faced with the risk of detection, chose to move funds away from banks under investigation to banks that they believed might be better havens for tax secrecy. A key component of the program requires cooperating banks to provide information that will enable the United States to follow the money to other Swiss banks and to banks located in other countries.
The program also provides a path to resolution for Swiss banks that were not engaged in wrongful acts with U.S. taxpayers but nonetheless want a resolution of their status. Most banks in this category will be asked to provide an internal investigation report prepared by an independent examiner, as well as any additional information requested by the department. A smaller group of banks will be allowed to show that they met certain criteria for deemed-compliance under the Foreign Account Tax Compliance Act (FATCA). Banks in these two groups will be eligible to receive non-target letters.
The program is intended to enable every Swiss bank that is not already under criminal investigation to find a path to resolution. It also creates significant risks for individuals and banks that continue to fail to cooperate, including for those Swiss banks that facilitated U.S. tax evasion but fail to cooperate now, for all U.S. taxpayers who think that they can continue to hide income and assets in offshore banks, and for those advisors and others who facilitated these crimes.
Since 2009, the department has charged more than 30 banking professionals and 68 U.S. accountholders with violations arising from their offshore banking activities. Fifty-four U.S. taxpayers and four bankers and financial advisors have pled guilty, and five taxpayers have been convicted at trial. One Swiss bank entered into a deferred prosecution agreement, and a second Swiss bank was indicted and pleaded guilty. Currently, the department is actively investigating the Swiss-based activities of 14 financial institutions. The department’s enforcement activities are global and have also included public actions concerning activities in India, Luxembourg, Israel and the Caribbean.
The program does not address current or future investigations and pending cases concerning bank employees, financial advisors and other individuals. The department will address each of these cases only with the individual’s counsel, in a manner that gives consideration to the particular facts and circumstances of each case. In those cases in which indictments are pending, any resolution will also require addressing outstanding issues with the court. Counsel for banks currently under investigation, individuals who have been indicted, or bank employees who are concerned about whether they have potential criminal liability should contact the department’s Tax Division or the prosecutors handling their case if they wish to seek resolution.
The department notes that the joint statement with the Swiss Federal Department of Finance provides that if personal data are provided, they should only be used for purposes of law enforcement, which may include regulatory action, in the United States or as otherwise permitted by U.S. law. Additionally, the department has assured its Swiss counterparts that it understands that simply because the names of individuals are included in the information that it receives from a bank does not necessarily mean that any particular individual is or is not culpable of wrongdoing. The support that Switzerland has shown for this program may also help those banks already under investigation take some of the steps necessary to reach a resolution.
“Banks that come forward under the program that we have announced today have the opportunity to reach a resolution with the United States,” said Assistant Attorney General for the Tax Division Kathryn Keneally. “The program will give us yet more information to pursue U.S. taxpayers who are continuing to hide their assets in offshore accounts, and creates significant risks for those Swiss banks that fail to come forward. We recognize and express our appreciation for Switzerland’s support of the program.”
“The program the Department of Justice announced today is another positive step forward in the U.S. government’s continuing efforts to combat offshore tax evasion,” said Danny Werfel, Acting Commissioner of the Internal Revenue Service. “On behalf of the IRS, I extend my appreciation to both the Justice Department and the Swiss government for developing a way forward that provides the United States with information that will be critical to the enforcement of our tax laws and will bring closure for Swiss banks that meet the requirements of the program.”
BUSINESSMAN PLEADS GUILTY IN BANKING CONSPIRACY CASE
FROM: U.S. DEPARTMENT OF JUSTICE
Thursday, August 29, 2013
California Businessman Pleads Guilty to Conspiracy to Conceal Israeli Bank Accounts
Encino, Calif., Resident Is the Latest in a Series of Defendants Charged with Conspiring with Bankers to Hide Secret Israeli Bank Accounts
Aaron Cohen of Encino, Calif., pleaded guilty today in the U.S. District Court for the Central District of California to conspiracy to defraud the United States, the Justice Department and Internal Revenue Service-Criminal Investigation (IRS-CI) announced.
According to court documents, Cohen, a U.S. citizen, maintained undeclared bank accounts at two international banks headquartered in Tel Aviv, Israel, identified in court documents as Bank A and Bank B. One of Cohen’s undeclared accounts was maintained at a branch of Bank A located in the Cayman Islands. The accounts were held in the names of nominees in order to keep them secret from the U.S. Government. In or about 2000, Cohen began using the funds in his undeclared account in the Cayman Islands as collateral for back-to-back loans obtained from another branch of Bank A located in Los Angeles. Cohen’s ownership of the funds in the Cayman Islands accounts was not identified in the loan records maintained at the Los Angeles branch, thus concealing the fact that he was borrowing his own money, paying tax-deductible interest on the loans and not reporting the interest income he was earning in the Cayman Islands on his U.S. tax returns.
According to the plea agreement, in or about 2009, Cohen transferred approximately $2 million from his Cayman Islands account at Bank A to a new offshore account at Bank B in Israel. Cohen then used the funds in the new account as collateral to obtain a back-to-back loan from the Los Angeles branch of Bank B. Cohen failed to report any income from the accounts on his individual income tax returns that were filed with the IRS. For tax years 2006 through 2009, Cohen failed to report interest income of approximately $238,000. The highest balance in the undeclared accounts was approximately $3,450,000.
“Today’s guilty plea is but the latest example that attempting to hide income and assets from the United States in offshore accounts is a bad gamble,” said Assistant Attorney General for the Justice Department’s Tax Division Kathryn Keneally. “The Internal Revenue Service will find the hiding places and the Department of Justice will criminally prosecute these tax cheats, who face potential jail time, still owe the taxes due and may lose those hidden assets and more to severe civil penalties."
“Mr. Cohen is yet another taxpayer caught using anonymous offshore accounts to avoid paying his fair share of taxes,” said IRS Criminal Investigation Chief Richard Weber. “Through IRS-CI’s efforts, we are gaining access to more and more information on institutions and individuals involved in offshore tax fraud, and you can expect us to use all of our enforcement tools to fight offshore tax evasion.”
Cohen is the latest in a series of defendants charged in the U.S. District Court for the Central District of California with failing to report income from undeclared accounts in Israel.
On March 29, 2013, Zvi Sperling of Beverly Hills, Calif., pleaded guilty to conspiring to defraud the United States in connection with back-to-back loans obtained in Los Angeles at branches of Bank A and Bank B that were secured by funds in undeclared bank accounts in Israel. For tax years 2005 through 2008, Sperling failed to report income of approximately $381,563. The highest balance in Sperling’s undeclared accounts was approximately $4 million.
On May 21, 2013, Guity Kashfi of Los Angeles, Calif., pleaded guilty to conspiring to defraud the United States in connection with back-to-back loans obtained from branches of Bank A and Bank B in Los Angeles that were secured by funds in undeclared bank accounts in Israel and Luxembourg. For tax years 2005 through 2011, Kashfi failed to report interest income of approximately $221,306. The highest balance in Kashfi’s undeclared accounts was approximately $2.5 million.
U.S. citizens and residents who have an interest in, or signature or other authority over, a financial account in a foreign country with assets in excess of $10,000 are required to disclose the existence of such account on Schedule B, Part III, of their individual income tax returns. Additionally, U.S. citizens and residents must file a Report of Foreign Bank and Financial Reports (FBAR) with the U.S. Treasury disclosing any financial account in a foreign country with assets in excess of $10,000 in which they have a financial interest, or over which they have signature or other authority.
Cohen faces a potential maximum prison term of five years and a maximum fine of $250,000. In addition, Cohen has agreed to pay a civil penalty to the IRS in the amount of 50 percent of the high balance of his undeclared accounts for failing to file FBARs.
Assistant Attorney General Kathryn Keneally of the Justice Department’s Tax Division and André Birotte Jr., U.S. Attorney for the Central District of California thanked special agents of IRS-CI, who investigated the case, and Tax Division Senior Litigation Counsel John E. Sullivan and Assistant Chief Elizabeth C. Hadden, who prosecuted these cases, and Assistant U.S. Attorney Sandra A. Brown of the U.S. Attorney’s Office, who assisted with the prosecutions.
Thursday, August 29, 2013
California Businessman Pleads Guilty to Conspiracy to Conceal Israeli Bank Accounts
Encino, Calif., Resident Is the Latest in a Series of Defendants Charged with Conspiring with Bankers to Hide Secret Israeli Bank Accounts
Aaron Cohen of Encino, Calif., pleaded guilty today in the U.S. District Court for the Central District of California to conspiracy to defraud the United States, the Justice Department and Internal Revenue Service-Criminal Investigation (IRS-CI) announced.
According to court documents, Cohen, a U.S. citizen, maintained undeclared bank accounts at two international banks headquartered in Tel Aviv, Israel, identified in court documents as Bank A and Bank B. One of Cohen’s undeclared accounts was maintained at a branch of Bank A located in the Cayman Islands. The accounts were held in the names of nominees in order to keep them secret from the U.S. Government. In or about 2000, Cohen began using the funds in his undeclared account in the Cayman Islands as collateral for back-to-back loans obtained from another branch of Bank A located in Los Angeles. Cohen’s ownership of the funds in the Cayman Islands accounts was not identified in the loan records maintained at the Los Angeles branch, thus concealing the fact that he was borrowing his own money, paying tax-deductible interest on the loans and not reporting the interest income he was earning in the Cayman Islands on his U.S. tax returns.
