In a crackdown on offshore accounts, the Internal Revenue Service has placed more focus on the disclosure of foreign accounts. In addition, the Foreign Account Tax Compliance Act went into effect in July and requires foreign financial institutions provide the agency information on U.S. taxpayer clients.
A recently unsealed indictment accuses six individuals and six firms located in Belize of helping U.S. taxpayers avoid taxes by setting up offshore accounts. An undercover F.B.I. agent candidly told executives of the Belize firm that he wanted to set up an offshore account to conceal assets, stock ownership and money transfers from the IRS and Securities and Exchange Commission.
The Belize firm described a scheme in which they could open a brokerage account with apparent independent offshore company ownership. This would allow the investor to move money and trade stock without making disclosures to the federal agencies.
Accusations in indictment accuse those associated with the Belize firms of starting the $500 million scheme in 2009. Criminal tax charges filed against the individuals included tax fraud and money laundering, in addition to securities fraud conspiracy.
The same man, a U.S. citizen, created all six firms. By using PayPal and prepaid MasterCards it became harder to trace funds. The man may have worked with as many as 100 U.S. citizens and residents. Prosecutors have not yet filed any public charges against these clients.
The owner of the firms will appear for arraignment in Florida. The U.S. government is seeking extradition of the others involved. These charges carry very serious penalties. When it becomes apparent that the IRS or U.S. Department of Justice is conducting an investigation, seek the counsel of an experienced taxation defense attorney.
Source: New York Times, "$500 Million Stock Fraud Alleged in Brooklyn Court," Stephanie Clifford, September 9, 2014.