Abusive Tax Shelters

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

March 9, 2016

The Justice Department and Internal Revenue Service announced the guilty pleas of Cayman National Securities Ltd. (CNS) and Cayman National Trust Co. Ltd. (CNT), two Cayman Island affiliates of Cayman National Corporation. CNS and CNT pleaded guilty to a criminal Information charging them with conspiring with many of their U.S. taxpayer-clients to hide more than $130 million in offshore accounts from the U.S. Internal Revenue Service and to evade U.S. taxes on the income earned in those accounts. CNS and CNT entered their guilty pleas pursuant to plea agreements requiring the companies to, among other things, produce through the treaty process account files of non-compliant U.S. taxpayers who maintained accounts at CNS and CNT, and pay a total of $6 million in financial penalties. DOJ

February 4, 2016

Zurich-based Bank Julius Baer & Co. Ltd. agreed to pay $547 million to settle charges of conspiring with many of its U.S. taxpayer-clients and others to help U.S. taxpayers hide from the IRS billions of dollars in offshore accounts and evade U.S. taxes on the income earned in those accounts.  DOJ

February 4, 2016

The Justice Department and the Internal Revenue Service announced the filing of criminal charges against Bank Julius Baer & Co. Ltd., a financial institution headquartered in Zurich, Switzerland. Julius Baer is charged with conspiring with many of its U.S. taxpayer-clients and others to help U.S. taxpayers hide billions of dollars in offshore accounts from the IRS and to evade U.S. taxes on the income earned in those accounts. The Justice Department also announced a deferred prosecution agreement with Julius Baer under which the company admits that it knowingly assisted many of its U.S. taxpayer-clients in evading their tax obligations under U.S. law. The agreement requires Julius Baer to pay a total of $547 million by no later than Feb. 9, 2016. DOJ

December 22, 2014

Bank Leumi, a major Israeli international bank, admitted that it conspired to assist US taxpayers to prepare and present false tax returns to the Internal Revenue Service (IRS) by hiding income and assets in offshore bank accounts in Israel and elsewhere around the world. The criminal conduct spanned over a 10 year period and included an array of services and products designed to keep US taxpayer accounts concealed at Bank Leumi Group’s locations in Israel, Switzerland, Luxembourg and the US. The bank agreed to pay a total of $270 million in fines and penalties and to cease to provide banking and investment services for all accounts held by US taxpayers. DOJ

November 21, 2014

Credit Suisse AG was sentenced today for conspiring to assist US taxpayers file false income tax returns the IRS. Credit Suisse pleaded guilty to conspiracy on May 19. The plea agreement, along with agreements made with state and federal agencies, provides that Credit Suisse will pay a total of approximately $2.6B: approximately $1.8B in a criminal fine and restitution, $100M to the Federal Reserve and $715M to the New York State Department of Financial Services. As part of the plea agreement, Credit Suisse acknowledged that, for decades prior to and through 2009, it operated an illegal cross-border banking business that knowingly and willfully aided and assisted thousands of U.S. clients in opening and maintaining undeclared accounts and concealing their offshore assets and income from the IRS. DOJ

May 19, 2014

Credit Suisse pled guilty to criminal charges of conspiring to help thousands of US taxpayers evade taxes and agreed to pay fines and restitution amounting to $2.6 billion. It is the first big bank to plead guilty to illegal activity since Drexel Burnham Lambert in 1989. Whistleblower Insider

March 18, 2014

California attorney Christopher Rusch was sentenced to serve 10 months in prison for helping his clients Stephen M. Kerr and Michael Quiel, both businessmen from Phoenix, hide millions of dollars in secret offshore bank accounts at UBS and Pictet & Cie in Switzerland. DOJ