U.S. federal authorities charged six Belize business executives with the creation of a scheme designed to aid Americans in the evasion of $500 million in taxes as well as dodging their reporting obligations under the Foreign Account Tax Compliance Act. Undercover law enforcement agents investigated the conspiracy by posing as dishonest clients.
The indictment was unsealed on September 9, 2014 in a federal court in Brooklyn, New York. The six individuals and six corporate defendants faced multiple charges including conspiracy to commit securities fraud, tax fraud, and money laundering.
"As alleged, Bandfield and his co-conspirators devised not only a fraudulent scheme but an elaborate corporate structure based on lies and deceit designed to enable U.S. citizens to evade and circumvent our securities and tax laws. They set up sham companies with figureheads at the helm in an attempt to deceive U.S. law enforcement and regulators and bragged about their scheme to their clients," stated United States Attorney Lynch.
"Today's sweeping indictment, charging the individuals and companies responsible for this $500 million scheme, closes this fraudulent offshore safe haven and sends a strong message to those who seek to abuse the financial markets in order to enrich themselves that we will investigate and prosecute them no matter where they set up shop."
He went on to say the IRS has put offshore tax evasion and money laundering at the top of its list and that the enactment of FATCA has made it increasingly difficult for U.S. taxpayers to attempt to hide their assets abroad.
The alleged conspiracy took place between January 2009 and September 2014. According to the indictment, the self-proclaimed financial professionals set up shell companies in Belize and Nevis, West Indies for the corrupt clients and placed nominees at the helm of these companies. This would allow the corrupt clients to conceal their ownership interest in the stock of U.S. public companies and to continue trading under the nominees' names through brokerage firms also set up in Belize.
The scheme also enabled clients to avoid reporting requirements to the IRS by concealing proceeds generated by the manipulated stock transactions through shell companies and their nominees.
Only one of the six facing charges, Bob Bandfield, is under arrest since he was in Miami at the time of the indictment. It is presumed the other five are in Belize and will likely be the subject of an extradition request.
Source: "1st FATCA Indictment Against Foreign Company," The Tax Times, September 26th, 2014