According to the plea agreement, in or about 2009, Cohen transferred approximately $2 million from his Cayman Islands account at Bank A to a new offshore account at Bank B in Israel. Cohen then used the funds in the new account as collateral to obtain a back-to-back loan from the Los Angeles branch of Bank B. Cohen failed to report any income from the accounts on his individual income tax returns that were filed with the IRS. For tax years 2006 through 2009, Cohen failed to report interest income of approximately $238,000. The highest balance in the undeclared accounts was approximately $3,450,000.
“Today’s guilty plea is but the latest example that attempting to hide income and assets from the United States in offshore accounts is a bad gamble,” said Assistant Attorney General for the Justice Department’s Tax Division Kathryn Keneally. “The Internal Revenue Service will find the hiding places and the Department of Justice will criminally prosecute these tax cheats, who face potential jail time, still owe the taxes due and may lose those hidden assets and more to severe civil penalties."
“Mr. Cohen is yet another taxpayer caught using anonymous offshore accounts to avoid paying his fair share of taxes,” said IRS Criminal Investigation Chief Richard Weber. “Through IRS-CI’s efforts, we are gaining access to more and more information on institutions and individuals involved in offshore tax fraud, and you can expect us to use all of our enforcement tools to fight offshore tax evasion.”
Cohen is the latest in a series of defendants charged in the U.S. District Court for the Central District of California with failing to report income from undeclared accounts in Israel.
On March 29, 2013, Zvi Sperling of Beverly Hills, Calif., pleaded guilty to conspiring to defraud the United States in connection with back-to-back loans obtained in Los Angeles at branches of Bank A and Bank B that were secured by funds in undeclared bank accounts in Israel. For tax years 2005 through 2008, Sperling failed to report income of approximately $381,563. The highest balance in Sperling’s undeclared accounts was approximately $4 million.
On May 21, 2013, Guity Kashfi of Los Angeles, Calif., pleaded guilty to conspiring to defraud the United States in connection with back-to-back loans obtained from branches of Bank A and Bank B in Los Angeles that were secured by funds in undeclared bank accounts in Israel and Luxembourg. For tax years 2005 through 2011, Kashfi failed to report interest income of approximately $221,306. The highest balance in Kashfi’s undeclared accounts was approximately $2.5 million.
U.S. citizens and residents who have an interest in, or signature or other authority over, a financial account in a foreign country with assets in excess of $10,000 are required to disclose the existence of such account on Schedule B, Part III, of their individual income tax returns. Additionally, U.S. citizens and residents must file a Report of Foreign Bank and Financial Reports (FBAR) with the U.S. Treasury disclosing any financial account in a foreign country with assets in excess of $10,000 in which they have a financial interest, or over which they have signature or other authority.
Cohen faces a potential maximum prison term of five years and a maximum fine of $250,000. In addition, Cohen has agreed to pay a civil penalty to the IRS in the amount of 50 percent of the high balance of his undeclared accounts for failing to file FBARs.
Assistant Attorney General Kathryn Keneally of the Justice Department’s Tax Division and André Birotte Jr., U.S. Attorney for the Central District of California thanked special agents of IRS-CI, who investigated the case, and Tax Division Senior Litigation Counsel John E. Sullivan and Assistant Chief Elizabeth C. Hadden, who prosecuted these cases, and Assistant U.S. Attorney Sandra A. Brown of the U.S. Attorney’s Office, who assisted with the prosecutions.
Saturday, August 24, 2013
TAX PREPARERS AND FOREIGN NATIONALS CHARGED WITH CONSPIRACY TO DEFRAUD U.S.
FROM: U.S. JUSTICE DEPARTMENT
Tuesday, August 20, 2013
Alabama Tax Return Preparers and 19 Foreign Nationals Charged with Conspiring to Defraud the United States, Identity Theft and Money Laundering
Justice Department announced that a 14-count superseding indictment was unsealed today, charging JB Tax Professional Services Inc., Jacqueline J. Arias and Jose Bayron Estrada, of Spruce Pine, Ala., along with 19 foreign nationals, many of whom resided in the New Orleans area, with conspiracy to defraud the United States and conspiracy to commit mail and wire fraud by filing fraudulent income tax returns. The indictment also charges certain defendants with aggravated identity theft and conspiracy to commit money laundering. Most of the defendants were previously indicted in May 2013 and arrested in June 2013.
According to the indictment, members of the conspiracy obtained Forms W-2, often by purchasing them for cash, for the purposes of filing fraudulent income tax returns. Conspirators further obtained individual taxpayer identification numbers (ITINs) for use in filing fraudulent tax returns, in some cases using false applications filed with the assistance of Arias and JB Tax Professional Services. An ITIN is a tax processing number issued by the Internal Revenue Service (IRS) to individuals who do not have, and are not eligible to obtain, a social security number. Both Arias and the business were designated by the IRS as certified acceptance agents, which are entrusted by the IRS with the responsibility of reviewing the documentation of an ITIN applicant’s identity and alien status for authenticity, completeness and accuracy before submitting their application to the IRS.
The charging documents allege that the defendants used the social security numbers of real persons to conduct mail and wire fraud. The defendants also allegedly disguised and concealed the proceeds of their fraud by agreeing to conduct certain types of financial transactions.
An indictment merely alleges that crimes have been committed, and each defendant is presumed innocent until proven guilty. Each defendant faces a maximum potential sentence of five years in prison for the conspiracy charge. Each aggravated identity theft charge carries a mandatory two-year prison sentence, and the defendants charged in the money laundering conspiracy count face a possible maximum sentence of twenty years in prison. The defendants will also be subject to fines, mandatory restitution and forfeiture if convicted.
The case is being investigated by U.S. Immigration and Customs Enforcement, which oversees Homeland Security Investigations; IRS-Criminal Investigation; the U.S. Secret Service; the U.S. Postal Inspection Service; and the Social Security Administration, Office of the Inspector General, in partnership with the St. Tammany Parish, La. and Jefferson Parish, La. Sheriffs’ Departments. The case is being prosecuted by Tax Division Trial Attorneys Hayden Brockett and Kevin Lombardi.
Tuesday, August 20, 2013
Alabama Tax Return Preparers and 19 Foreign Nationals Charged with Conspiring to Defraud the United States, Identity Theft and Money Laundering
Justice Department announced that a 14-count superseding indictment was unsealed today, charging JB Tax Professional Services Inc., Jacqueline J. Arias and Jose Bayron Estrada, of Spruce Pine, Ala., along with 19 foreign nationals, many of whom resided in the New Orleans area, with conspiracy to defraud the United States and conspiracy to commit mail and wire fraud by filing fraudulent income tax returns. The indictment also charges certain defendants with aggravated identity theft and conspiracy to commit money laundering. Most of the defendants were previously indicted in May 2013 and arrested in June 2013.
According to the indictment, members of the conspiracy obtained Forms W-2, often by purchasing them for cash, for the purposes of filing fraudulent income tax returns. Conspirators further obtained individual taxpayer identification numbers (ITINs) for use in filing fraudulent tax returns, in some cases using false applications filed with the assistance of Arias and JB Tax Professional Services. An ITIN is a tax processing number issued by the Internal Revenue Service (IRS) to individuals who do not have, and are not eligible to obtain, a social security number. Both Arias and the business were designated by the IRS as certified acceptance agents, which are entrusted by the IRS with the responsibility of reviewing the documentation of an ITIN applicant’s identity and alien status for authenticity, completeness and accuracy before submitting their application to the IRS.
The charging documents allege that the defendants used the social security numbers of real persons to conduct mail and wire fraud. The defendants also allegedly disguised and concealed the proceeds of their fraud by agreeing to conduct certain types of financial transactions.
An indictment merely alleges that crimes have been committed, and each defendant is presumed innocent until proven guilty. Each defendant faces a maximum potential sentence of five years in prison for the conspiracy charge. Each aggravated identity theft charge carries a mandatory two-year prison sentence, and the defendants charged in the money laundering conspiracy count face a possible maximum sentence of twenty years in prison. The defendants will also be subject to fines, mandatory restitution and forfeiture if convicted.
The case is being investigated by U.S. Immigration and Customs Enforcement, which oversees Homeland Security Investigations; IRS-Criminal Investigation; the U.S. Secret Service; the U.S. Postal Inspection Service; and the Social Security Administration, Office of the Inspector General, in partnership with the St. Tammany Parish, La. and Jefferson Parish, La. Sheriffs’ Departments. The case is being prosecuted by Tax Division Trial Attorneys Hayden Brockett and Kevin Lombardi.
Friday, August 23, 2013
CONSTRUCTION COMPANY OWNER PLEADS GUILTY TO NOT PAYING PAYROLL TAXES
FROM: U.S. JUSTICE DEPARTMENT
Tuesday, August 20, 2013
New York Maintenance and Construction Company Owner Pleads Guilty in Manhattan Federal Court to Failing to Pay Payroll Taxes
Kathryn Keneally, Assistant Attorney General for the Justice Department’s Tax Division, announced today the guilty plea of Thomas Nastasi III, 46, of Mt. Kisco, N.Y., to one count of willful failure to pay the Internal Revenue Service (IRS) the payroll taxes of his company, Nastasi Maintenance & Construction LLC. Nastasi pleaded guilty before U.S. District Judge Paul G. Gardephe in the Southern District of New York.
