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Abusive Tax Shelters

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Ex-HSBC Whistleblower Released From Custody as EU Campaigns for Stronger Whistleblower Protections

Posted  04/9/18
By the C|C Whistleblower Lawyer Team Law360 reports on a former HSBC employee wanted by Switzerland for allegedly leaking information about important clients to tax authorities who was released from custody in Spain. Herve Falciani was arrested last week by Spanish police on an international arrest warrant. Falciani had been sentenced to five years in prison by a Swiss court who tried him in absentia for industrial...

2017 Whistleblower of the Year Nominee -- Paradise Papers Whistleblower(s)

Posted  12/22/17
This “Whistleblower Spotlight” features the Paradise Papers leaker(s), an unnamed whistleblower (or whistleblowers) responsible for shining a light on the widespread use of illicit offshore tax havens. The November 2017 exposé revealed where government officials, royalty, entertainers, and powerful corporations store their cash to avoid taxes.  The details are in 13.4 million documents, such as emails and...

Following Panama Papers, EU Investigative Committee Proposes Tougher Tax-Evasion Measures

Posted  12/14/17
By the C|C Whistleblower Lawyer Team The European Parliament voted overwhelmingly to adopt over 200 non-binding recommendations proposed by an investigative committee formed in the wake of the explosive Panama Papers leak. The recommendations include new regulations targeting tax avoidance, such as regulating tax intermediaries and expanding protections for tax whistleblowers. The committee also recommended...

New Leak of Documents Exposes Tax Shelters, Other Financial Wrongdoing

Posted  11/9/17
By the C|C Whistleblower Lawyer Team The “Paradise Papers,” a leak of financial documents from a Bermuda-based law firm called Appleby, shed light on the use of offshores by some of the world’s wealthiest and most powerful people. This is the world’s second biggest leak of such documents, topped only by lasts year’s “Panama Papers.” The 13.4M files were obtained by a German newspaper and reviewed by the...

August 15, 2017

Prime Partners SA ("Prime Partners") entered into a non-prosecution agreement ("NPA") with the U.S. Attorney’s Office and agreed to pay $5 million to the United States for assisting U.S. taxpayer-clients in opening and maintaining undeclared foreign bank accounts from 2001 through 2010. The NPA was based on Prime Partners’ extraordinary cooperation, including its voluntary production of approximately 175 client files for non-compliant U.S. taxpayer-clients, and provides that Prime Partners will not be criminally prosecuted. The NPA requires Prime Partners to forfeit $4.32 million to the United States, representing certain fees that it earned by assisting its U.S. taxpayer-clients in opening and maintaining these undeclared accounts, and to pay $680,000 in restitution to the IRS, representing the approximate unpaid taxes arising from the tax evasion by Prime Partners’ U.S. taxpayer-clients. DOJ

July 19, 2017

A citizen and resident of Switzerland pleaded guilty to conspiring to defraud the United States in connection with her work as the head of a team of bankers for Credit Suisse AG, announced the Justice Department’s Tax Division. According to the statement of facts and the plea agreement, Susanne D. Rüegg Meier, admitted that from 2002 through 2011, while working as the team head of the Zurich Team of Credit Suisse’s North American desk in Switzerland, she participated in a wide-ranging conspiracy to aid and assist U.S. taxpayers in evading their income taxes by concealing assets and income in secret Swiss bank accounts. Rüegg Meier was responsible for supervising the servicing of accounts involving over 1,000 to 1,500 client relationships. She was also personally responsible for handling the accounts of approximately 140 to 150 clients, about 95 percent of whom were U.S. persons residing primarily in New York, Chicago and Florida, which held assets under management totaling approximately $400 million. Rüegg Meier admitted that the tax loss associated with her criminal conduct was between $3.5 and $9.5 million. DOJ

May 25, 2017

A federal court in Minneapolis, Minnesota ruled that Wells Fargo is liable for a 20 percent negligence penalty in connection with $350 million of foreign tax credits that it claimed based on its participation in an abusive tax shelter known as Structured Trust Advantaged Repackaged Securities (STARS). This follows a Minnesota jury’s verdict on Nov. 17, 2016, that ruled Wells Fargo was not entitled to those foreign tax credits because the transaction lacked both economic substance and a non-tax business purpose. After a three-week trial, the jury in this case was asked to determine whether Wells Fargo’s STARS transaction had economic substance, and the jury made some key factual findings. Wells Fargo contended that STARS was a single, integrated transaction that resulted in low-cost funding, but the jury found that in reality, the transaction consisted of two economically distinct and independent transactions: a loan and a trust. The jury found that the trust structure had no reasonable potential for pretax profit and that Wells Fargo entered into the trust structure solely for tax reasons. The jury also found that Wells Fargo entered into the loan solely for tax-related reasons. DOJ

April 25, 2017

Three Orange County, California residents were sentenced to prison for willfully failing to report their foreign bank accounts in Switzerland and Israel, announced the Justice Department’s Tax Division. Dan Farhad Kalili, 55, a resident of Irvine, California, was sentenced to serve 12 months and one day in prison; his brother, David Ramin Kalili, 52, a resident of Newport Coast, was sentenced to serve eight months in prison; and his brother-in-law, David Shahrokh Azarian, 67, also a resident of Newport Coast, was sentenced to serve eight months in prison. According to documents and information provided to the court, Dan Kalili, David Kalili and Azarian willfully failed to file with the Department of Treasury Reports of Foreign Bank and Financial Accounts (FBARs) regarding secret bank accounts in Switzerland and Israel that each maintained and controlled, many for well over a decade. These secret accounts held assets that reached into the millions of dollars. DOJ

UBS to Face French Tax Trial After Settlement Talks Fail

Posted  03/21/17
By the C|C Whistleblower Lawyer Team UBS AG, the Swiss bank, will stand trial in France for allegedly helping wealthy clients evade taxes by hiding funds overseas. UBS had been in settlement negotiations with French authorities, but the parties had been unable to agree on the size of the fine. UBS reportedly rejected a settlement proposed by French prosecutors that included a fine of $1.1 billion euros (about...

March 13, 2017

A Los Angeles, California businessman was sentenced to 24 months in prison for hiding more than $23.5 million in offshore bank accounts. According to court documents, Masud Sarshar, a U.S. citizen, maintained several undeclared bank accounts at Bank Leumi and two other Israeli banks, both in his name and in the names of entities that he created. Sarshar owned and operated Apparel Limited Inc., a business that designed, manufactured and sold clothing and other apparel. For decades, with the assistance of at least two relationship managers from Bank Leumi and a second Israeli bank (Israeli Bank A), Sarshar hid tens of millions of dollars in assets in these accounts in an effort to conceal income and obstruct the Internal Revenue Service (IRS). Between 2006 and 2009, Sarshar diverted more than $21 million in untaxed gross business income to those undeclared accounts and earned more than $2.5 million in interest income from the funds. Sarshar reported none of this income on his 2006 through 2012 individual and corporate tax returns. He also filed false Reports of Foreign Bank and Financial Accounts, commonly known as FBARs, with the U.S. Department of Treasury on which he omitted his ownership and control of these offshore accounts. DOJ

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