SWISS ASSET MANAGER PLEADS GUILTY IN CASE INVOLVING TAX EVASION

FROM:  U.S. JUSTICE DEPARTMENT
Tuesday, March 31, 2015

Swiss Asset Manager Pleads Guilty in Federal Court to Conspiring with U.S. Taxpayers to Evade Federal Income Taxes and File False Tax Returns
A Swiss citizen and former asset manager at a Swiss asset management firm pleaded guilty to conspiring with U.S. taxpayer-clients and others to help U.S. taxpayers hide millions of dollars in offshore accounts from the Internal Revenue Service (IRS), and to evade U.S. taxes on the income earned in those accounts, the Justice Department announced.

Peter Amrein, 53, a Swiss citizen, pleaded guilty before U.S. District Judge Sidney H. Stein of the Southern District of New York pursuant to a plea agreement to one count of conspiracy to defraud the IRS, to evade federal income taxes and to file false federal income tax returns.  Amrein faces a maximum sentence of five years in prison at his July 1 sentencing before Judge Stein.

“Peter Amrein’s guilty plea today is another example of individuals being held culpable, in addition to institutions, for their criminal violations of U.S. tax laws,” said U.S. Attorney Preet Bharara of the Southern District of New York.  “Regardless of the elaborate scheme you might employ, we will use all of our investigative powers to ensure that all citizens pay their fair share, and that those who assist them in evading our laws are also held responsible.”

According to the allegations in the superseding Information and the prior indictment, as well as statements made during the plea proceeding and other documents filed in federal court in Manhattan, New York:

Amrein worked as a client advisor at a Swiss bank (Swiss Bank No. 3) and, later, as an asset manager at a Swiss asset management firm (the Swiss Asset Management Firm).  In those roles, between 1998 and 2012, Amrein helped U.S. taxpayers evade taxes and hide millions of dollars in undeclared accounts at various Swiss banks, including Wegelin & Co., which was charged and pleaded guilty in the Southern District of New York for its conduct in conspiring with U.S. taxpayers to evade taxes.  Amrein, among other things, worked with an attorney based in Zurich, to establish sham foundations, which were organized under the laws of non-U.S. countries such as Liechtenstein, so that the undeclared assets of certain of Amrein’s U.S. taxpayer-clients could be maintained in the names of these foreign foundations rather than in the clients’ own names.  Amrein did so in order to help his clients conceal their ownership of these undeclared accounts from the IRS.

In 2008, it became publicly known that UBS AG (UBS) was being investigated by U.S. law enforcement for helping U.S. taxpayers maintain undeclared accounts in Switzerland.  Because of the investigation of UBS, one of the Swiss banks where Amrein had opened undeclared accounts for U.S. taxpayers (Swiss Bank No. 4) informed Amrein that it was going to close these undeclared accounts.  In order to assist his clients in continuing to maintain undeclared accounts, Amrein searched for other banks in Switzerland that, despite the public investigation of UBS, were still willing to open undeclared accounts for U.S. taxpayers.  Amrein found such a bank (Swiss Bank No. 1).  Thereafter, Amrein opened undeclared accounts for U.S. taxpayer-clients at Swiss Bank No. 1 in the name of sham foundations, and transferred the clients’ undeclared assets from Swiss Bank No. 4 to these accounts at Swiss Bank No. 1.  

For some of these clients, Amrein, with the assistance of others, helped send funds back to the United States and to other foreign jurisdictions in ways that were designed to ensure that U.S. authorities would not discover the existence of the clients’ undeclared accounts.  For instance, Amrein instructed a client advisor at Swiss Bank No. 1 (the Swiss Bank No. 1 Client Advisor) to empty one of the accounts by sending checks in amounts smaller than $9,900 to the beneficial owner of the account, i.e., the U.S. taxpayer.  On another occasion, Amrein instructed the Swiss Bank No. 1 Client Advisor to transfer the balance of one of the accounts, which was then valued at more than $2.4 million, to another account controlled by the U.S. taxpayer in Belize City, Belize.  Moreover, as late as 2011, Amrein continued to look for other Swiss banks that were still willing to open undeclared accounts for U.S. taxpayers.  For example, in June 2011, Amrein met with a client advisor at a Swiss bank (Swiss Bank No. 2), to discuss opening undeclared accounts for U.S. taxpayer-clients at Swiss Bank No. 2.        

