Tuesday, September 3, 2013
SEC CHARGES INVESTMENT ADVISORY FIRM WITH FAVORING CERTAIN CLIENTS
FROM: U.S. SECURITIES AND EXCHANGE COMMISSION
The Securities and Exchange Commission announced charges against a San Diego-based investment advisory firm and its president for allegedly steering winning trades to favored clients and lying about how certain money was being spent.
The SEC’s Enforcement Division alleges that J.S. Oliver Capital Management and Ian O. Mausner engaged in a cherry-picking scheme that awarded more profitable trades to hedge funds in which Mausner and his family had invested. Meanwhile they doled out less profitable trades to other clients, including a widow and a charitable foundation. The disfavored clients suffered approximately $10.7 million in harm.
The SEC’s Enforcement Division further alleges that Mausner and J.S. Oliver misused soft dollars, which are credits or rebates from a brokerage firm on commissions paid by clients for trades executed in the investment adviser’s client accounts. If appropriately disclosed, an investment adviser may retain the soft dollar credits to pay for expenses, including a limited category of brokerage and research services that benefit clients. However, Mausner and J.S. Oliver misappropriated more than $1.1 million in soft dollars for undisclosed purposes that in no way benefited clients, such as a payment to Mausner’s ex-wife related to their divorce.
“Mausner’s fraudulent schemes were a one-two punch that betrayed his clients and cost them millions of dollars,” said Marshall S. Sprung, Co-Chief of the SEC Enforcement Division’s Asset Management Unit. “Investment advisers must allocate trades and use soft dollars consistent with their fiduciary duty to put client interests first.”
The SEC also charged Douglas F. Drennan, a portfolio manager at J.S. Oliver, for his role in the soft dollar scheme.
According to the SEC’s order instituting administrative proceedings, Mausner engaged in the cherry-picking scheme from June 2008 to November 2009 by generally waiting to allocate trades until after the close of trading or the next day. This allowed Mausner to see which securities had appreciated or declined in value, and he gave the more favorably priced securities to the accounts of four J.S. Oliver hedge funds that contained investments from Mausner and his family. Mausner profited by more than $200,000 in fees earned from one of the hedge funds based on the boost in its performance from the winning trades he allocated. Mausner also marketed that same hedge fund to investors by touting the fund’s positive returns when in reality those returns merely resulted from the cherry-picking scheme.
According to the SEC’s order, the soft dollar scheme occurred from January 2009 to November 2011. Mausner and J.S. Oliver failed to disclose the following uses of soft dollars:
More than $300,000 that Mausner owed his ex-wife under their divorce agreement.
More than $300,000 in “rent” for J.S. Oliver to conduct business at Mausner’s home. Most of this amount was funneled to Mausner’s personal bank account.
Approximately $480,000 to Drennan’s company for outside research and analysis when in reality Drennan was an employee at J.S. Oliver.
Nearly $40,000 in maintenance and other fees on Mausner’s personal timeshare in New York City.
According to the SEC’s order, Drennan participated in the soft dollar scheme by submitting false information to support the misuse of soft dollar credits and approving some of the soft dollar payments to his own company.
The SEC’s order alleges that J.S. Oliver and Mausner willfully violated the antifraud provisions of the federal securities laws and asserts disclosure, compliance, and recordkeeping violations against them. The SEC’s order alleges that Drennan willfully aided, abetted, and caused J.S. Oliver’s fraud violations in the soft dollar scheme.
The SEC’s investigation, which is continuing, has been conducted by Ronnie Lasky and C. Dabney O’Riordan of the Enforcement Division’s Asset Management Unit in the Los Angeles Regional Office. The SEC’s litigation will be led by David Van Havermaat, John Bulgozdy, and Ms. Lasky. The examination of J.S. Oliver was conducted by Ashish Ward, Eric Lee, and Pristine Chan of the Los Angeles office’s investment adviser/investment company examination program.
The Securities and Exchange Commission announced charges against a San Diego-based investment advisory firm and its president for allegedly steering winning trades to favored clients and lying about how certain money was being spent.
The SEC’s Enforcement Division alleges that J.S. Oliver Capital Management and Ian O. Mausner engaged in a cherry-picking scheme that awarded more profitable trades to hedge funds in which Mausner and his family had invested. Meanwhile they doled out less profitable trades to other clients, including a widow and a charitable foundation. The disfavored clients suffered approximately $10.7 million in harm.
