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Abusive Tax Shelters

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April 30, 2020

Israel-based Bank Hapoalim, together with its Swiss and other subsidiaries, will pay nearly $875 million and plead guilty to charges that it conspired with U.S. taxpayers and others to conceal $7.6 billion in thousands of Swiss and Israeli bank accounts from the Internal Revenue Service and other U.S. government entities, including New York State.  As part of its plea, the bank admitted that it assisted U.S. customers in setting up secret accounts, sheltering assets and income, and evading taxes.  The total payment by bank entities consists of $216.8 million in restitution to the IRS, $160.3 million in forfeiture, federal penalties of $239.8 million, $37.4 million in civil monetary penalties to the Federal Reserve System, and $220 million in penalties to the New York State Department of Financial Services.   As part of a deferred prosecution agreement, the bank will cooperate with ongoing investigations and disclose information regarding U.S.-related accounts. The bank simultaneously entered into a separate settlement agreement regarding money laundering with respect to the FIFA bribery investigation. DOJ; USAO SDNY; NY.

Top Ten Tax Enforcement Actions of 2019

Posted  01/17/20
Hundred Dollar Bills with American Flag, and 1040 Tax Form
Tax fraud and tax evasion persist each year in various forms and whistleblowers have been at the forefront in combatting entities and individuals cheating the system. Under the IRS Whistleblower Reward Program, whistleblowers who bring information regarding tax fraud to light that results in a recover of over $2 million can be eligible for a reward between 15 to 30% of the government’s recovery. The IRS...

December 10, 2019

HSBC Private Bank (Suisse) SA has entered into a deferred prosecution agreement and agreed to pay $192 million for conspiring with U.S. clients and others to evade taxes over a ten year period.  At the peak of the scheme in 2007, HSBC Switzerland was estimated to hold undeclared assets worth approximately $1.26 billion on behalf of U.S. clients, before it self-disclosed to authorities three years later.  The resulting fine, which took into account the bank’s extensive cooperation with the investigation, represents about $61 million in restitution to the IRS, $72 million in civil forfeiture to the DOJ, and $59 million in penalties.  DOJ

Malta’s Ongoing Corruption Scandal Renews Focus on Money Laundering

Posted  12/5/19
By Sarah “Poppy” Alexander
Money Hanging on a Clothes Line
The tragic murder of investigative journalist Daphne Caruana Galizia in 2017 sparked international outrage—and the fear that nothing would be done to discover who was behind her death.  This turns out not to be the case.  After years of persistence from her family and journalist community, Yorgen Fenech, a gambling, real estate, and energy mogul, was arrested on November 20 for complicity in her murder.  He has...

November 6, 2019

Winston Shrout, who became a fugitive after being sentenced to 10 years in prison in 2017, has been captured and returned to custody.  Shrout led seminars promoting the use of fraudulent financial instruments as a means to avoid taxes, and sold materials for the preparation of such fraudulent instruments.  In addition, Shrout failed to file tax returns from 2009 through 2014.   DOJ

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

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

Legal Sports Betting Is Leading to Serious Fraud Risks

Posted  05/31/19
man holding cell phone to place sports bet
With the NBA finals upon us, you may be thinking putting down some cash on one team or the other. Thanks to a Supreme Court decision last year, your state may even allow such bets. And no wonder. Illegal sports betting is a gigantic industry—estimated at $150 billion a year, it eclipses the $5 billion legally gambled in Nevada. Much of that money goes into the hands of mafia interests, who increasingly use online...

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
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