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Abusive Tax Shelters

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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

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

December 19, 2018

The U.S. has filed a complaint to bar EcoVest Capital, Inc. and associated individuals from continued activities related to the defendants' allegedly abusive conservation easement syndication tax scheme.  As set forth in the complaint, taxpayers may take a "qualified conservation contribution" deduction equivalent to the fair market value of a conservation easement, but only if certain requirements with respect to the donation of an interest in property for conservation purposes are satisfied. The defendants allegedly have organized, promoted, and sold ownership interests in at least 96 sham “conservation easement syndicates” which lack economic substance.  The syndicates have reported over $2 billion in improper tax deductions, resulting in hundreds of millions in tax underpayments.   DOJ

Constantine Cannon Attorneys Eric Havian and Michael Ronickher Published in Law360 on the Need for Anti-Money Laundering Whistleblower Rewards

Posted  12/12/18
In the wake of anti-money laundering enforcement activity spurred by the Panama Papers, Constantine Cannon attorneys Eric Havian and Michael Ronickher published an article in Law360 on why we need an anti-money laundering whistleblower program. Havian and Ronickher argue for a new, DOJ-led whistleblower program to close the “large enforcement gap” left open by the existing IRS and SEC programs: “Domestic law...

December 4, 2018

In connection with their work for the "Panama Papers" law firm of Mossack Fonseca & Co. and its affiliates, Ramses Owens, Dirk Brauer, Richard Gaffey, and Harald Joachim Von Der Goltz have been indicted for actions related to the firm's efforts to circumvent U.S. tax laws on behalf of their clients through the use of offshore accounts and shell companies which Mossack Fonseca created.  The defendants then used an alleged “playbook” to repatriate un-taxed money into the U.S. banking system. The defendants are charged with wire fraud, tax fraud, and money laundering, among other offenses. In the last two months, three of the defendants have been arrested; Ramses Owens remains at large.  DOJ

Money Laundering Watch: Will More Chickens Come Home to Roost Following Deutsche Bank Raid?

Posted  11/30/18
The Panama Papers fallout continues with a massive early morning raid on Deutsche Bank headquarters in Frankfurt, Germany. Some 170 officers searched for evidence of the bank’s role in over $350m worth of suspected money-laundering through organizations in the British Virgin Islands. Deutsche Bank confirms the investigation is related to the Panama Papers: the April 2016 release of over 11 million files about...

November 19, 2018

Teymour Khoubian of Beverly Hills, California, has pleaded guilty to filing false tax returns which concealed offshore accounts he held and earned income from.  Khoubian had declined to disclose the accounts under the IRS's Offshore Voluntary Disclosure Program.  As part of his guilty plea, Khoubian agreed to a penalty of $7.7 million and an additional $612,310 in restitution to the IRS. Khoubian faces a prison sentence of three years.  DOJ

October 5, 2018

Following a court trial, a federal court in Utah has ordered that RaPower-3 LLC and International Automated Systems, Inc. stop all promotion and marketing and disgorge $50 million collected in an abusive tax scheme involving false tax deductions and solar energy credits.  The companies and their principals marketed what they claimed was technology that could be used in the production of solar energy and which, they further claimed, entitled the purchasers to take certain tax deductions and solar energy tax credits.  In fact, however, the technology was phony and defendants knew that its purchasers would not be entitled to the tax deductions and credits.  DOJ

August 28, 2018

The U.S. has entered in to a deferred prosecution agreement with Swiss bank Basler Kantonalbank (BKB), with BKB agreeing to pay over $60 million in penalties and cooperate with ongoing investigations regarding U.S.-related accounts.  The bank held over 1,000 accounts for U.S. customers, with an aggregate value over $800 million; many of these accounts were not declared to U.S. taxing authorities by the account-holders; the bank provided specific services to its undeclared clients to promote concealment of assets and income from U.S. taxing authorities.  DOJ