Alaskan Plastic Surgeon Convicted of Offshore Tax Evasion
The Department of Justice announced the conviction of an Alaskan doctor who used secret accounts in Costa Rica to hide assets from his wife, as well as to evade U.S. taxes. At his sentencing next March, he faces a maximum of 20 years imprisonment. He could also be forced to forfeit $4.6 million in seized funds.
Shortly after his wife filed for divorce in 2007, Dr. Michael Brandner drove more than 4,000 miles from Tacoma, Washington, to Costa Rica. He took $3,250,000 in cashier’s checks with him, as well as 1,000 ounces of gold. He hid these assets in two bank accounts and a safe deposit box. In 2008, he opened an account in Panama under the name of a sham corporation and deposited $4.6 million. Brandner concealed both the existence of these accounts, as well as the interest earned by the accounts, from both his wife and the Internal Revenue Service.
Once the divorce proceedings were concluded, Brandner attempted to repatriate the assets to the United States, but the funds were seized by the Department of Homeland Security. Brandner was convicted of one count of wire fraud, as well as three counts of tax evasion related to $600,000 in unreported income for the 2008-2010 tax years.
To open the foreign accounts, Brandner used the assistance of an unnamed person, who would later cooperate with U.S. authorities when he came under investigation for a separate matter. This cooperating witness recorded phone conversations with Brandner, in which Brandner says that he intends to conceal the funds in his Panamanian account from the divorce court. The cooperating witness also informed Brandner of the FBAR filing requirement in these recorded conversations, but Brandner nonetheless failed to ever file an FBAR.
In addition to imprisonment, Brandner could face forfeiture of the funds that were held in the offshore accounts, which have been seized. The IRS is still allowing U.S. taxpayers with undisclosed foreign accounts to come forward voluntarily and avoid the risk of criminal prosecution, but this must be done before the U.S. government discovers the accounts on their own. Costa Rica is one of more than 100 countries that have signed Intergovernmental Agreements with the United States to implement FATCA, which provides for the automatic exchange of information between governments on an annual basis.