The SEC’s Enforcement Division further alleges that Mausner and J.S. Oliver misused soft dollars, which are credits or rebates from a brokerage firm on commissions paid by clients for trades executed in the investment adviser’s client accounts. If appropriately disclosed, an investment adviser may retain the soft dollar credits to pay for expenses, including a limited category of brokerage and research services that benefit clients. However, Mausner and J.S. Oliver misappropriated more than $1.1 million in soft dollars for undisclosed purposes that in no way benefited clients, such as a payment to Mausner’s ex-wife related to their divorce.
“Mausner’s fraudulent schemes were a one-two punch that betrayed his clients and cost them millions of dollars,” said Marshall S. Sprung, Co-Chief of the SEC Enforcement Division’s Asset Management Unit. “Investment advisers must allocate trades and use soft dollars consistent with their fiduciary duty to put client interests first.”
The SEC also charged Douglas F. Drennan, a portfolio manager at J.S. Oliver, for his role in the soft dollar scheme.
According to the SEC’s order instituting administrative proceedings, Mausner engaged in the cherry-picking scheme from June 2008 to November 2009 by generally waiting to allocate trades until after the close of trading or the next day. This allowed Mausner to see which securities had appreciated or declined in value, and he gave the more favorably priced securities to the accounts of four J.S. Oliver hedge funds that contained investments from Mausner and his family. Mausner profited by more than $200,000 in fees earned from one of the hedge funds based on the boost in its performance from the winning trades he allocated. Mausner also marketed that same hedge fund to investors by touting the fund’s positive returns when in reality those returns merely resulted from the cherry-picking scheme.
According to the SEC’s order, the soft dollar scheme occurred from January 2009 to November 2011. Mausner and J.S. Oliver failed to disclose the following uses of soft dollars:
More than $300,000 that Mausner owed his ex-wife under their divorce agreement.
More than $300,000 in “rent” for J.S. Oliver to conduct business at Mausner’s home. Most of this amount was funneled to Mausner’s personal bank account.
Approximately $480,000 to Drennan’s company for outside research and analysis when in reality Drennan was an employee at J.S. Oliver.
Nearly $40,000 in maintenance and other fees on Mausner’s personal timeshare in New York City.
According to the SEC’s order, Drennan participated in the soft dollar scheme by submitting false information to support the misuse of soft dollar credits and approving some of the soft dollar payments to his own company.
The SEC’s order alleges that J.S. Oliver and Mausner willfully violated the antifraud provisions of the federal securities laws and asserts disclosure, compliance, and recordkeeping violations against them. The SEC’s order alleges that Drennan willfully aided, abetted, and caused J.S. Oliver’s fraud violations in the soft dollar scheme.
The SEC’s investigation, which is continuing, has been conducted by Ronnie Lasky and C. Dabney O’Riordan of the Enforcement Division’s Asset Management Unit in the Los Angeles Regional Office. The SEC’s litigation will be led by David Van Havermaat, John Bulgozdy, and Ms. Lasky. The examination of J.S. Oliver was conducted by Ashish Ward, Eric Lee, and Pristine Chan of the Los Angeles office’s investment adviser/investment company examination program.
PAIR ARRESTED FOR ROLES IN MURDER PLOT
FROM: U.S. MARSHALS SERVICE
Marshals Task Force Arrests Pair Wanted For Ordering Murder
Columbus, OH – U.S. Marshal Patrick Sedoti of the Southern District of Ohio announces the arrest of Clarissa Clark, 19, and Summer Kerley, 29, both of Pittsburgh. The pair was arrested early Thursday evening by the Southern Ohio Fugitive Apprehension Strike Team (SOFAST) on warrants issued by authorities in Pittsburgh. The two women face charges of criminal solicitation of homicide, conspiracy to commit homicide and terroristic threats all stemming from a March 2013 shooting in the Sheraden neighborhood of Pittsburgh. Kerley is also charged with aggravated assault.
In late March, Clark and Kerley were passengers on a ‘party bus’ in Southern Pittsburgh and became engaged in a verbal altercation with other passengers. It is alleged that Clark made several phone calls to arrange for two men, James Lawrence, 21 and Michael Lyons, 22, to assault the others involved in the fight. Eventually, Clark ordered the bus to pull over and Lawrence and Lyons emerged from a car with guns and began firing at the victim. Steven Lee, 21, of McKees Rocks, Pa. was killed.
