In 2009, the Justice Department (DOJ) announced it would crackdown on offshore accounts. The DOJ would be dedicating more if its efforts and resources to finding individuals and companies who use offshore tax havens to avoid paying income taxes in the United States.
The crackdown was announced, in part, because one of Switzerland’s largest banks, UBS, had been helping U.S. citizens hide assets from the IRS in foreign accounts for years. According to Reuters, UBS paid $780 million in February to settle civil and criminal charges related to the case.
Recently, in the first trial since the emphasis on offshore accounts was announced, a father and son development team in Florida was found guilty of filing false tax returns and conspiracy.
According to a Bloomberg report, prosecutors alleged that Mauricio Cohen Assor and Leon Cohen Levy hid $33 million in proceeds from the sale of a New York hotel. The men used offshore accounts, forged documents and had friends and family pose as owners to avoid paying taxes on the sale. Assor was accused of failing to report nearly $12 million in income, while Levy was alleged to have hid over $4.4 million.
Though both men lived in expensive homes, drove luxury cars and had significant investments in other companies, Assor and Levy both reported incomes of under $50,000 on their taxes for the years in question.
The two men, according to prosecutors, put a majority of the money in one of Europe’s largest banks, HSBC, and moved it to other offshore accounts to conceal the income. HSBC itself was under investigation by the Justice Department and, according to a Wall Street Journal report, the DOJ ordered HSBC to strengthen its compliance with federal anti-money laundering laws.
The men, who were arrested on April 15th, will remain in custody until their sentencing in December. Assoc and Levy both face up to 11 years in prison.