According to the previously filed indictment and statements made during Nastasi’s guilty plea, from 2001 through 2011, Thomas Nastasi III owned and operated several Manhattan construction and maintenance companies, including Nastasi Maintenance & Construction. As the president of the companies, Nastasi was responsible for withholding payroll taxes from his employees and paying them over to the IRS. Those taxes included the employees’ income taxes, Social Security, and Medicare taxes. Nastasi accumulated over $1.7 million in payroll taxes that were owed but never paid to the IRS. Those taxes included the employer’s portion of Social Security and Medicare taxes for his employees.
Court documents and statements also established that instead of paying the companies’ payroll taxes to the IRS, Nastasi used company funds to pay hundreds of thousands of dollars in personal expenses, for items including boat-related expenses and cigars. Nastasi also made false statements to the IRS in the course of its attempts to obtain delinquent tax returns and collect the corporate and personal taxes owed by Nastasi and his companies.
“Employers who use taxes withheld from their employees’ paychecks to fund their own lavish lifestyles instead of paying over the funds to the government show a blatant disregard not only for the law, but also for all honest taxpayers who work hard and play by the rules,” said Assistant Attorney General Kathy Keneally. “Business owners who commit these crimes not only face jail time, but also must repay the stolen taxes, with interest and penalties.”
“Business owners who misdirect employment taxes to their own personal ends are stealing from their employees and all taxpayers’ futures,” said Richard Weber, Chief of IRS Criminal Investigation. “Thomas Nastasi III funded an extravagant lifestyle with his ill-gotten gains, including $67,000 spent on cigars. When investigated, he made false statements in an attempt to obstruct our special agents. IRS Criminal Investigation vigorously pursues anyone who collects taxes and fails to timely remit those taxes.”
Sentencing is set for Dec.19, 2013, at 2:30 p.m. before Judge Paul Gardephe.
Assistant Attorney General Keneally thanked special agents of IRS-Criminal Investigation and the U.S. Attorney’s Office for the Southern District of New York for their efforts in this case.
Tuesday, August 20, 2013
New York Maintenance and Construction Company Owner Pleads Guilty in Manhattan Federal Court to Failing to Pay Payroll Taxes
Kathryn Keneally, Assistant Attorney General for the Justice Department’s Tax Division, announced today the guilty plea of Thomas Nastasi III, 46, of Mt. Kisco, N.Y., to one count of willful failure to pay the Internal Revenue Service (IRS) the payroll taxes of his company, Nastasi Maintenance & Construction LLC. Nastasi pleaded guilty before U.S. District Judge Paul G. Gardephe in the Southern District of New York.
According to the previously filed indictment and statements made during Nastasi’s guilty plea, from 2001 through 2011, Thomas Nastasi III owned and operated several Manhattan construction and maintenance companies, including Nastasi Maintenance & Construction. As the president of the companies, Nastasi was responsible for withholding payroll taxes from his employees and paying them over to the IRS. Those taxes included the employees’ income taxes, Social Security, and Medicare taxes. Nastasi accumulated over $1.7 million in payroll taxes that were owed but never paid to the IRS. Those taxes included the employer’s portion of Social Security and Medicare taxes for his employees.
Court documents and statements also established that instead of paying the companies’ payroll taxes to the IRS, Nastasi used company funds to pay hundreds of thousands of dollars in personal expenses, for items including boat-related expenses and cigars. Nastasi also made false statements to the IRS in the course of its attempts to obtain delinquent tax returns and collect the corporate and personal taxes owed by Nastasi and his companies.
“Employers who use taxes withheld from their employees’ paychecks to fund their own lavish lifestyles instead of paying over the funds to the government show a blatant disregard not only for the law, but also for all honest taxpayers who work hard and play by the rules,” said Assistant Attorney General Kathy Keneally. “Business owners who commit these crimes not only face jail time, but also must repay the stolen taxes, with interest and penalties.”
“Business owners who misdirect employment taxes to their own personal ends are stealing from their employees and all taxpayers’ futures,” said Richard Weber, Chief of IRS Criminal Investigation. “Thomas Nastasi III funded an extravagant lifestyle with his ill-gotten gains, including $67,000 spent on cigars. When investigated, he made false statements in an attempt to obstruct our special agents. IRS Criminal Investigation vigorously pursues anyone who collects taxes and fails to timely remit those taxes.”
Sentencing is set for Dec.19, 2013, at 2:30 p.m. before Judge Paul Gardephe.
Assistant Attorney General Keneally thanked special agents of IRS-Criminal Investigation and the U.S. Attorney’s Office for the Southern District of New York for their efforts in this case.
Sunday, August 11, 2013
MAN SENTENCED FOR TAX EVASION FOR FAILING TO PAY TAXES ON MONETARY AWARD FROM EMPLOYMENT DISPUTE
FROM: U.S. JUSTICE DEPARTMENT
Wednesday, August 7, 2013
Former Sevierville, Tenn. Resident Convicted of Tax Evasion
The Justice Department and the Internal Revenue Service (IRS) announced today that Jimmie Duane Ross of Lehi, Utah, and formerly of Sevierville, Tenn., was convicted today of five counts of tax evasion following a jury trial in the U.S. District Court for the Eastern District of Tennessee.
According to the indictment and evidence produced at trial, Ross won a monetary award of approximately $840,000 in 1999 after arbitration of an employment dispute with a former employer. Ross thereafter failed to pay the full amount of his income tax due and owing for 1999 and evaded the tax by filing a false mortgage on his residence, filing a false lien on his vehicle, dealing extensively in cash and directing funds to an offshore account. In addition, from 2004 through 2007, Ross earned commission income for referring clients to a purported Nevis-based investment company and evaded his taxes by using nominees and other means.
Following the jury verdict, U.S. District Judge R. Leon Jordan ordered that Ross be detained and scheduled the sentencing for Jan. 14, 2014. On each of the five counts of conviction, Ross faces a maximum sentence of five years in prison and a maximum fine of $250,000.
The case was investigated by Special Agents of IRS – Criminal Investigation. Trial Attorneys Kevin Lombardi and Kimberly Shartar of the Justice Department’s Tax Division prosecuted the case.
Wednesday, August 7, 2013
Former Sevierville, Tenn. Resident Convicted of Tax Evasion
The Justice Department and the Internal Revenue Service (IRS) announced today that Jimmie Duane Ross of Lehi, Utah, and formerly of Sevierville, Tenn., was convicted today of five counts of tax evasion following a jury trial in the U.S. District Court for the Eastern District of Tennessee.
According to the indictment and evidence produced at trial, Ross won a monetary award of approximately $840,000 in 1999 after arbitration of an employment dispute with a former employer. Ross thereafter failed to pay the full amount of his income tax due and owing for 1999 and evaded the tax by filing a false mortgage on his residence, filing a false lien on his vehicle, dealing extensively in cash and directing funds to an offshore account. In addition, from 2004 through 2007, Ross earned commission income for referring clients to a purported Nevis-based investment company and evaded his taxes by using nominees and other means.
Following the jury verdict, U.S. District Judge R. Leon Jordan ordered that Ross be detained and scheduled the sentencing for Jan. 14, 2014. On each of the five counts of conviction, Ross faces a maximum sentence of five years in prison and a maximum fine of $250,000.
The case was investigated by Special Agents of IRS – Criminal Investigation. Trial Attorneys Kevin Lombardi and Kimberly Shartar of the Justice Department’s Tax Division prosecuted the case.
Wednesday, July 24, 2013
CONSTRUCTION COMPANY OWNER INDICTED FOR TAX FRAUD
FROM: U.S. DEPARTMENT OF JUSTICE
Friday, July 19, 2013
Owner of New York Construction Company Indicted for Tax Fraud
The Justice Department and Internal Revenue Service (IRS) announced that Gurmail Singh, of Richmond Hill, N.Y., was arrested yesterday following his indictment on July 11, 2013, for multiple tax crimes. The indictment was unsealed yesterday following his arrest.
According to the indictment, Singh owned Fancy and Vicky Construction Co. Inc., a construction company in Richmond Hill. As alleged in the indictment, Singh used check-cashing services to cash more than $2.9 million of checks paid to his construction company for services between 2006 and 2008. He concealed his check-cashing activities from his tax return preparers, and this income was not included as gross income on the company’s tax returns. Singh also diverted cash receipts earned by his companies for his own personal use.
The indictment alleges that Singh filed false 2006 and 2007 corporate income tax returns for Fancy and Vicky Construction, failed to file a 2008 corporate income tax return for Fancy and Vicky Construction and failed to file individual income tax returns for 2007 and 2008. Singh faces a potential maximum sentence of nine years in prison and a potential fine of up to $800,000.
A trial date has not been scheduled. An indictment merely alleges that a crime has been committed, and a defendant is presumed innocent until proven guilty beyond a reasonable doubt.
Kathryn Keneally, Assistant Attorney General for the Justice Department's Tax Division, commended the efforts of special agents of IRS–Criminal Investigation, who investigated the case, and Tax Division Trial Attorneys Mark Kotila and Jeffrey Bender, who are prosecuting the case.
Friday, July 19, 2013
Owner of New York Construction Company Indicted for Tax Fraud
The Justice Department and Internal Revenue Service (IRS) announced that Gurmail Singh, of Richmond Hill, N.Y., was arrested yesterday following his indictment on July 11, 2013, for multiple tax crimes. The indictment was unsealed yesterday following his arrest.
