The Department of Justice and Internal Revenue Service-Criminal Investigation announce a guilty plea by Aaron Cohen of Encino, California. Mr. Cohen pleaded guilty in the U.S. District Court for the Central District of California to conspiracy to defraud the United States.
Mr. Cohen, who is a U.S. citizen, held bank accounts at two international banks headquartered in Tel Aviv, Israel, identified in court documents as Bank A and Bank B. One of Mr. Cohen’s accounts was maintained at a Cayman Island branch of Bank A. The accounts were undeclared and held in the names of nominees to keep them secret from the U.S. Government. Mr. Cohen used the undeclared account in the Cayman Islands as collateral for back-to-back loans obtained from a Los Angeles branch of Bank A. Mr. Cohen’s Cayman Island funds were not identified in the loan records kept at the Los Angeles branch of Bank A, concealing the fact that he was borrowing his own money, paying tax-deductible interest on the loans, and no reporting the interest earned in the Cayman Island on is income tax returns.
The full announcement from the Department of Justice can be found at http://www.justice.gov/opa/pr/2013/August/13-tax-978.html.