Mr. Bharara praised the outstanding investigative work of the IRS-Criminal Investigations.  He also thanked the Department of Justice’s Tax Division for their significant assistance in the investigation.

CEO, MANAGING PARTNER OF WALL STREET BROKER-DEALER CHARGED IN CONSPIRACY TO BRIBE FOREIGN OFFICIALS

FROM:  U.S. JUSTICE DEPARTMENT 

Monday, April 14, 2014

CEO and Managing Partner of Wall Street Broker-Dealer Charged with Massive International Bribery Scheme

The chief executive officer and a managing partner of a New York-based U.S. broker-dealer were arrested today on felony charges arising from a conspiracy to pay bribes to a senior official in Venezuela’s state economic development bank.

Acting Assistant Attorney General David A. O’Neil of the Justice Department’s Criminal Division, U.S. Attorney Preet Bharara of the Southern District of New York and Assistant Director in Charge George Venizelos of the New York Office of the FBI made the announcement.

According to the indictment unsealed today, Benito Chinea and Joseph DeMeneses, who were the Chief Executive Officer and a managing partner, respectively, of a New York-based broker-dealer (Broker-Dealer), are accused of conspiring with others to pay and launder bribes to Maria de los Angeles Gonzalez de Hernandez, a senior official in Venezuela’s state-owned economic development bank, Banco de Desarollo Económico y Social de Venezuela (BANDES), in exchange for her directing BANDES’s financial trading business to the Broker-Dealer. DeMeneses was also charged with conspiring to obstruct an examination of the Broker-Dealer by the U.S. Securities and Exchange Commission (SEC) to conceal the true facts of the Broker-Dealer’s relationship with BANDES.

Chinea, 47, was arrested today in Manalapan, N.J., where he resides, and DeMeneses, 44, was arrested today in Fairfield, Conn., where he resides.  In a separate action, the SEC announced civil charges against Chinea, DeMeneses and others involved in the bribery scheme.

“ These senior Wall Street executives are accused of paying six-figure bribes to an official in Venezuela to secure foreign business for their firm,” said Acting Assistant Attorney General O’Neil.  “Today’s charges show once again that we will aggressively pursue individual executives, all the way up the corporate ladder, when they try to bribe their way ahead of the competition. ”

“These two defendants, senior executives at a U.S. brokerage firm, are the fifth and sixth people to be charged in an alleged conspiracy to corrupt the trading business of a state-run economic development bank of Venezuela,” said U.S. Attorney Bharara.   “They are alleged to have bribed a willing officer at the bank to steer its overseas trading business to the defendants’ brokerage firm, reaping millions for these defendants and their partners in crime.  This Office will not tolerate the kind of outright bribery and concealment that characterized this scheme.”

“As alleged in the indictment, Chinea and Demeneses bribed Gonzalez to secure bank Bandes's financial trading business,” said FBI ADIC Venizelos.   “Demeneses compounded the Broker-Dealer’s illegal activities by conspiring to obstruct an investigation by regulators.  The arrests today of Chinea and Demeneses should be a reminder to all those in the business community that engaging in bribery schemes to secure business and make a profit is illegal. Together with our law enforcement partners, the FBI will continue to investigate bribery and fraud at all levels.”