According to the indictment, Singh owned Fancy and Vicky Construction Co. Inc., a construction company in Richmond Hill. As alleged in the indictment, Singh used check-cashing services to cash more than $2.9 million of checks paid to his construction company for services between 2006 and 2008. He concealed his check-cashing activities from his tax return preparers, and this income was not included as gross income on the company’s tax returns. Singh also diverted cash receipts earned by his companies for his own personal use.
The indictment alleges that Singh filed false 2006 and 2007 corporate income tax returns for Fancy and Vicky Construction, failed to file a 2008 corporate income tax return for Fancy and Vicky Construction and failed to file individual income tax returns for 2007 and 2008. Singh faces a potential maximum sentence of nine years in prison and a potential fine of up to $800,000.
A trial date has not been scheduled. An indictment merely alleges that a crime has been committed, and a defendant is presumed innocent until proven guilty beyond a reasonable doubt.
Kathryn Keneally, Assistant Attorney General for the Justice Department's Tax Division, commended the efforts of special agents of IRS–Criminal Investigation, who investigated the case, and Tax Division Trial Attorneys Mark Kotila and Jeffrey Bender, who are prosecuting the case.
Tuesday, June 4, 2013
ACCOUNTANT SENTENCED FOR ROLES IN TWO FRAUD SCHEMES
FROM: U.S. DEPARTMENT OF JUSTICE
Thursday, May 30, 2013
Florida Accountant Sentenced to Federal Prison for Two Fraud Schemes
Joseph Rizzuti, of Stuart, Fla., was sentenced to 80 months in federal prison for conspiracy to commit wire fraud and for corruptly endeavoring to obstruct the Internal Revenue Service (IRS), the Justice Department and the IRS announced today.
According to court documents, Rizzuti, an accountant and the owner of Beacon Accounting Services in Palm City, Fla., interfered with the IRS’s ability to collect taxes owed by two clients by stealing payments from those clients intended for the IRS and making misrepresentations to the clients, as well as the IRS, to conceal his scheme. Rizzuti also admitted to engaging in a criminal conspiracy to commit wire fraud by making material misrepresentations to individuals throughout the United States who believed the money they were investing with Rizzuti and his co-conspirators was funding Nigerian-related oil and Bahamian construction projects, but instead Rizzuti and his co-conspirators used the investors’ money for their own personal expenses. In total, Rizzuti and his co-conspirators stole approximately $3 million.
In addition to prison time, U.S. District Judge Donald L. Graham sentenced Rizzuti to serve three years of supervised release and to pay $298,000 in restitution to victims of his schemes to the IRS. Additional penalties will be assessed in the next 90 days.
This case was investigated by special agents of IRS - Criminal Investigation and the Treasury Inspector General for Tax Administration. Trial Attorneys Justin Gelfand and Rebecca Perlmutter of the Justice Department’s Tax Division prosecuted the case.
Thursday, May 30, 2013
Florida Accountant Sentenced to Federal Prison for Two Fraud Schemes
Joseph Rizzuti, of Stuart, Fla., was sentenced to 80 months in federal prison for conspiracy to commit wire fraud and for corruptly endeavoring to obstruct the Internal Revenue Service (IRS), the Justice Department and the IRS announced today.
According to court documents, Rizzuti, an accountant and the owner of Beacon Accounting Services in Palm City, Fla., interfered with the IRS’s ability to collect taxes owed by two clients by stealing payments from those clients intended for the IRS and making misrepresentations to the clients, as well as the IRS, to conceal his scheme. Rizzuti also admitted to engaging in a criminal conspiracy to commit wire fraud by making material misrepresentations to individuals throughout the United States who believed the money they were investing with Rizzuti and his co-conspirators was funding Nigerian-related oil and Bahamian construction projects, but instead Rizzuti and his co-conspirators used the investors’ money for their own personal expenses. In total, Rizzuti and his co-conspirators stole approximately $3 million.
In addition to prison time, U.S. District Judge Donald L. Graham sentenced Rizzuti to serve three years of supervised release and to pay $298,000 in restitution to victims of his schemes to the IRS. Additional penalties will be assessed in the next 90 days.
This case was investigated by special agents of IRS - Criminal Investigation and the Treasury Inspector General for Tax Administration. Trial Attorneys Justin Gelfand and Rebecca Perlmutter of the Justice Department’s Tax Division prosecuted the case.
Wednesday, May 15, 2013
FORMER NEVADA CONSTRUCTION COMPANY OWNER INDICTED FOR INCOME TAX EVASION
FROM: U.S. DEPARTMENT OF JUSTICE
Tuesday, May 14, 2013
Former Construction Company Owner Indicted in Nevada for Income Tax Evasion
A federal grand jury in Nevada today returned an indictment against a former construction company owner for evading federal income and employment taxes, announced Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division, Internal Revenue Service-Criminal Investigation (IRS-CI) Chief Richard Weber, FBI Acting Special Agent in Charge William C. Woerner of the Las Vegas Field Office, and Sheriff Doug Gillespie of the Las Vegas Metropolitan Police Department.
Leon Benzer, 46, of Las Vegas, was charged in U.S. District Court in the District of Nevada with two counts of tax evasion.
In January 2013, Benzer was indicted in a related case on charges of wire fraud and conspiracy to commit wire and mail fraud. According to court documents, from approximately August 2003 through February 2009, Benzer orchestrated a scheme to direct construction defect litigation and repairs at condominium complexes to a conspiring law firm and Benzer’s construction company, Silver Lining Construction (SLC). As a result of this scheme, the indictment alleges that SLC was awarded a contract worth over $7 million for work at the Vistana Homeowner’s Association (Vistana HOA) in Las Vegas. The case is pending.
According to the indictment returned today, in August 2006 Benzer filed five years’ worth of personal tax forms and business tax returns without any payments accompanying those returns. As of April 2007, Benzer had allegedly failed to pay his personal tax liability of approximately $459,000 and SLC’s employment tax liability of approximately $687,000 and unemployment tax liability of approximately $18,000. In May 2007, the IRS issued a notice of intent to file a levy; Benzer subsequently appealed this process and indicated that he wanted to enter into an "offer-in-compromise" with the IRS to pay a portion of what was owed in full satisfaction of all his tax liabilities. According to the indictment, during this offer-in-compromise process, the IRS requested detailed financial information from Benzer.
Between March 2005 and January 2008, the indictment alleges that Benzer and SLC received over $7 million from the Vistana HOA contract, including a wire transfer of over $1 million on Sept. 21, 2007, to a personal US Bank account that Benzer opened in August 2007. The indictment alleges that when Benzer filed certain IRS forms related to the offer-in-compromise process on Sept. 25, 2007, he failed to disclose this personal U.S. Bank account or the assets contained in it.
The maximum prison sentence for each count of tax evasion is five years in prison and a maximum fine of $100,000.
The charges and allegations against the indicted defendant are merely accusations, and the defendant is considered innocent unless and until proven guilty.
The case is being prosecuted by Senior Deputy Chief Kathleen McGovern, Deputy Chief Charles La Bella and Trial Attorney Thomas B.W. Hall of the Criminal Division’s Fraud Section. The case is being investigated by IRS-CI, the FBI and the Las Vegas Metropolitan Police Department, Criminal Intelligence Section.
Today’s charges were brought in connection with the President’s Financial Fraud Enforcement Task Force. The task force was established to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. With more than 20 federal agencies, 94 U.S. attorneys’ offices and state and local partners, it’s the broadest coalition of law enforcement, investigatory and regulatory agencies ever assembled to combat fraud. Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state and local authorities; addressing discrimination in the lending and financial markets and conducting outreach to the public, victims, financial institutions and other organizations. Over the past three fiscal years, the Justice Department has filed nearly 10,000 financial fraud cases against nearly 15,000 defendants including more than 2,900 mortgage fraud defendants.
Tuesday, May 14, 2013
Former Construction Company Owner Indicted in Nevada for Income Tax Evasion
A federal grand jury in Nevada today returned an indictment against a former construction company owner for evading federal income and employment taxes, announced Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division, Internal Revenue Service-Criminal Investigation (IRS-CI) Chief Richard Weber, FBI Acting Special Agent in Charge William C. Woerner of the Las Vegas Field Office, and Sheriff Doug Gillespie of the Las Vegas Metropolitan Police Department.
Leon Benzer, 46, of Las Vegas, was charged in U.S. District Court in the District of Nevada with two counts of tax evasion.
In January 2013, Benzer was indicted in a related case on charges of wire fraud and conspiracy to commit wire and mail fraud. According to court documents, from approximately August 2003 through February 2009, Benzer orchestrated a scheme to direct construction defect litigation and repairs at condominium complexes to a conspiring law firm and Benzer’s construction company, Silver Lining Construction (SLC). As a result of this scheme, the indictment alleges that SLC was awarded a contract worth over $7 million for work at the Vistana Homeowner’s Association (Vistana HOA) in Las Vegas. The case is pending.
