The U.S. Department of Justice recently entered into an agreement with yet another foreign bank, LLB Verwaltung (Switzerland) AG, for the bank's role in assisting clients evade their U.S. tax obligations. LLB-Switzerland's business with U.S. clients boomed in 2008, after it became public that UBS AG, Switzerland's largest bank, was under criminal investigation in the U.S. for a number of violations, including tax crimes. LLB-Switzerland at one point held over $176 million in U.S. client funds, which the bank's management knew were largely undeclared. As a result of the recent agreement, LLB-Switzerland will pay the U.S. a penalty of $10.6 million.
In a recent tax controversy forum hosted by New York University, the Principal Deputy Assistant Attorney General to the Department of Justice Tax Division (DOJ-Tax), Richard Zuckerman, said that his team is increasing its focus on individuals attempting to use bitcoin and other digital assets to evade taxes. DOJ-Tax is currently prosecuting several criminal cryptocurrency cases, and Zuckerman noted that others are already in process.
A 74-year-old former fund manager who resided in San Francisco was recently sentenced to 30 months in prison for investment adviser fraud and filing a false income tax return that failed to report millions of dollars in illegally diverted funds. The California resident moved funds between several entities related to Burrill Capital, LLC, using advance management fees he was not permitted to draw. His accountant was convicted of assisting with the filing of the false income tax return and will be sentenced soon.
A California real estate professional was recently sentenced to 2 years in prison for filing false income tax returns that failed to report over $1 million in cash earned through marijuana sales made between 2012 and 2014. In addition, he was ordered to serve one year of supervised release and pay $466,707 in restitution to the IRS.
A California resident pleaded guilty last week to conspiring to submit false claims for income tax refunds and to bank fraud, according to the Department of Justice Tax Division. The woman worked with others to file false returns and allegedly obtain over $9 million in improper tax refunds. Her co-conspirators pleaded guilty earlier this year to related charges.
A Californian pleaded guilty this week before the U.S. District Court, Central District of California, to willfully failing to disclose over $1 million held in offshore bank accounts. He and the bank also took other steps to hide and secretly access his funds. The man now faces up to five years in prison, supervised release, restitution, and other monetary penalties.
The Department of Justice recently imposed another $5.3 million penalty on Bank Lombard Odier & Co., Ltd., a Swiss bank that has already paid over $99 million for offering offshore banking services to U.S. taxpayers without disclosing their transactions. Since Bank Lombard signed its first non-prosecution agreement in 2015, it has acquired 88 additional accounts, again without disclosing them as required.
A taxpayer recently found out the hard way that if something sounds too good to be true, get a second opinion. His San Francisco-based CPA helped him prepare and file tax returns that failed to report over $18 million in income between December 2007 and September 2013, which resulted in $4.7 million of unpaid tax liabilities. In this case, both the taxpayer and his CPA were indicted; the taxpayer entered into a plea agreement and the tax preparer took his chances --- he lost.
NPB Neue Privat Bank, a Swiss private bank based in Zurich, and the U.S. Department of Justice Tax Division signed a non-prosecution agreement on July 18, 2018, by which NPB will pay a $5 million penalty for aiding U.S. taxpayers in opening accounts to conceal assets and income from the U.S. government. Between August 2008 and December 2015, NPB managed approximately $400 million annually in both declared and undeclared assets. The bank failed to disclose the identities of American clients to the Internal Revenue Service after entering into a Qualified Intermediary Agreement in 2001 whereby it was to report U.S. securities transactions to the IRS on Forms 1099 and obtain Forms W-9 from new and existing U.S. clients to help verify their tax compliance.
What do a U.S. Senator, the owner of an Albanian brokerage firm, an attorney who is a dual citizen of America and Israel, and a group of current and former U.S. citizen now living in Canada, Switzerland, and the Czech Republic all have in common? They have been denied review by the U.S. Supreme Court in their jointly failed attempt to enjoin the enforcement of the Foreign Account Tax Compliance Act (FATCA), certain intergovernmental agreements (IGAs), and the foreign bank account reporting (FBAR) penalty.