Offshore Tax Fraud Scheme Fabricated Stock Losses to Offset Gains

Two former executives of an investment firm were sentenced to more than 4 months in prison after authorities convicted them of a tax fraud scam that fabricated stock losses in order to help wealthy clients avoid taxes.

The U.S. Attorney’s Office for the Western District of Washington reports the firm utilized offshore bank accounts to carry out the scheme.

As our tax attorneys frequently report on our Tax Problem Attorney Blog, the government’s crackdown on offshore bank accounts continues to result in federal tax evasion charges throughout the United States.

In this case the executives were charged with conspiracy to defraud the United States and aiding and assisting with the filing of a false tax return.

Both men also paid the Internal Revenue Service $7 million in penalties.

The case involved a tax shelter the men dubbed POINT (Portfolio Optimized Investment Transaction), which resulted in an estimated tax loss to the government of $250 million.

“Today the individuals responsible for developing and selling a fraudulent tax shelter scheme have been held accountable for their actions. Their tax strategies were no more than a web of lies and false representations,” said Victor S.O. Song, Chief, IRS Criminal Investigation. “As the tax filing season gets underway, honest taxpayers can be assured that the IRS, in partnership with the Department of Justice, will investigate and prosecute those who promote such bogus schemes. Also, it is worth noting that none of the investors benefited from this fraudulent scheme because the IRS collected the correct tax from those who invested in it.”

The government continues to become more aggressive in investigating and prosecuting alleged tax violators — particularly when the case involves offshore bank accounts. Seeking the advice of a qualified tax lawyer is always the best course of action to protect your rights, your freedom and the future financial well-being of you and your family.

Prosecutors had requested six years in prison, saying the defendants made “a mockery of the entire tax system,” by fabricating stock losses to offset gains for very wealthy individuals. The government contends the scheme was carried out from 1999 to 2006.

Puget Sound Business Journal report is available here.

If you have an offshore bank account or any tax problem, contact the tax attorneys at Brager Tax Law Group, A P.C. for a confidential appointment to discuss your rights. Call 310-208-6200.