According to the indictment returned today, in August 2006 Benzer filed five years’ worth of personal tax forms and business tax returns without any payments accompanying those returns. As of April 2007, Benzer had allegedly failed to pay his personal tax liability of approximately $459,000 and SLC’s employment tax liability of approximately $687,000 and unemployment tax liability of approximately $18,000. In May 2007, the IRS issued a notice of intent to file a levy; Benzer subsequently appealed this process and indicated that he wanted to enter into an "offer-in-compromise" with the IRS to pay a portion of what was owed in full satisfaction of all his tax liabilities. According to the indictment, during this offer-in-compromise process, the IRS requested detailed financial information from Benzer.
Between March 2005 and January 2008, the indictment alleges that Benzer and SLC received over $7 million from the Vistana HOA contract, including a wire transfer of over $1 million on Sept. 21, 2007, to a personal US Bank account that Benzer opened in August 2007. The indictment alleges that when Benzer filed certain IRS forms related to the offer-in-compromise process on Sept. 25, 2007, he failed to disclose this personal U.S. Bank account or the assets contained in it.
The maximum prison sentence for each count of tax evasion is five years in prison and a maximum fine of $100,000.
The charges and allegations against the indicted defendant are merely accusations, and the defendant is considered innocent unless and until proven guilty.
The case is being prosecuted by Senior Deputy Chief Kathleen McGovern, Deputy Chief Charles La Bella and Trial Attorney Thomas B.W. Hall of the Criminal Division’s Fraud Section. The case is being investigated by IRS-CI, the FBI and the Las Vegas Metropolitan Police Department, Criminal Intelligence Section.
Today’s charges were brought in connection with the President’s Financial Fraud Enforcement Task Force. The task force was established to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. With more than 20 federal agencies, 94 U.S. attorneys’ offices and state and local partners, it’s the broadest coalition of law enforcement, investigatory and regulatory agencies ever assembled to combat fraud. Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state and local authorities; addressing discrimination in the lending and financial markets and conducting outreach to the public, victims, financial institutions and other organizations. Over the past three fiscal years, the Justice Department has filed nearly 10,000 financial fraud cases against nearly 15,000 defendants including more than 2,900 mortgage fraud defendants.
Thursday, April 11, 2013
57 CHARGED FOR ROLES IN OPERATING ILLEGAL ONLINE SPORTS GAMING BUSINESS
FROM: U.S. DEPARTMENT OF JUSTICE
Wednesday, April 10, 2013
Fifty-Seven Charged with Operating Illegal Online Sports Gaming Business
Indictment Seeks Forfeiture Money Judgment of $1 Billion
Thirty-four individuals and 23 entities have been indicted and accused of operating an illegal sports bookmaking business that solicited more than $1 billion in illegal bets, announced Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division and U.S. Attorney for the Western District of Oklahoma Sanford C. Coats.
"These defendants allegedly participated in an illegal sports gambling business, lining their pockets with profits from over a billion dollars in illegal gambling proceeds," said Acting Assistant Attorney General Raman. "Today’s charges demonstrate that we are as determined as ever to hold accountable those involved in facilitating illegal online gambling by U.S. citizens, regardless of where the business operates, or where the defendants reside."
"The defendants cannot hide the allegedly illegal sports gambling operation behind corporate veils or state and international boundaries," said U.S. Attorney Sanford C. Coats. "I thank the IRS and FBI for their diligent work over several years to investigate this billion dollar international gambling enterprise."
According to the indictment, Bartice Alan King, aka "Luke" and "Cool," 42, of Spring, Texas, conspired with others to operate internet and telephone gambling services first from San Jose, Costa Rica and then from Panama City, which took wagers almost exclusively from gamblers in the United States seeking to place bets on sports. Known since 2003 as Legendz Sports, the enterprise allegedly used bookies located in the United States to illegally solicit and accept sports wagers as well as settle gambling debts.
The 34 defendants are alleged to have been employees, members and associates of the ongoing Legendz Sports enterprise. The 23 corporate defendants are alleged to have been used by Legendz Sports to facilitate gambling operations, operate as payment processors, own websites and domain names used in the enterprise, launder gambling funds and make payouts to gamblers.
The indictment alleges that Legendz Sports sought to maximize the number of gamblers who opened wagering accounts by offering both "post-up" betting, which requires a bettor to first set up and fund an account before placing bets and "credit" betting, which allowed the bettor to place a wager without depositing money in advance through face-to-face meetings with bookies or agents.
The indictment alleges that Legendz Sports solicited millions of illegal bets totaling over $1 billion.
"These defendants allegedly participated in an illegal sports gambling business, lining their pockets with profits from over a billion dollars in illegal gambling proceeds," said Acting Assistant Attorney General Raman. "Today’s charges demonstrate that we are as determined as ever to hold accountable those involved in facilitating illegal online gambling by U.S. citizens, regardless of where the business operates, or where the defendants reside."
"The defendants cannot hide the allegedly illegal sports gambling operation behind corporate veils or state and international boundaries," said U.S. Attorney Sanford C. Coats. "I thank the IRS and FBI for their diligent work over several years to investigate this billion dollar international gambling enterprise."
"Individuals cannot skirt the laws of the United States by setting up illegal internet gambling operations in a foreign country, while living in the United States and enjoying all the benefits of U.S. citizens," said Jim Finch, Special Agent in Charge of the FBI Oklahoma City Field Office. "The FBI, along with our law enforcement partners, will continue to be diligent in investigating such violations of federal law."
"Combining the financial investigative expertise of the IRS with the skills and resources of the FBI makes a formidable team for combating major, greed-driven crimes," said Andrea D. Whelan, Internal Revenue Service Special Agent in Charge. "This massive indictment is the result of our highly effective law enforcement partnership."
If convicted, the defendants face up to 20 years in prison for racketeering, up to 20 years in prison for conspiring to commit money laundering, up to 10 years in prison for money laundering and up to five years in prison for operating an illegal gambling business.
In addition, the indictment seeks a forfeiture money judgment of at least $1 billion traceable to numerous specific assets that include real estate, bank accounts, brokerage and investment accounts, certificates of deposit, individual retirement accounts, domain names, a Sabreliner aircraft, a gas lease and vehicles.
The public is reminded that the indictment is merely an accusation and that the defendants are each presumed innocent unless and until proven guilty.
This case is the result of an investigation by the FBI and Internal Revenue Service-Criminal Investigation, with the assistance of U.S. Immigration and Customs Enforcement’s Homeland Security Investigations and the U.S. Marshals Service. The case is being prosecuted by Assistant U.S. Attorneys Susan Dickerson Cox and William Lee Borden Jr., from the Western District of Oklahoma and Trial Attorney John S. Han with the Department of Justice Criminal Division Organized Crime and Gang Section.
Wednesday, April 10, 2013
Fifty-Seven Charged with Operating Illegal Online Sports Gaming Business
Indictment Seeks Forfeiture Money Judgment of $1 Billion
Thirty-four individuals and 23 entities have been indicted and accused of operating an illegal sports bookmaking business that solicited more than $1 billion in illegal bets, announced Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division and U.S. Attorney for the Western District of Oklahoma Sanford C. Coats.
"These defendants allegedly participated in an illegal sports gambling business, lining their pockets with profits from over a billion dollars in illegal gambling proceeds," said Acting Assistant Attorney General Raman. "Today’s charges demonstrate that we are as determined as ever to hold accountable those involved in facilitating illegal online gambling by U.S. citizens, regardless of where the business operates, or where the defendants reside."
"The defendants cannot hide the allegedly illegal sports gambling operation behind corporate veils or state and international boundaries," said U.S. Attorney Sanford C. Coats. "I thank the IRS and FBI for their diligent work over several years to investigate this billion dollar international gambling enterprise."
According to the indictment, Bartice Alan King, aka "Luke" and "Cool," 42, of Spring, Texas, conspired with others to operate internet and telephone gambling services first from San Jose, Costa Rica and then from Panama City, which took wagers almost exclusively from gamblers in the United States seeking to place bets on sports. Known since 2003 as Legendz Sports, the enterprise allegedly used bookies located in the United States to illegally solicit and accept sports wagers as well as settle gambling debts.
The 34 defendants are alleged to have been employees, members and associates of the ongoing Legendz Sports enterprise. The 23 corporate defendants are alleged to have been used by Legendz Sports to facilitate gambling operations, operate as payment processors, own websites and domain names used in the enterprise, launder gambling funds and make payouts to gamblers.
The indictment alleges that Legendz Sports sought to maximize the number of gamblers who opened wagering accounts by offering both "post-up" betting, which requires a bettor to first set up and fund an account before placing bets and "credit" betting, which allowed the bettor to place a wager without depositing money in advance through face-to-face meetings with bookies or agents.
The indictment alleges that Legendz Sports solicited millions of illegal bets totaling over $1 billion.
"These defendants allegedly participated in an illegal sports gambling business, lining their pockets with profits from over a billion dollars in illegal gambling proceeds," said Acting Assistant Attorney General Raman. "Today’s charges demonstrate that we are as determined as ever to hold accountable those involved in facilitating illegal online gambling by U.S. citizens, regardless of where the business operates, or where the defendants reside."
"The defendants cannot hide the allegedly illegal sports gambling operation behind corporate veils or state and international boundaries," said U.S. Attorney Sanford C. Coats. "I thank the IRS and FBI for their diligent work over several years to investigate this billion dollar international gambling enterprise."
"Individuals cannot skirt the laws of the United States by setting up illegal internet gambling operations in a foreign country, while living in the United States and enjoying all the benefits of U.S. citizens," said Jim Finch, Special Agent in Charge of the FBI Oklahoma City Field Office. "The FBI, along with our law enforcement partners, will continue to be diligent in investigating such violations of federal law."
