Articles Posted in FBAR Violations

A 45-year-old Ohio man has pleaded guilty to filing false personal income tax returns after admitting to having nearly $1 million in an undeclared offshore bank account, the U.S. Department of Justice reported.

Tax attorneys are being called to handle such cases with increasing frequency. As we report frequently on our Tax Problem Attorney Blog, the Offshore Voluntary Disclosure Initiative gives taxpayers a chance to avoid criminal prosecution for failing to file FBARs (Foreign Bank Account Reports) by self-reporting and paying interest and penalties.

Over the last several years, the government has significantly ramped up enforcement against U.S. taxpayers who use Swiss bank accounts or other overseas accounts.

In this case, Edward Gurary pleaded guilty before U.S. District Judge Dan Polster in Cleveland to charges of filing false personal income tax returns from 2004 to 2008. Court documents indicate Gurary has lived in Switzerland since 2010 but was residing in Orange Village, Ohio during the years relevant to the prosecution. Gurary admitted to owning a UBS AG account in the name of a Bahamian entity, named Demko Ltd., which carried a balance ranging from $490,000 to $947,000.

The Internal Revenue Service alleged unpaid taxes ranged from $3,400 to more than $21,000 per year. This is generally below the threshold that many tax attorneys believed would trigger a criminal tax prosecution.

As part of the plea, Gurary also admitted that he falsely indicated on his Schedule B that he did not have authority over any foreign financial accounts. In addition to the UBS account in Switzerland, the defendant also had significant assets at Credit Suisse AG.

An FBAR form is required to be filed with the IRS each June on any financial accounts that have exceeded $10,000 in the reporting year, and over which the reporter has signature control or ownership.

Gurary agreed to pay a 50 percent penalty of the highest aggregate amount in the two accounts between 2002 and 2007. He tendered a check to the government for $300,000 at the sentencing hearing and has agreed to surrender a $200,000 cash bond at sentencing.

He will face a sentence of up to three years in prison and a $250,000 fine at his June 1 sentencing.
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A father and son team of Miami hotel developers have been sentenced to 10 years in prison after being convicted of conspiracy and filing false tax returns; the government alleges they tried to conceal more than $150 million in assets in offshore bank accounts, according to the U.S. Department of Justice.

Most of the allegations in this case stem from the sale of a New York hotel in 2000, which generated $33 million. They probably didn’t need a tax attorney to tell them that putting unreported income in an offshore bank account was illegal.

Mauricio Cohen Assor, 77, and son, Leon Cohen-Levy, 46, of Miami Beach, FL, were arrested on Tax Day, April 15, 2010. Cohen Assor has been ordered to pay $9.3 million in restitution, while Cohen-Levy has been ordered to pay more than $7.7 million.

The Internal Revenue Service accused them of concealing more than $150 million in assets, including mansions, yachts, luxury cars and bank accounts. Together, they failed to report more than $49 million in income to the IRS.

“American taxpayers who seek anonymity and shelter behind foreign bank accounts in tax haven jurisdictions are simply running out of places to hide,” said U.S. Attorney for the District of South Florida Wifredo A. Ferrer. “Those who evade their income tax obligations will be found and will be held accountable for their actions.”

The case is another illustration of why taxpayers may want to take advantage of the Internal Revenue Service’s Offshore Voluntary Disclosure Initiative, which permits citizens to avoid criminal prosecution by voluntarily reporting offshore bank accounts and paying interest and penalties. The IRS requires Foreign Bank Account Reports (FBARs) be filed each year, which disclose bank accounts that have a value of more than $10,000 at any point during the reporting year.

The two men were convicted of using shell companies and offshore tax havens in multiple jurisdictions, including the Bahamas, the British Virgin Islands, Panama, Liechtenstein and Switzerland. They are also accused of using shell companies to hide ownership of luxury homes and vehicles, file false tax returns, failing to file tax returns, and inducing witnesses to testify falsely under oath.

Cohen Assor and Cohen-Levy were the developers and owners of several hotels under the trade name Flatotel International, which had locations in France, Spain, Brussels and New York. About $33 million in proceeds from the sale of a New York hotel was transferred to HSBC in Switzerland and the income on the sale was never reported to U.S. authorities.
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