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Tax Enforcement Actions

The Internal Revenue Service (IRS) is the United States agency with primary responsibility for enforcing federal tax laws, working with the Department of Justice. Whistleblowers with knowledge of violations of the federal tax laws can submit a claim to the IRS under the IRS Whistleblower Reward Program, and may be eligible to receive a monetary reward.

Below are summaries of recently-announced settlements or successful prosecutions by the IRS or DOJ. If you believe you have information about fraud or wrongful conduct which could give  rise to a claim under the IRS Whistleblower Reward Program, please contact us to speak with one of our experienced whistleblower attorneys.

August 12, 2019

The CEO of a Colorado-based technology company has been sentenced to over 6 years in prison for defrauding the IRS, impeding the administration of tax laws, and stealing money from his employees’ healthcare and 401(K) plans.  As the head of Touchbase USA (TBUSA) and its successor company Touchbase Global Services, Inc. (TBGSI), Riordan Maynard allegedly stole over $50,000 from his employees’ healthcare plan and $68,000 from their 401(K) plans for use on company expenses.  He also caused TBUSA to be closed and TBGSI to be opened in order to avoid paying more than $2.5 million in unpaid payroll taxes.  After running up another $2.5 million in unpaid payroll taxes, Maynard also conspired to work around IRS levies sent to his customers.  USAO CO

August 5, 2019

Swiss private bank LLB Verwaltung (Switzerland) AG will pay a $10.6 million penalty to resolve allegations that the bank and some of its management employees conspired with a Swiss asset manager and U.S. clients to conceal assets and income from the IRS. The Swiss asset manager provided prospective customers with a sales letter -- the bank also had a copy -- pitching his ability to conceal a client’s assets and income from taxing authorities through the use of multiple layers of sham offshore entities and nominee directors in favorable countries or regions. LLB-Switzerland at one time had approximately 100 U.S. clients holding nearly $200 million in assets.  DOJ

July 19, 2019

Lawrence Robert Gazdick Jr., owner of a Virginia equipment rental business operating under the names National Technology Rentals, NTL Technology Leasing Services, and AV Rental Solutions, pleaded guilty to employment tax fraud, withholding payroll taxes from employee paychecks but failing to file payroll tax returns or pay the IRS.  In total, Gazdick caused a loss to the IRS of approximately $5.35 millionDOJ

July 19, 2019

For not disclosing additional U.S. accounts when a 2015 non-prosecution agreement was signed with the DOJ, Banque Bonhôte & Cie SA, Ltd. (Bonhôte) of Switzerland has signed an addendum, agreeing to pay an additional $1.2 million penalty on top of its $624,000 share of an earlier penalty against 80 Swiss banks totaling $1.36 billion.  The DOJ had executed non-prosecution agreements with the banks in 2015 and 2016 to resolve potential criminal liabilities relating to offshore banking services.  DOJ

June 18, 2019

A New Hampshire man named Imtiaz Shaikh has been sentenced to 1.5 years in prison and ordered to pay $2.8 million to the State of New Hampshire for evading taxes on the sale of certain tobacco products.  According to state law, wholesale distributors of other tobacco products (OTP) must be licensed, file reports on the number of OTP sold, and pay taxes at 65% of the wholesale price.  To avoid paying taxes on his products, Shaikh conducted business through a number of shell corporations, robbing the state of $2.8 million in unpaid taxes.  USAO NH

May 8, 2019

Cosmetics retailer Sephora USA Inc. paid $159,349 to the State of Indiana to resolve claims brought by a whistleblower under the Indiana False Claims Act alleging that Sephora made false statements in connection with failing to collect sales tax on internet sales shipped to Indiana consumers.  IN AG

April 26, 2019

A permanent injunction has been issued barring Michael L. Meyer from in any way marketing the "Ultimate Tax Plan," also referred to as Charitable LLC or Charitable Limited Partnership, or otherwise preparing federal tax returns or advising taxpayers on charitable contributions.  Meyer had sold his bogus tax scheme with claims that taxpayers could reduce taxes by purportedly transferring property to an entity and purportedly donating their interest in the entity to a charity, while retaining complete control over the assets.  Meyer appraised the “donations,” prepared tax forms for participants to claim unwarranted deductions, and controlled the charities used to perpetuate the scheme.  The government alleged that the scheme deprived the U.S. of at least $35 million in tax revenue.  DOJ

April 25, 2019

Zurich Life Insurance Company Ltd and Zurich International Life Limited have entered into a non-prosecution agreement and agreed to a penalty of $5.115 million to resolve allegations that it knew some of its U.S. taxpayer customers were using certain Zurich policies in order to evade U.S. taxes and reporting requirements.  Under applicable law, the increase of the principal in the policies was subject to U.S. taxation, and the policies were required to be disclosed to the IRS, but Zurich knew or should have known that the policies were undeclared.   Zurich reported its finding of these accounts to the government as part of the DOJ Swiss Bank Program.  DOJ

April 4, 2019

Kenneth C. Coleman of Houston, Texas, who owned Acacia Pharma Distributors, Inc. and Four Corners Suppliers, Inc., has been sentenced to 30 years in prison following his conviction at trial for money laundering, tax evasion, and related charges.  Coleman and his companies purchased second-hand prescription medications from various illegitimate sources and sold them to a third party, Green Valley Medical Distributors, LLC, which then sold the medications to pharmacies as if they were brand new.  In arranging the sales, Coleman created fraudulent documents that misrepresented the sources of the medications and their prior sales.  After being paid by Green Valley, Coleman and others would pay the suppliers of the drugs, often in cash, and failed to report income or file corporate income taxes.  Coleman was also ordered to forfeit $20.3 million and pay $717,000 in restitution to the IRS.  DOJ

March 12, 2019

Israeli-based Mizrahi-Tefahot Bank Ltd., together with its subsidiaries, United Mizrahi Bank (Switzerland) Ltd. and Mizrahi Tefahot Trust Company Ltd., entered into a deferred prosecution agreement resolving claims that the bank engaged in conduct to conceal client funds for the purpose of evading U.S. income taxes.  Among other actions, the bank enabled U.S. customer-taxpayers to maintain accounts using pseudonyms, code names, and foreign nominee entities, accepted non-U.S. forms of identification from known U.S. customers, and held mail for U.S. customers offshore.  In addition, the bank violated its Qualified Intermediary Agreement with the IRS.  The agreement requires the bank to pay $195 million, cooperate in ongoing investigations, and implement specific compliance and monitoring procedures.  DOJ
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