"Combining the financial investigative expertise of the IRS with the skills and resources of the FBI makes a formidable team for combating major, greed-driven crimes," said Andrea D. Whelan, Internal Revenue Service Special Agent in Charge. "This massive indictment is the result of our highly effective law enforcement partnership."
If convicted, the defendants face up to 20 years in prison for racketeering, up to 20 years in prison for conspiring to commit money laundering, up to 10 years in prison for money laundering and up to five years in prison for operating an illegal gambling business.
In addition, the indictment seeks a forfeiture money judgment of at least $1 billion traceable to numerous specific assets that include real estate, bank accounts, brokerage and investment accounts, certificates of deposit, individual retirement accounts, domain names, a Sabreliner aircraft, a gas lease and vehicles.
The public is reminded that the indictment is merely an accusation and that the defendants are each presumed innocent unless and until proven guilty.
This case is the result of an investigation by the FBI and Internal Revenue Service-Criminal Investigation, with the assistance of U.S. Immigration and Customs Enforcement’s Homeland Security Investigations and the U.S. Marshals Service. The case is being prosecuted by Assistant U.S. Attorneys Susan Dickerson Cox and William Lee Borden Jr., from the Western District of Oklahoma and Trial Attorney John S. Han with the Department of Justice Criminal Division Organized Crime and Gang Section.
Monday, April 1, 2013
BUILDER RECEIVES 27 MONTHS IN PRISON FOR INCOME TAX EVASION
FROM: U.S. DEPARTMENT OF JUSTICE
Thursday, March 28, 2013
Idaho Home Builder Sentenced for Tax Evasion
Justin D. Schoenauer, 41, also known as Corey J. Schoenauer, a resident of Twin Falls County, Idaho, was sentenced late yesterday in U.S. District Court for the District of Idaho to 27 months in prison for income tax evasion. Schoenauer was also sentenced to three years of supervised release and ordered to pay $429,436 in restitution. Schoenauer was indicted in February 2012 and pleaded guilty to the offense on Oct. 30, 2012.
According to court documents, Schoenauer was a general contractor who, for the past 10 years, operated a sole proprietorship called Patagonia Construction, a business engaged primarily in building homes. Schoenauer admitted that during tax years 2005 through 2008, he concealed Patagonia’s business receipts. Schoenauer further admitted that he directed some customers to make checks payable to him personally, rather than to Patagonia, then ensured that those checks were not deposited into Patagonia’s main bank account. When having tax returns prepared, Schoenauer falsely told his return preparer that all of his business receipts were deposited into the main Patagonia bank account, thereby concealing Patagonia’s gross receipts and causing the preparation and filing of false tax returns. Schoenauer paid the Internal Revenue Service (IRS) $35,000 at sentencing, which will be applied to his outstanding tax liability.
"When a business owner cheats on his taxes, he gains an unfair advantage over honest businesses and cheats all honest taxpayers," said Assistant Attorney General for the Justice Department’s Tax Division Kathryn Keneally. "This sentence shows that we will hold such criminals accountable."
"Paying income tax is a solemn obligation of citizenship," said U.S. Attorney for the District of Idaho Wendy J. Olson. "Integrity in business transactions required to be reported to the federal government is essential to the proper functioning of our economy. Those who hide income, evade taxes and launder profits undermine our democracy. This sentence sends a strong message that those who seek to avoid their tax responsibilities will be properly punished."
"The license to run a business is not a license to evade paying taxes," said Richard Weber, Chief, IRS Criminal Investigation. "Mr. Schoenauer’s misconduct, concealing business receipts and having checks made payable to himself, is offensive to all honest business owners. IRS Criminal Investigation continues to protect the U.S. tax system by investigating and bringing to justice individuals who violate tax laws."
Assistant Attorney General Keneally and U.S. Attorney Olson commended the efforts of special agents from IRS-Criminal Investigation, who investigated the case, and Tax Division Trial Attorneys Michael J. Romano and Mark L. Williams, who prosecuted the case.
Thursday, March 28, 2013
Idaho Home Builder Sentenced for Tax Evasion
Justin D. Schoenauer, 41, also known as Corey J. Schoenauer, a resident of Twin Falls County, Idaho, was sentenced late yesterday in U.S. District Court for the District of Idaho to 27 months in prison for income tax evasion. Schoenauer was also sentenced to three years of supervised release and ordered to pay $429,436 in restitution. Schoenauer was indicted in February 2012 and pleaded guilty to the offense on Oct. 30, 2012.
According to court documents, Schoenauer was a general contractor who, for the past 10 years, operated a sole proprietorship called Patagonia Construction, a business engaged primarily in building homes. Schoenauer admitted that during tax years 2005 through 2008, he concealed Patagonia’s business receipts. Schoenauer further admitted that he directed some customers to make checks payable to him personally, rather than to Patagonia, then ensured that those checks were not deposited into Patagonia’s main bank account. When having tax returns prepared, Schoenauer falsely told his return preparer that all of his business receipts were deposited into the main Patagonia bank account, thereby concealing Patagonia’s gross receipts and causing the preparation and filing of false tax returns. Schoenauer paid the Internal Revenue Service (IRS) $35,000 at sentencing, which will be applied to his outstanding tax liability.
"When a business owner cheats on his taxes, he gains an unfair advantage over honest businesses and cheats all honest taxpayers," said Assistant Attorney General for the Justice Department’s Tax Division Kathryn Keneally. "This sentence shows that we will hold such criminals accountable."
"Paying income tax is a solemn obligation of citizenship," said U.S. Attorney for the District of Idaho Wendy J. Olson. "Integrity in business transactions required to be reported to the federal government is essential to the proper functioning of our economy. Those who hide income, evade taxes and launder profits undermine our democracy. This sentence sends a strong message that those who seek to avoid their tax responsibilities will be properly punished."
"The license to run a business is not a license to evade paying taxes," said Richard Weber, Chief, IRS Criminal Investigation. "Mr. Schoenauer’s misconduct, concealing business receipts and having checks made payable to himself, is offensive to all honest business owners. IRS Criminal Investigation continues to protect the U.S. tax system by investigating and bringing to justice individuals who violate tax laws."
Assistant Attorney General Keneally and U.S. Attorney Olson commended the efforts of special agents from IRS-Criminal Investigation, who investigated the case, and Tax Division Trial Attorneys Michael J. Romano and Mark L. Williams, who prosecuted the case.
Friday, March 29, 2013
JUSTICE ANNOUNCES NATIONWIDE SHUTDOWN OF FRAUDULENT TAX RETURN PREPARERS
FROM: U.S. DEPARTMENT OF JUSTICE
Wednesday, March 27, 2013
Justice Department’s Civil Injunction Program Shuts Down Fraudulent Tax Return Preparers and Promoters Nationwide
Federal Courts Enjoined More than 30 Tax Return Preparers and Tax Scheme Promoters in Past Six Months
The Justice Department today announced recent results of its civil injunction efforts to combat unscrupulous tax return preparers and tax fraud promoters. According to Internal Revenue Service (IRS) estimates, 60 percent of taxpayers use tax professionals to prepare and file their tax returns. Paid tax return preparers now prepare more than 80 million individual tax returns annually. For more than a decade, the department’s Tax Division, working with the Internal Revenue Service, has pursued a civil injunction program to stop fraudulent return preparers and promoters from violating federal tax laws and consumer protection laws. With the current tax-filing season underway, the Tax Division in the last six months has obtained permanent injunctions against more than 30 preparers and promoters doing business all over the United States.
Since Oct. 1, 2012, the Tax Division has obtained civil injunctions against both large-scale return preparation franchises and smaller, independent return preparers and promoters across the country. For example, on Oct. 22, 2012, a U.S. District Court in Dayton, Ohio, entered preliminary injunctions against ITS Financial LLC and its CEO, Fesum Ogbazion. ITS Financial is the parent company that owns the Dayton-based Intstant Tax Service tax-preparation franchise operation. Instant Tax Service claims to be the fourth-largest tax-preparation firm in the nation. The preliminary injunction remains in force pending trial on the government’s request for a permanent injunction, currently scheduled for May 2013. During December, January and February, federal district courts also permanently enjoined current and former Instant Tax Service franchisees in Las Vegas, Kansas City and Los Angeles , and entered a preliminary injunction against an Instant Tax Service franchisee in Indianapolis. Similarly, on March 1, 2013, a U.S. District Court in Tennessee permanently shut down a licensee of Memphis-based Mo’ Money Taxes LLC and MoneyCo USA LLC. Federal courts have also shut down return preparers in Mississippi, Florida, Louisiana and South Carolina, and promoters of alleged tax-fraud schemes in Michigan, New York and Kansas.
As alleged in the Tax Division’s civil injunction complaints, fraudulent return preparers commonly falsify information to take advantage of refundable credits available under federal tax law, often improperly manipulating customers’ income, expenses and dependents to hit the so-called "sweet spot" to maximize the refundable credit claimed. They also take advantage of customers by selling deceptive loan products with exhorbitant fees. As identified in the government’s complaints, some of the fraudulent schemes and practices that have been stopped through injunction orders recently include:
· Preparing phony tax-return forms with fabricated businesses and income;
· Claiming false education and homebuyer credits;
· Claiming false and inflated deductions;
· Claiming false filing status;
· Claiming false dependents;
· Selling deceptive loan products;
· Filing tax returns without customer consent or authorization;
· Preparing bogus W-2 forms, based on information from employee paystubs;
· Falsifying information on returns to claim inflated earned income tax credits; and
· Filing fraudulent tax returns using stolen taxpayer identities to obtain improper tax refunds.
