BANKER ACCUSED OF HELPING U.S. TAXPAYERS TO HIDE OVERSEAS BANK ACCOUNTS BY USING FAKE NAMES

FROM:  U.S. JUSTICE DEPARTMENT 

Wednesday, April 30, 2014

California Banker Charged with Helping U.S. Taxpayers Conceal Secret Israeli Bank Accounts

Shokrollah Baravarian, of Beverly Hills, California, was charged today in the U.S. District Court for the Central District of California with conspiracy to defraud the United States, the Justice Department and Internal Revenue Service (IRS) announced.

According to the indictment, Baravarian, a former senior vice president at the Los Angeles branch of a bank headquartered in Tel Aviv, Israel, conspired to conceal the existence of undeclared accounts owned and controlled by U.S. customers in Israel.  The indictment alleges that these accounts were concealed from the IRS by opening them under pseudonyms, code names and the names of nominee entities set up in the British Virgin Islands and the island of Nevis.

“This charge results from an ongoing and extensive investigation into the use of undeclared bank accounts in Israel, and demonstrates the department’s determination to find and prosecute those who help U.S. taxpayers evade taxes through offshore accounts located anywhere in the world,” said Deputy Attorney General James M. Cole.

“IRS-Criminal Investigation and Tax Division prosecutors have been investigating the use of undeclared bank accounts globally, and charges have been brought against not only the U.S. taxpayers with undeclared Israeli bank accounts but also those who facilitate the hiding of assets and income abroad,” said Assistant Attorney General Kathryn Keneally for the Tax Division.  “Whether it be Israel, Switzerland, the Caribbean or elsewhere, the Justice Department is finding the hiding places and is committed to prosecuting tax cheats.”

“The defendant assisted others to hide the true ownership of offshore bank accounts through the use of code names and nominee entities,” said Chief of IRS-Criminal Investigation Richard Weber.  “Our special agents unraveled the complex financial transactions used to disguise the funds in the undeclared accounts.  Those who help others commit tax evasion risk prosecution and substantial monetary penalties.”

The indictment further alleges that Baravarian assisted U.S. customers in secretly accessing the funds in their undeclared accounts by obtaining back-to-back loans from the Los Angeles branch of the bank.  According to the indictment, a back-to-back loan was a loan that was secured by funds in an undeclared account in Israel and issued by the Los Angeles branch to a U.S. customer.  Baravarian is alleged to have helped conceal the fact that U.S. customers were using their own funds as collateral by purposely not keeping copies of loan-related documents in the files at the Los Angeles branch.  These documents included Israeli account information and pledge agreements used to secure the loans.  As detailed in the indictment, some U.S. customers obtained back-to-back loans from the Los Angeles branch by transferring funds to Israel from other foreign countries, including Switzerland and China.

The indictment further alleges that a banker in Israel would periodically travel to Los Angeles and meet with U.S. customers to discuss their account statements.  Prior to making these trips, the banker would redact the names of the U.S. customers reflected on the account statements.

Baravarian 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 and on a Report of Foreign Bank and Financial Reports filed with the U.S. Treasury.

If convicted, Baravarian faces a potential maximum prison term of five years and a maximum fine of $250,000.  The charge contained in the indictment is only an allegation. The defendant is presumed innocent and it is the government’s burden to prove guilt beyond a reasonable doubt.

The case was investigated by special agents of IRS-Criminal Investigation.  Senior Litigation Counsel John E. Sullivan and Assistant Chief Elizabeth C. Hadden of the Tax Division are prosecuting the case with the assistance of Assistant U.S. Attorney Sandra R. Brown, Chief of the Tax Division of the U.S. Attorney’s Office for the Central District of California.

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.