A Divorce & Trade-Based Tax Fraud / Money Laundering
Although the divorcing husband was wealthy, he offered his wife only a meager settlement. The husband also threatened that he was "judgment proof" and that his wife might collect nothing after the divorce despite their longtime marriage. The husband however, had ample marital assets and he and several of his business associates had likely hidden them in a trade-based tax fraud / laundering scheme similar to the one Mr. Gene Haas was arrested for on June 19, 2006.
Given his fraudulent tax scheme, Mr. Haas was sentenced on November 5, 2007 to two years in prison for violating 18 U.S.C § 371, as mentioned by his August 24, 2007 plea agreement. He also ended up paying a $5 million dollar fine and over $70 million dollars in back taxes owed for 2000 and 2001. According to "Attachment A" of Mr. Haas' plea agreement, the Enmark Aerospace and Supermill companies had provided Mr. Haas with invoices for fictitious purchases. Pursuant to these phony invoices, Mr. Haas paid Enmark & Supermill about $35 million and then took business deductions for "cost of goods sold". Enmark and Supermill next returned the $35 million (less a 2% kick back fee) to Mr. Haas through his nominee, CNC Associates, Inc.
As demonstrated by the twelve case studies found at pp. 9-20 of the Financial Action Task Force's June 23, 2006 report "Trade-Based Money Laundering, Copyright © FATF/OECD. All rights reserved.", there are a wide variety of ways to conceal assets in a trade-based fraud. According to p. 4 of "Trade-Based Money Laundering", such schemes may involve: the over or under-invoicing of goods or services; the over or under-shipping of goods; falsely describing goods or services; or multiple invoicing. There are however several indicia which can sometimes help one recognize that assets have been concealed in a trade-based tax fraud or laundering scheme. As more fully set forth at page 24 of "Trade-Based Money Laundering", these asset search indicia may include:
Copyright 2007-2008 Fred L. Abrams
Given his fraudulent tax scheme, Mr. Haas was sentenced on November 5, 2007 to two years in prison for violating 18 U.S.C § 371, as mentioned by his August 24, 2007 plea agreement. He also ended up paying a $5 million dollar fine and over $70 million dollars in back taxes owed for 2000 and 2001. According to "Attachment A" of Mr. Haas' plea agreement, the Enmark Aerospace and Supermill companies had provided Mr. Haas with invoices for fictitious purchases. Pursuant to these phony invoices, Mr. Haas paid Enmark & Supermill about $35 million and then took business deductions for "cost of goods sold". Enmark and Supermill next returned the $35 million (less a 2% kick back fee) to Mr. Haas through his nominee, CNC Associates, Inc.
As demonstrated by the twelve case studies found at pp. 9-20 of the Financial Action Task Force's June 23, 2006 report "Trade-Based Money Laundering, Copyright © FATF/OECD. All rights reserved.", there are a wide variety of ways to conceal assets in a trade-based fraud. According to p. 4 of "Trade-Based Money Laundering", such schemes may involve: the over or under-invoicing of goods or services; the over or under-shipping of goods; falsely describing goods or services; or multiple invoicing. There are however several indicia which can sometimes help one recognize that assets have been concealed in a trade-based tax fraud or laundering scheme. As more fully set forth at page 24 of "Trade-Based Money Laundering", these asset search indicia may include:
- a disparity between a shipped commodity's bill of lading and its invoice.
- a disparity between a commodity's value as recorded on its invoice and fair market value.
- the shipping of goods although there is no profit / economic benefit.
- a shipment with a nexus to shell companies.
- letters of credit related to a shipment that have been amended or extended repeatedly.
- the type of shipped commodity is inconsistent with the importer's / exporter's ordinary business activities.
- shipping to or from a high-risk geographical location (i.e. a jurisdiction especially vulnerable to money laundering).
Copyright 2007-2008 Fred L. Abrams
