FBAR Cases – Example of Offshore Account Criminal & Civil Penalties
FBAR Cases: The U.S. Government is increasing enforcement for civil and criminal willful and non-willful FBAR foreign account related penalties.
In addition to monetary fines and imprisonment, criminal foreign account charges may also include charges for Tax Fraud, Tax Evasion, Money Laundering and Structuring, and other tax and white-collar crimes.
FBAR Case for Willfulness
In the case of Mr. Birman, he was a California resident who maintained more than $1,000,000 dollars in foreign accounts in Israel, and specifically in the Bank of Leumi.
He actively worked with the bank to issue certain phantom “loans” as a way for him to access his money without being detected.
*It should be noted that Leumi Bank is considered a bad bank and has already entered into a deferred prosecution agreement with the U.S. government.
As a result, the bank agreed to turnover information regarding many of its customers who were considered U.S. account holders to the IRS for potential investigation and prosecution.
Don’t Give Your Foreign Bank “Evasion” Instructions
The reality is that the U.S, government will go after anyone who they believe committed tax fraud, especially if it involves offshore Banks and especially backs.
What many clients attempt to do (before speaking with an attorney) is to ask their foreign financial institution to either identify the account with a number or false entity name (instead of the individual’s name) or he/she instructs the bank to refrain from sending statements to the United States.
Willful Blindness and FBAR Penalties
If you contact your foreign bank or institution and direct them to not send statements to your U.s address or otherwise identify you personally with the account, you are committing tax fraud (and usually several other foreign account/FBAR crimes).
The argument that since you never saw any statements, you should not be accountable will not hold any when water. Why? Because you or your agent instructed the institution to withhold the statements. Therefore, you are intentionally avoiding the knowledge that you could otherwise have obtained from you foreign institution.
Here is a Summary of the Case as provided by the DOJ:
A Los Angeles man pleaded guilty today in U.S. District Court for the Central District of California to willfully failing to file a Report of Foreign Bank and Financial Accounts (FBAR), which would have disclosed his foreign bank accounts, announced Principal Deputy Assistant Attorney General Richard E. Zuckerman of the Justice Department’s Tax Division.
According to court documents, Ben Zion Birman, of Los Angeles, California held offshore accounts in Israel at Bank Leumi Le-Israel B.M. from 2006 to 2011. Birman willfully failed to file with the Department of Treasury an FBAR for calendar year 2010, despite having over $1 million in Bank Leumi accounts.
In an effort to further hide his money, Birman instructed Bank Leumi to hold bank mail from delivery to the United States, and obtained access to his offshore funds through the use of “back-to-back” loans, which were designed to enable borrowers to tap their concealed accounts. These lending arrangements permitted Birman to have funds issued by Leumi’s U.S. branch that were secretly secured by funds in his undeclared accounts in Israel.
In December 2014, Bank Leumi entered into a deferred prosecution agreement after the bank admitted to conspiring from at least 2000 until early 2011 to aid and assist U.S. taxpayers to prepare and present false tax returns by hiding income and assets in offshore bank accounts in Israel and other locations around the world. Under the terms of the deferred prosecution agreement, Bank Leumi paid the United States a total of $270 million and continues to cooperate with respect to civil and criminal tax investigations.
U.S. citizens, resident aliens, and permanent legal residents with a foreign financial interest in or signatory authority over a foreign financial account worth more than $10,000 are required to file an FBAR each year disclosing the account.
Birman faces a maximum sentence of five years in prison, as well as a period of supervised release, restitution and monetary penalties. Birman’s sentencing is scheduled for December 10, 2018.
“The Department of Justice is committed to vigorously investigating and prosecuting offshore account holders who maintain undeclared accounts and willfully ignore their U.S. reporting and tax obligations,” said Principal Deputy Assistant Attorney General Zuckerman.
Principal Deputy Assistant Attorney General Zuckerman commended special agents from IRS-Criminal Investigation, who are investigating the case, and Tax Division Trial Attorneys Leslie Goemaat and Melissa Schraibman Grinberg, who are prosecuting the case. The Tax Division thanks the U.S. Attorney’s Office of the Central District of California for its assistance.
Golding & Golding: About our International Tax Law Firm
Golding & Golding specializes exclusively in international tax, and specifically IRS offshore disclosure.
We are the “go-to” firm for other Attorneys, CPAs, Enrolled Agents, Accountants, and Financial Professionals across the globe. Our attorneys have worked with thousands of clients on offshore disclosure matters, including FATCA & FBAR.
Each case is led by a Board-Certified Tax Law Specialist with 20-years experience, and the entire matter (tax and legal) is handled by our team, in-house.
*Please beware of copycat tax and law firms misleading the public about their credentials and experience.