After receiving a tip from the U.S. Marshals office in Pittsburgh, Columbus based Marshals and Task Force officers from SOFAST located both Clark and Kerley in a residence on Columbus’ east-side. The women were arrested without incident and are currently the Franklin County Corrections Center awaiting extradition to Pennsylvania for trial.
Columbus SOFAST is a fugitive focused, U.S. Marshals Service led task force consisting of local, state, and federal authorities including the Franklin County Sheriff’s Office, Delaware County Sheriff’s Office, Ohio Adult Parole Authority, Columbus Police Department, Ohio State Highway Patrol, Immigration and Customs Enforcement, United States Secret Service, and the U.S. Attorney’s Office.
Marshals Task Force Arrests Pair Wanted For Ordering Murder
Columbus, OH – U.S. Marshal Patrick Sedoti of the Southern District of Ohio announces the arrest of Clarissa Clark, 19, and Summer Kerley, 29, both of Pittsburgh. The pair was arrested early Thursday evening by the Southern Ohio Fugitive Apprehension Strike Team (SOFAST) on warrants issued by authorities in Pittsburgh. The two women face charges of criminal solicitation of homicide, conspiracy to commit homicide and terroristic threats all stemming from a March 2013 shooting in the Sheraden neighborhood of Pittsburgh. Kerley is also charged with aggravated assault.
In late March, Clark and Kerley were passengers on a ‘party bus’ in Southern Pittsburgh and became engaged in a verbal altercation with other passengers. It is alleged that Clark made several phone calls to arrange for two men, James Lawrence, 21 and Michael Lyons, 22, to assault the others involved in the fight. Eventually, Clark ordered the bus to pull over and Lawrence and Lyons emerged from a car with guns and began firing at the victim. Steven Lee, 21, of McKees Rocks, Pa. was killed.
After receiving a tip from the U.S. Marshals office in Pittsburgh, Columbus based Marshals and Task Force officers from SOFAST located both Clark and Kerley in a residence on Columbus’ east-side. The women were arrested without incident and are currently the Franklin County Corrections Center awaiting extradition to Pennsylvania for trial.
Columbus SOFAST is a fugitive focused, U.S. Marshals Service led task force consisting of local, state, and federal authorities including the Franklin County Sheriff’s Office, Delaware County Sheriff’s Office, Ohio Adult Parole Authority, Columbus Police Department, Ohio State Highway Patrol, Immigration and Customs Enforcement, United States Secret Service, and the U.S. Attorney’s Office.
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.
Monday, September 2, 2013
50TH ANNIVERSARY COMMEMORATION OF THE VIETNAM WAR
FROM: U.S. DEPARTMENT OF DEFENSE
Army Launches 50th Anniversary Commemoration of Vietnam War
By J.D. Leipold
Army News Service
WASHINGTON, Aug. 30, 2013 - The afternoon in the Pentagon auditorium on Aug. 28 was a time for reflection on a war that spanned 10 years and cost the country the lives of more than 58,000 young men and women. It was also an occasion to honor and thank nine Vietnam War veterans who'd served a total of 14 tours in-country and 225 years in uniform.
Kicking off the Pentagon's first event commemorating the 50th anniversary of the conflict, Army Lt. Gen. Raymond V. Mason, deputy chief of staff for logistics, opened the ceremony recalling personal memories as well as his broader experiences as a young American citizen.
"I was a young Army brat and it was difficult for me to watch my dad come back after his third tour in Vietnam and not get treated appropriately, at least in my mind," Mason said. "I was just a pretty young guy at that time, but I could feel that it wasn't right. It struck me, and I knew if I ever had the opportunity to make that right I would do the best I could.
"Today, we are recognizing nine of our patriots and their families who stood up to the test of their generation and their decade," he continued. "I think it's well overdue. Nothing is more important than pausing and reflecting on the sacrifices of what these great men and women did and those who gave their last full measure."
On March 8, 1965, America's ground war in Vietnam began when 3,500 Marines were deployed with the American public's support. By Christmas, nearly 200,000 soldiers, Marines, airmen and sailors were in the country. At war's end on April 30, 1975, nearly 3 million Americans had been on the ground, in the air and on rivers of Vietnam. More than 58,000 Americans lost their lives.
While the official 50th anniversary of the Vietnam War will be in 2015, the president and Congress requested the secretary of Defense to begin planning the Vietnam War commemoration in 2007.