According to the allegations in the indictment unsealed today, as well as other documents previously filed in Manhattan federal court, Chinea and DeMeneses worked at the headquarters of the Broker-Dealer in New York City.   In 2008, the Broker-Dealer established a group called the Global Markets Group (GMG), which offered fixed income trading services for institutional clients in the purchase and sale of foreign sovereign debt.   One of the Broker-Dealer’s GMG clients was BANDES, which operated under the direction of the Venezuelan Ministry of Finance.   Gonzalez was an official at BANDES and oversaw the development bank’s overseas trading activity.   At her direction, BANDES conducted substantial trading through the Broker-Dealer.   Most of the trades executed by the Broker-Dealer on behalf of BANDES involved fixed income investments for which the Broker-Dealer charged the bank a commission.

As alleged in court documents, from late 2008 through 2012, Chinea and DeMeneses, together with three Miami-based Broker-Dealer employees, Ernesto Lujan, Tomas Alberto Clarke Bethancourt and Jose Alejandro Hurtado, participated in a bribery scheme in which Gonzalez directed trading business she controlled at BANDES to the Broker-Dealer, and in return, agents and employees of the Broker-Dealer split the revenue the Broker-Dealer generated from this trading business with Gonzalez.   During this time period, the Broker-Dealer generated over $60 million in commissions from trades with BANDES.   In order to conceal their conduct, Chinea, DeMeneses and their co-conspirators routed the payments to Gonzalez, frequently in six-figure amounts, through third-parties posing as “foreign finders” and into offshore bank accounts.   In several instances, Chinea personally signed checks worth millions of dollars that were made payable to one of these purported “foreign finders” and later deposited in a Swiss bank account.

As further alleged in court documents, as a result of the bribery scheme, BANDES quickly became the Broker-Dealer’s most profitable customer.   As the relationship continued, however, Gonzalez became increasingly unhappy about the untimeliness of the payments due her from the Broker-Dealer, and she threatened to suspend BANDES’s business.   In response, DeMeneses and Clarke agreed to pay Gonzalez approximately $1.5 million from their personal funds.   Chinea and DeMeneses agreed to use Broker-Dealer funds to reimburse DeMeneses and Clarke for these bribe payments.   To conceal their true nature, Chinea and DeMeneses agreed to hide these reimbursements in the Broker-Dealer’s books as sham loans from the Broker-Dealer to corporate entities associated with DeMeneses and Clarke.

Court documents also allege that beginning in or around November 2010, the SEC commenced a periodic examination of the Broker-Dealer, and from November 2010 through March 2011, the SEC’s exam staff made several visits to the Broker-Dealer’s offices in Manhattan.   In or about early 2011, DeMeneses and others involved in the scheme discussed that the SEC was examining the Broker-Dealer’s relationship with BANDES.   DeMeneses and others agreed they would take steps to conceal the true facts of the Broker-Dealer’s relationship with BANDES, including by deleting emails, in order to hide the actual relationship from the SEC.

Chinea and DeMeneses were each charged with one count of conspiracy to violate the Foreign Corrupt Practices Act (FCPA) and the Travel Act, five counts of violating the FCPA, and five counts of violating of the Travel Act.   Chinea and DeMeneses were also charged with one count of conspiracy to commit money laundering and three counts of money laundering. DeMeneses was further charged with one count of conspiracy to obstruct justice.

Previously, on Aug. 29 and Aug. 30, 2013, Lujan, Hurtado and Clarke each pleaded guilty in Manhattan federal court to conspiring to violate the FCPA, to violate the Travel Act and to commit money laundering, as well as substantive counts of these offenses, relating, among other things, to the scheme involving bribe payments to Gonzalez.   On Nov. 18, 2013, Gonzalez pleaded guilty in Manhattan federal court to conspiring to violate the Travel Act and to commit money laundering, as well as substantive counts of these offenses, for her role in the corrupt scheme.

The charges contained in the indictment are merely accusations, and the defendants are presumed innocent unless and until proven guilty.

This ongoing investigation is being conducted by the FBI, with assistance from the Criminal Division’s Office of International Affairs.   The department appreciates the substantial assistance provided by the SEC.