Some preparers try to conceal their fraud by not signing the returns they prepare and by using stolen or fake social security numbers to misidentify the paid preparer.
"It is important that we make clear, especially now when honest taxpayers are filing their returns, that we will pursue those who would abuse our nation’s tax laws," said Assistant Attorney General for the Tax Division Kathryn Keneally. "Fraudulent tax return preparers and tax scheme promoters too often seek to take advantage of their customers as well as to undermine our tax system. I commend the Tax Division’s attorneys and our colleagues at the Internal Revenue Service for their steady diligence and tireless work in uncovering and shutting down these schemes and scams."
Wednesday, March 27, 2013
Justice Department’s Civil Injunction Program Shuts Down Fraudulent Tax Return Preparers and Promoters Nationwide
Federal Courts Enjoined More than 30 Tax Return Preparers and Tax Scheme Promoters in Past Six Months
The Justice Department today announced recent results of its civil injunction efforts to combat unscrupulous tax return preparers and tax fraud promoters. According to Internal Revenue Service (IRS) estimates, 60 percent of taxpayers use tax professionals to prepare and file their tax returns. Paid tax return preparers now prepare more than 80 million individual tax returns annually. For more than a decade, the department’s Tax Division, working with the Internal Revenue Service, has pursued a civil injunction program to stop fraudulent return preparers and promoters from violating federal tax laws and consumer protection laws. With the current tax-filing season underway, the Tax Division in the last six months has obtained permanent injunctions against more than 30 preparers and promoters doing business all over the United States.
Since Oct. 1, 2012, the Tax Division has obtained civil injunctions against both large-scale return preparation franchises and smaller, independent return preparers and promoters across the country. For example, on Oct. 22, 2012, a U.S. District Court in Dayton, Ohio, entered preliminary injunctions against ITS Financial LLC and its CEO, Fesum Ogbazion. ITS Financial is the parent company that owns the Dayton-based Intstant Tax Service tax-preparation franchise operation. Instant Tax Service claims to be the fourth-largest tax-preparation firm in the nation. The preliminary injunction remains in force pending trial on the government’s request for a permanent injunction, currently scheduled for May 2013. During December, January and February, federal district courts also permanently enjoined current and former Instant Tax Service franchisees in Las Vegas, Kansas City and Los Angeles , and entered a preliminary injunction against an Instant Tax Service franchisee in Indianapolis. Similarly, on March 1, 2013, a U.S. District Court in Tennessee permanently shut down a licensee of Memphis-based Mo’ Money Taxes LLC and MoneyCo USA LLC. Federal courts have also shut down return preparers in Mississippi, Florida, Louisiana and South Carolina, and promoters of alleged tax-fraud schemes in Michigan, New York and Kansas.
As alleged in the Tax Division’s civil injunction complaints, fraudulent return preparers commonly falsify information to take advantage of refundable credits available under federal tax law, often improperly manipulating customers’ income, expenses and dependents to hit the so-called "sweet spot" to maximize the refundable credit claimed. They also take advantage of customers by selling deceptive loan products with exhorbitant fees. As identified in the government’s complaints, some of the fraudulent schemes and practices that have been stopped through injunction orders recently include:
· Preparing phony tax-return forms with fabricated businesses and income;
· Claiming false education and homebuyer credits;
· Claiming false and inflated deductions;
· Claiming false filing status;
· Claiming false dependents;
· Selling deceptive loan products;
· Filing tax returns without customer consent or authorization;
· Preparing bogus W-2 forms, based on information from employee paystubs;
· Falsifying information on returns to claim inflated earned income tax credits; and
· Filing fraudulent tax returns using stolen taxpayer identities to obtain improper tax refunds.
Some preparers try to conceal their fraud by not signing the returns they prepare and by using stolen or fake social security numbers to misidentify the paid preparer.
"It is important that we make clear, especially now when honest taxpayers are filing their returns, that we will pursue those who would abuse our nation’s tax laws," said Assistant Attorney General for the Tax Division Kathryn Keneally. "Fraudulent tax return preparers and tax scheme promoters too often seek to take advantage of their customers as well as to undermine our tax system. I commend the Tax Division’s attorneys and our colleagues at the Internal Revenue Service for their steady diligence and tireless work in uncovering and shutting down these schemes and scams."
Wednesday, March 27, 2013
PRESIDENT OF SOVEREIGN CITIZEN NATION FACES UP TO 164 YEARS IN PRISON FOR TAX CRIMES
FROM: U.S. DEPARTMENT OF JUSTICEMonday, March 25, 2013
Self-Proclaimed "President" of Sovereign Citizen Nation Convicted in Alabama of Federal Tax Crimes
A federal jury in Montgomery, Ala., found James Timothy Turner, also known as Tim Turner, guilty late Friday of conspiracy to defraud the United States, attempting to pay taxes with fictitious financial instruments, attempting to obstruct and impede the Internal Revenue Service (IRS), failing to file a 2009 federal income tax return and falsely testifying under oath in a bankruptcy proceeding, the Justice Department, the IRS and the FBI announced today.
Based on the evidence introduced at trial and court filings, Turner, the self-proclaimed "president" of the so-called sovereign citizen group "Republic for the United States of America" (RuSA), traveled the country in 2008 and 2009 conducting seminars teaching attendees how to defraud the IRS by preparing and submitting fictitious "bonds" to the United States government in payment of federal taxes. Although the evidence at trial revealed the bonds are fictitious and worthless, witnesses testified that Turner used special paper, financial terminology and elaborate borders in an effort to make them look "real" and more likely to succeed in defrauding the recipient. Turner was convicted of sending a $300 million "bond" in his own name and of aiding and abetting others in sending fifteen other "bonds" to the Treasury Department to pay taxes and other debts.
The evidence at trial also established that Turner taught people how to file retaliatory liens against government officials who interfered with the processing of fictitious "bonds." Turner filed a purported $17.6 billion maritime lien in Montgomery County, Ala., Probate Court against another individual. Finally, evidence presented at trial demonstrated that the FBI began an investigation after Turner and three other individuals sent demands to all 50 governors in the United States in March 2010 ordering each governor to resign within three days or be "removed."
"The jury’s verdict in this case sends a message that defrauding the government and others through the use of bogus financial documents will not be tolerated," said Assistant Attorney General for the Justice Department’s Tax Division Kathryn Keneally. "Disagreement with the law is no excuse for the real harm caused by these self-interested tax defiers."
"These sovereign citizen groups use these retaliatory tax liens and fraudulent tax schemes as weapons against the United States and its citizens," stated Acting U.S. Attorney Sandra J. Stewart. "It is only the hard work of law enforcement that can stop these criminals from using these financial weapons. I would like to thank the law enforcement officers who worked vigilantly on this case to bring this criminal to justice."
"Those who create elaborate schemes and fraudulent tax elimination tactics run a high risk of prosecution," stated Richard Weber, Chief, IRS Criminal Investigation. "Mr. Turner’s attempts to thwart the IRS, as well as the assistance and training he provided to others, was not tax planning, it was criminal activity. IRS-Criminal Investigation is committed to vigorously pursuing those who promote illegal financial transactions designed to evade the payment of taxes. For those who would consider similar behavior, let this case be a strong warning that there is no secret formula for evading the payment of taxes and no one is above the law."
Turner remains in federal custody pending sentencing. Turner faces a potential maximum prison term of 164 years, a maximum potential fine of $2,350,000 and mandatory restitution.
"The prosecution of individuals who intentionally impede the IRS by submitting fictitious and frivolous documents, in an attempt to avoid paying federal taxes, is a vital element in maintaining public confidence in our tax system," stated Veronica Hyman-Pillot, Special Agent in Charge of IRS Criminal Investigation. "Hopefully the verdict will send a message to other individuals like Turner, that this conduct will not be tolerated."
"This joint investigation exemplifies the government’s commitment to investigate and prosecute those, who through tax schemes, attempt to cheat and steal from the government," stated Stephen Richardson, Special Agent in Charge of the FBI, Mobile Division.
This case was investigated by special agents of the FBI and IRS-Criminal Investigation, and is being prosecuted by Tax Division Trial Attorney Justin Gelfand and Middle District of Alabama Assistant U.S. Attorney Gray Borden.
Sunday, January 13, 2013
FLORIDA WOMAN AGREES TO PPAY $21 MILLION PENALTY FOR NOT DISCLOSING SWISS BANK ACCOUNT INCOME
FROM: U.S. DEPARTMENT OF JUSTICE
Tuesday, January 8, 2013
South Florida Woman Pleads Guilty to Failing to Disclose Income from Swiss Bank Accounts and Agrees to $21 Million Penalty
Mary Estelle Curran of Palm Beach, Fla., pleaded guilty today in the U.S. District Court for the Southern District of Florida to filing false tax returns for tax years 2006 and 2007, the Justice Department and Internal Revenue Service, Criminal Investigation (IRS-CI) announced.