The goal is to get more than 10,000 corporations, civic groups as well as government and community organizations to join as partners and help sponsor hometown events to honor Vietnam veterans, their families and those who were prisoners of war and missing in action.
To date, 4,921 commemorative partners have signed on, including Army logistics, or G-4, which became the first.
Following Mason's remarks, Army Vice Chief of Staff Gen. John F. Campbell thanked him and his team for leading the way to celebrate the contributions of Vietnam veterans.
The son of an Air Force senior master sergeant, Campbell told of his years growing up on military bases around the world before attending West Point, and then recalled his first interaction with Vietnam veterans while a lieutenant in Germany.
"Both the battalion commanders were Vietnam veterans ... all the platoon sergeants, all the first sergeants, all the company commanders were Vietnam veterans," Campbell said. The vets, he said, instilled in him their hard-fought lessons-learned from Vietnam and wanted to make sure the young lieutenants and soldiers wouldn't make the same mistakes they had.
Retired Army Lt. Gen. Claude "Mick" Kicklighter serves as director of the U.S. Vietnam War Commemoration. During the Pentagon event he previewed the timeline of plans for honoring Vietnam veterans across the country over the next few years.
"Veterans of Valor," a 30-minute documentary with the nine honorees recalling humorous and somber anecdotes of their war experiences and interspersed with still photographs of themselves in Vietnam was also premiered.
Army Launches 50th Anniversary Commemoration of Vietnam War
By J.D. Leipold
Army News Service
WASHINGTON, Aug. 30, 2013 - The afternoon in the Pentagon auditorium on Aug. 28 was a time for reflection on a war that spanned 10 years and cost the country the lives of more than 58,000 young men and women. It was also an occasion to honor and thank nine Vietnam War veterans who'd served a total of 14 tours in-country and 225 years in uniform.
Kicking off the Pentagon's first event commemorating the 50th anniversary of the conflict, Army Lt. Gen. Raymond V. Mason, deputy chief of staff for logistics, opened the ceremony recalling personal memories as well as his broader experiences as a young American citizen.
"I was a young Army brat and it was difficult for me to watch my dad come back after his third tour in Vietnam and not get treated appropriately, at least in my mind," Mason said. "I was just a pretty young guy at that time, but I could feel that it wasn't right. It struck me, and I knew if I ever had the opportunity to make that right I would do the best I could.
"Today, we are recognizing nine of our patriots and their families who stood up to the test of their generation and their decade," he continued. "I think it's well overdue. Nothing is more important than pausing and reflecting on the sacrifices of what these great men and women did and those who gave their last full measure."
On March 8, 1965, America's ground war in Vietnam began when 3,500 Marines were deployed with the American public's support. By Christmas, nearly 200,000 soldiers, Marines, airmen and sailors were in the country. At war's end on April 30, 1975, nearly 3 million Americans had been on the ground, in the air and on rivers of Vietnam. More than 58,000 Americans lost their lives.
While the official 50th anniversary of the Vietnam War will be in 2015, the president and Congress requested the secretary of Defense to begin planning the Vietnam War commemoration in 2007.
The goal is to get more than 10,000 corporations, civic groups as well as government and community organizations to join as partners and help sponsor hometown events to honor Vietnam veterans, their families and those who were prisoners of war and missing in action.
To date, 4,921 commemorative partners have signed on, including Army logistics, or G-4, which became the first.
Following Mason's remarks, Army Vice Chief of Staff Gen. John F. Campbell thanked him and his team for leading the way to celebrate the contributions of Vietnam veterans.
The son of an Air Force senior master sergeant, Campbell told of his years growing up on military bases around the world before attending West Point, and then recalled his first interaction with Vietnam veterans while a lieutenant in Germany.
"Both the battalion commanders were Vietnam veterans ... all the platoon sergeants, all the first sergeants, all the company commanders were Vietnam veterans," Campbell said. The vets, he said, instilled in him their hard-fought lessons-learned from Vietnam and wanted to make sure the young lieutenants and soldiers wouldn't make the same mistakes they had.
Retired Army Lt. Gen. Claude "Mick" Kicklighter serves as director of the U.S. Vietnam War Commemoration. During the Pentagon event he previewed the timeline of plans for honoring Vietnam veterans across the country over the next few years.