Senior Deputy Chief James Koukios and Trial Attorney Maria Gonzalez Calvet of the Criminal Division’s Fraud Section and Assistant U.S. Attorneys Harry A. Chernoff and Jason H. Cowley of the Southern District of New York’s Securities and Commodities Fraud Task Force are in charge of the prosecution.   Assistant U.S. Attorney Carolina Fornos is responsible for the forfeiture aspects of the case.

FORMER PRESIDENT RUSSIAN STEEL PRODUCER SUBSIDIARY INDICTED FOR HIDING ASSETS IN SWISS BANK ACCOUNTS

FROM:  U.S. JUSTICE DEPARTMENT 
Department of Justice
Office of Public Affairs

FOR IMMEDIATE RELEASE
Friday, March 21, 2014
Former President of Russian Steel Producer’s U.S. Subsidiary Indicted for Hiding Assets in Secret Swiss Bank Accounts

Victor Lipukhin, formerly a resident of St. Charles, Ill., was indicted yesterday by a federal grand jury in Kansas City, Mo., for attempting to interfere with the administration of the internal revenue laws and filing false tax returns, the Justice Department and Internal Revenue Service (IRS) announced today.  The charges relate to Lipukhin hiding millions of dollars in several Swiss bank accounts held at UBS AG.  

According to the indictment, Lipukhin formerly served as president of Severstal Inc. (USA), a subsidiary of AO Severstal, the largest steel producer in Russia.  He lived in St. Charles from at least 2001 through mid-2007.

Lipukhin, a Russian citizen and former lawful permanent U.S. resident, kept between approximately $4,000,000 and $7,500,000 in assets in two bank accounts with UBS in Switzerland from at least 2002 through 2007.  In 2002, he and another individual opened a UBS bank account in the name of Old Orchard, a sham Bahamian entity.  The account was initially funded with over $47,000,000 transferred into the account from a previously maintained UBS account in the Bahamas.  In 2003, the other individual left the account, leaving Lipukhin as the sole owner and signatory.  Lipukhin also maintained another account at UBS in Switzerland in the name of Lone Star, another sham Bahamian entity.  He directed virtually all transactions in the accounts, typically through a Bahamian national who served as the nominee director of the Old Orchard and Lone Star entities to help conceal Lipukhin’s ownership and control.  However, he failed to report his ownership of these accounts and failed to report any income earned in these accounts on his tax returns.

According to the indictment, in order to further conceal his ownership of the undisclosed UBS accounts, Lipukhin utilized fictitious mortgages through an entity called Dapaul Management, controlled by a Canadian attorney, to conceal his purchase of real estate in the United States with funds from the UBS accounts.  This includes his purchase of a historic building at 18 N. Fourth St, in St. Charles, Ill., for $900,000 in the name of Charlestal LLC, a domestic entity controlled by Lipukhin.  He also transferred funds from his UBS accounts to the Canadian attorney for ultimate transfer to a domestic Charlestal bank account in order to conceal the source of the funds, then used the funds in the Charlestal account to pay for various personal expenses and to withdraw cash for personal use.  Finally, Lipukhin impeded the administration of Internal Revenue laws by attempting to prevent an automobile dealer from filing a Form 8300 – which is required for certain cash transactions over $10,000 – with the IRS in order to report Lipukhin’s cash payment to purchase an automobile.

An indictment merely alleges that a crime has been committed, and a defendant is presumed innocent until proven guilty beyond a reasonable doubt.  If convicted, Lipukhin faces a potential maximum sentence of three years imprisonment on each count.

U.S. citizens and permanent residents are required to report income from any source on their tax returns, regardless of whether the source of the income is inside or outside the United States.  Further, U.S. taxpayers 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 also required to disclose the existence of the account on Schedule B, Part III of an individual income tax return.  They must also disclose the existence of the account by filing a Report of Foreign Bank and Financial Accounts with the U.S. Treasury.

Assistant Attorney General Kathleen Keneally of the Tax Division commended the agents from IRS –Criminal Investigation who investigated the case and Trial Attorney Timothy J. Stockwell of the Tax Division, who is prosecuting the case.

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.