According to court documents, Curran, a U.S. citizen, maintained undeclared bank accounts at UBS AG in Switzerland and a bank in Liechtenstein, which she inherited from her husband in 2000. The accounts at UBS AG were held in the names of nominee foreign entities, including the Flognet Foundation and Norega Investment. The account earned income each year, which Curran failed to report on her 2001 through 2007 individual income tax returns.
According to the plea agreement, Curran’s conduct caused a tax loss to the government of approximately $667,716. The value of all undeclared foreign financial accounts owned or controlled by Curran exceeded $42 million in 2007. In order to resolve her civil liability for failure to report her foreign bank accounts, Curran has agreed to pay a civil penalty in the amount of 50 percent of the high balance of the accounts, which is $21,666,929.
"The Justice Department continues to pursue those who hide income and assets from the IRS through the use of nominee businesses and offshore bank accounts," said Assistant Attorney General Keneally. "U.S. taxpayers who fail to come forward in the voluntary disclosure program risk prosecution and substantial fines, as this case demonstrates."
"U.S. citizens who seek to avoid their tax obligations by hiding income in undeclared bank accounts abroad should by now be fully on notice that they will be held accountable for their actions, both civilly and criminally," said U.S. Attorney for the Southern District of Florida Wifredo A. Ferrer. "The U.S. Attorney’s Office is committed to helping the IRS enforce our nation’s tax laws."
"Offshore accounts can no longer be used to hide from the IRS and avoid paying the fair amount of tax," said Richard Weber, Chief, IRS Criminal Investigation. "IRS Criminal Investigation is aggressively pursuing tax cheats – both domestically and internationally. We owe it to every American taxpayer to use all lawful means to identify and prosecute both those who evade their taxes and those who assist them in evading their tax obligations."
Curran faces a potential maximum prison term of six years. A sentencing date has not been set.
Assistant Attorney General Keneally and U.S. Attorney Ferrer thanked Special Agents of IRS - CI, who investigated the case, and Tax Division Senior Litigation Counsel Mark F. Daly and Trial Attorney Michelle M. Petersen and Assistant U.S. Attorney Thomas P. Lanigan, who prosecuted the case.
Tuesday, January 8, 2013
WOMAN INDICTED FOR IDENTITY THEFT TO OBTAIN TAX REFUNDS
FROM: U.S. DEPARTMENT OF JUSTICEMonday, January 7, 2013
Georgia Woman Indicted for Stealing Identities to Obtain Tax Refunds
A federal grand jury in Montgomery, Ala., returned a superseding indictment charging Deatrice Smith Williams and Quentin Collick for their roles in a stolen identity refund fraud conspiracy, Assistant Attorney General Kathryn Keneally of the Justice Department’s Tax Division, U.S. Attorney for the Middle District of Alabama George L. Beck Jr. and the Internal Revenue Service (IRS) announced today. The 13 count indictment charges Williams and Collick with conspiracy to file false claims, theft of public funds, wire fraud and aggravated identity theft.
On Aug. 9, 2012, Quentin Collick was indicted for his role in the conspiracy. In November 2012, pursuant to a criminal complaint, Williams was arrested for her role in the conspiracy. The superseding indictment was unsealed today.
According to court documents, Williams worked for a debt collection company in Georgia. As part of her employment, Williams had access to names and social security numbers. She provided several names and Social Security numbers to her son-in-law, Quentin Collick. Collick, and his co-conspirators used those names to file false tax returns from the Middle District of Alabama. Collick and his co-conspirators, in turn, cashed several fraudulent federal refund checks.
An indictment merely alleges that crimes have been committed, and a defendant is presumed innocent until proven guilty beyond a reasonable doubt. If convicted, Collick and Williams each face maximum potential sentences of 10 years in prison for the conspiracy count, up to 20 years in prison for each wire fraud count, and a mandatory 2-year sentence for the aggravated identity theft counts. Collick also faces up to 10 years in prison for each theft of public funds count. They are also subject to fines and mandatory restitution if convicted.
The case was investigated by Special Agents of the IRS - Criminal Investigation. Tax Division Trial attorneys Jason H. Poole and Michael Boteler and Assistant U.S. Attorney Todd Brown are prosecuting the case.
Tuesday, November 27, 2012
MAN SENTENCED TO 54 MONTHS IN PRISON FOR TRAFFICKING IN IDENTITITES
FROM: U.S. DEPARTMENT OF JUSTICEMexican National Sentenced to 54 Months in Prison for Trafficking the Identities of Puerto Rican U.S. Citizens
WASHINGTON – A Mexican national was sentenced today to 54 months in prison for trafficking of identities of Puerto Rican U.S. citizens and corresponding identity documents, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division; U.S. Attorney Rosa E. Rodríguez-Vélez for the District of Puerto Rico; Director John Morton of U.S. Immigration and Customs Enforcement (ICE), which oversees Homeland Security Investigations (HSI); Chief Postal Inspector Guy J. Cottrell of the U.S. Postal Inspection Service (USPIS); Scott P. Bultrowicz, Director of the U.S. State Department’s Diplomatic Security Service (DSS); and Internal Revenue Service-Criminal Investigation (IRS-CI) Chief Richard Weber.
Jose Sergio Garcia-Ramirez, 37, formerly of Rockford, Ill., was sentenced by U.S. District Judge Gustavo A. Gelpí, in the District of Puerto Rico. Judge Gelpí also ordered that Garcia-Ramirez forfeit $35,900 in proceeds and ordered the removal of Garcia-Ramirez from the United States after the completion of his sentence.
On July 17, 2012, Garcia-Ramirez pleaded guilty to one count of conspiracy to commit identification fraud and one count of aggravated identity theft before U.S. Magistrate Judge Bruce J. McGiverin in the District of Puerto Rico.
Garcia-Ramirez was charged in a superseding indictment returned by a federal grand jury in Puerto Rico on Mar. 22, 2012. To date, a total of 53 individuals have been charged for their roles in the identity trafficking scheme, and 18 defendants have pleaded guilty.
Court documents allege that individuals located in the Savarona area of Caguas, Puerto Rico (Savarona suppliers), obtained Puerto Rican identities and corresponding identity documents. Other conspirators located in various cities throughout the United States (identity brokers) allegedly solicited customers and sold Social Security cards and corresponding Puerto Rico birth certificates for prices ranging from $700 to $2,500 per set. The superseding indictment alleges that identity brokers ordered the identity documents from Savarona suppliers, on behalf of the customers, by making coded telephone calls. The conspirators are charged with using text messages, money transfer services and express, priority or regular U.S. mail to complete their illicit transactions.
Court documents allege that some identity brokers assumed a Puerto Rican identity themselves and used that identity in connection with the trafficking operation. Their customers allegedly generally obtained the identity documents to assume the identity of Puerto Rican U.S. citizens and to obtain additional identification documents, such as legitimate state driver’s licenses. Some customers allegedly obtained the documents to commit financial fraud and attempted to obtain a U.S. passport.
According to court documents, various identity brokers were operating in Rockford, Ill.; DeKalb, Ill.; Aurora, Ill.; Seymour, Ind.; Columbus, Ind.; Indianapolis; Hartford, Conn.; Clewiston, Fla.; Lilburn, Ga.; Norcross, Ga.; Salisbury, Md.; Columbus, Ohio; Fairfield, Ohio; Dorchester, Mass.; Lawrence, Mass.; Salem, Mass.; Worcester, Mass.; Grand Rapids, Mich.; Nebraska City, Neb.; Elizabeth, N.J.; Burlington, N.C.; Hickory, N.C.; Hazelton, Pa.; Philadelphia; Houston; Abingdon, Va.; Albertville, Ala.; and Providence, R.I.
Garcia-Ramirez admitted that he was an identity broker in the conspiracy and operated in Illinois. Garcia-Ramirez is the fourth defendant to be sentenced in this case.
The charges are the result of Operation Island Express, an ongoing, nationally-coordinated investigation led by the ICE-HSI Chicago Office and USPIS, DSS and IRS-CI offices in Chicago, in coordination with the ICE-HSI San Juan Office. The Illinois Secretary of State Police; Elgin, Ill., Police Department; Seymour, Ind., Police Department; and Indiana State Police provided substantial assistance. The ICE-HSI Assistant Attaché office in the Dominican Republic and International Organized Crime Intelligence and Operations Center (IOC-2) as well as various ICE, USPIS, DSS and IRS-CI offices around the country provided invaluable assistance.
The case is being prosecuted by Trial Attorneys James S. Yoon, Hope S. Olds, Courtney B. Schaefer and Christina Giffin of the Justice Department Criminal Division’s Human Rights and Special Prosecutions Section, with the assistance of Acting Deputy Chief Jeannette Gunderson of the Criminal Division’s Asset Forfeiture and Money Laundering Section, and the support of the U.S. Attorney’s Office for the District of Puerto Rico. The U.S. Attorney’s Offices in the Northern District of Illinois, Southern District of Indiana, District of Connecticut, District of Massachusetts, District of Nebraska, Middle District of North Carolina, Southern District of Ohio and Western District of Virginia provided substantial assistance.
Potential victims and the public may obtain information about the case at: www.justice.gov/criminal/vns/caseup/beltrerj.html. Anyone who believes their identity may have been compromised in relation to this investigation may contact the ICE toll-free hotline at 1-866-DHS-2ICE (1-866-347-2423) and its online tip form at www.ice.gov/tipline. Anyone who may have information about particular crimes in this case should also report it to the ICE tip line or website.
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