"Veterans of Valor," a 30-minute documentary with the nine honorees recalling humorous and somber anecdotes of their war experiences and interspersed with still photographs of themselves in Vietnam was also premiered.
U.S. LABOR SECRETARY PEREZ ISSUES LABOR DAY STATEMENT
FROM: U.S. LABOR DEPARTMENT
Statement on Labor Day by Secretary of Labor Thomas E. Perez
WASHINGTON — Secretary of Labor Thomas E. Perez issued the following statement today to commemorate Labor Day on Monday, Sept. 2:
On Labor Day, we pay tribute and say thanks to the people who build our nation's strength, character and prosperity. American workers are the most industrious, the most capable and the most diligent in the world. There is no challenge they don't embrace, no hardship they can't overcome.
"Our grit and determination has been put to the test recently, as we've endured the most crippling recession in 80 years. But now we are turning the corner. In the past 41 months, we've created 7.3 million jobs. The auto industry, which was flat on its back a few years ago, is surging again. Unemployment is at its lowest level since 2008. And the economy continues to grow as we provide affordable health care for every American. But there's no question we can and must do more.
"Our common agenda must be jobs, jobs, jobs. Working together, we can unleash the economy's full potential, secure a better bargain for the middle class and expand opportunities for everyone.
"Over the past 100 years, one federal agency has been workers' strongest ally and fiercest advocate: the U.S. Department of Labor. Our job is to make the American Dream a reality for all. To do that, we are investing in higher education and working closely with employers to provide workers with the state-of-the-art skills they need to succeed in 21st century jobs. We're making sure workers come home safely to their families at the end of every day, partnering with responsible employers to ensure the most exacting standards on occupational safety and health. We're continuing our strong efforts and unparalleled commitment to protect workers' benefits, so they can retire with dignity and security. And we're fighting for an honest day's pay for an honest day's work. It's a moral and economic imperative that we raise the federal minimum wage. People who work full-time in America shouldn't live in poverty.
"On Labor Day, we reflect on the men and women whose heads, hearts and hands have made ours the strongest economy the world has ever known. To meet the challenges ahead, we must draw inspiration from their stories. We must emulate their strength and resilience. We must summon their dignity and their courage.
"As the first Labor Secretary of the department's second century, I have every confidence that, powered by the talent and determination of our workers, we will create more opportunity in the years ahead. Best wishes for a safe, healthy and prosperous Labor Day."
Statement on Labor Day by Secretary of Labor Thomas E. Perez
WASHINGTON — Secretary of Labor Thomas E. Perez issued the following statement today to commemorate Labor Day on Monday, Sept. 2:
On Labor Day, we pay tribute and say thanks to the people who build our nation's strength, character and prosperity. American workers are the most industrious, the most capable and the most diligent in the world. There is no challenge they don't embrace, no hardship they can't overcome.
"Our grit and determination has been put to the test recently, as we've endured the most crippling recession in 80 years. But now we are turning the corner. In the past 41 months, we've created 7.3 million jobs. The auto industry, which was flat on its back a few years ago, is surging again. Unemployment is at its lowest level since 2008. And the economy continues to grow as we provide affordable health care for every American. But there's no question we can and must do more.
"Our common agenda must be jobs, jobs, jobs. Working together, we can unleash the economy's full potential, secure a better bargain for the middle class and expand opportunities for everyone.
"Over the past 100 years, one federal agency has been workers' strongest ally and fiercest advocate: the U.S. Department of Labor. Our job is to make the American Dream a reality for all. To do that, we are investing in higher education and working closely with employers to provide workers with the state-of-the-art skills they need to succeed in 21st century jobs. We're making sure workers come home safely to their families at the end of every day, partnering with responsible employers to ensure the most exacting standards on occupational safety and health. We're continuing our strong efforts and unparalleled commitment to protect workers' benefits, so they can retire with dignity and security. And we're fighting for an honest day's pay for an honest day's work. It's a moral and economic imperative that we raise the federal minimum wage. People who work full-time in America shouldn't live in poverty.
"On Labor Day, we reflect on the men and women whose heads, hearts and hands have made ours the strongest economy the world has ever known. To meet the challenges ahead, we must draw inspiration from their stories. We must emulate their strength and resilience. We must summon their dignity and their courage.
"As the first Labor Secretary of the department's second century, I have every confidence that, powered by the talent and determination of our workers, we will create more opportunity in the years ahead. Best wishes for a safe, healthy and prosperous Labor Day."
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