Tax Fraud

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The post “An Asset Search, Tax Fraud & Divorce” was first published at the Asset Search Blog on January 16, 2008.  It is republished below as the seventh post in the “Divorce & Hidden Money” series.  The post describes my investigation of a divorcing husband.  While I was the divorcing wife’s attorney, I discovered the husband had hidden money offshore in anticipation of the divorce.  I also suspected the husband concealed this money from the IRS in furtherance of a tax fraud.

If evidence of tax fraud is brought to the attention of a judge presiding over a divorce, the judge may report the fraud to the IRS.  When the divorcing husband admitted in his affidavit that he had not paid taxes, the judge in Hashimoto v. De La Rosa, 2004 slip op. 51081(Sup. Ct. N.Y. County, June 23, 2004) reported him to the I.R.S.  In Beth M. v. Joseph M., 2006 slip op. 51490 (Sup. Ct. Nassau County, July 25, 2006), the judge similarly reported a husband who testified during court proceedings that he had not filed tax returns for the years 1997 through 2001 and other times.

Some divorcing spouses meanwhile, directly tip the IRS about their spouse’s tax fraud.  The spouses supplying these tips may be eligible for a reward as participants in the IRS Whistleblower program.  It typically takes six or more years for an IRS whistleblower to collect any reward and a whistleblower can face many challenges.  More information about blowing the whistle is at the Reuters article Record $104 million reward boosts whistleblowing on tax cheats, which cites me; and the New York Times article The Price Whistle-Blowers Pay For Secrets.
Continue Reading Divorce & Hidden Money: Whistleblowing, Tax Fraud & Tipping The IRS

Google finance says that since 1993, Mr. Ty Warner’s company Ty Inc. “produced more than 370 different Beanie Babies with colorful names such as Feder Bear (current) and Cheeks the baboon (retired).”  Google finance reveals that Mr. Warner creator of the Beanie Babies, parlayed his profits into his purchase of a half-dozen luxury hotels.  Mr. Warner is a billionaire, with a net worth of 2.6 billion as of September 13th.

As outlined by a press release and his criminal information, Mr. Warner was accused of utilizing Swiss bank accounts to hide undeclared revenue from the IRS.  At his arraignment hearing last Wednesday, Mr. Warner pleaded guilty to tax fraud.  The Chicago Tribune reported that Mr. Warner told the judge at the hearing ‘I apologize for my conduct. It’s a terrible way to meet you’.  

An October 2, 2013 plea agreement reveals that Mr. Warner participated in an abusive offshore tax avoidance scheme.  To read Mr. Warner’s plea agreement, click on the image below:

Continue Reading Beanie Babies Tycoon Hid Cash In Secret Swiss Bank Accounts

Throughout its five seasons, Breaking Bad highlighted the ways narco-trafficker Walter White and his co-conspirators hid the illicit proceeds of their made-for-TV crimes.  Breaking Bad could even be considered a case study of how determined criminals and others hide assets.  For example, at Problem Dog, Season 4, Episode 7, Walter and his wife Skyler faced the dilemma of trying to conceal $7 million in drug profits, by laundering it through their A1A Car Wash.

During Mandala, Season 2, Episode 11, Skyler’s boss Ted Beneke admitted to hiding nearly $1 million in undeclared revenue from the IRS.  In furtherance of this tax fraud, Ted had cooked the books of his company, Beneke Fabricators.  At Caballo Sin Nombre, Season 3, Episode 2,  Walter’s partner Jesse Pinkman seemingly washed $400,000 through the cash purchase of his parent’s home.  In Gliding Over All, Season 5, Episode 8, Skyler disclosed she rented a storage unit to conceal a hoard of cash.  At the end of Crawl Space, Season 4, Episode 11, Walter was also shown next to some illicit cash he had earlier secreted beneath his house:

Continue Reading How Walter White Could Take His Money To A Swiss Bank

Liberty Reserve’s red flags, a new Swiss bill and letters rogatory:

  1. “Liberty Reserve’s money laundering spotted in 2009” reports the Costa Rican Financial Intelligence Unit had investigated Liberty Reserve because of  red flags.  This article too mentions that the Financial Intelligence Unit had turned the Liberty Reserve investigation over to Costa Rican

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This Asset Search News Roundup discusses the Secrecy for Sale Project and the indictment of a NY attorney along with a Swiss banker:

I)  The US-based  International Consortium of Investigative Journalists, (“ICIJ”), analyzed more than 2.5 million documents in its Secrecy for Sale Project.  The Project began after the ICIJ received a computer hard…

“Swiss Banks, Smuggling & Other Asset Recovery Issues” will be presented from 6:00 PM to 9:00 PM on April 18, 2013 in New York City, at the New York County Lawyers’ Association.  Jack Blum, Esq., Advocate Robert Fiecther of the Des Gouttes & Partners law firm located in Geneva, Switzerland and Fred L. Abrams, Esq. are speaking at this program.  To attend, please contact the New York County Lawyers’ Association at telephone no. (212) 267-6646.  The program’s description and agenda are as follows:

In its 2007 National Money Laundering Strategy report, the U.S. government estimated that as much as $36 billion annually from just the former Soviet Union, was being secretly transferred through U.S. bank accounts and U.S. shell companies.  Besides using U.S. bank accounts and shell companies, kleptocrats, Ponzi schemers, divorcing spouses, etc., can of course conceal assets by parking them in Swiss or other foreign bank accounts.

This program analyzes how bank secrecy laws, multiple jurisdictions and smuggling are utilized in schemes to conceal vast sums of money. The program discusses mutual legal assistance treaty relief and using letters rogatory as asset recovery tools.  It mentions ways whistleblowers or other tipsters may help sniff out these monies and the difficulty lawyers face in dealing with whistleblowers either as clients or as tipsters.

One of the program’s speakers Jack Blum, Esq., will examine the IRS Whistleblower Program and the ethical concerns gatekeepers such as lawyers and accountants have in reporting illegal behavior in both the civil and criminal contexts.  Mr. Blum served as associate counsel, or assistant counsel, or special counsel to three U.S. Senate committees or subcommittees; and has been quoted by or mentioned in thousands of newspaper and magazine articles around the world.  He was also an expert witness for the U.S. Department of Justice and the Internal Revenue Service.

Mr. Blum’s select clients include Heinrich Kieber, who blew the whistle on customers with offshore accounts at Liechtenstein’s private bank, the LGT Group.  Mr. Kieber sold his whistleblowing tips to the German government, which used them to track suspected tax cheats.  Mr. Blum too represented former Julius Baer Swiss banker Rudolf Elmer, who supplied tips about suspected tax evaders to both WikiLeaks and the IRS.

Another one of the program’s speakers is Robert Fiechter, who is a partner at the Des Gouttes & Partners law firm of Geneva Switzerland, founded in 1834.  Advocate Fiechter also serves as a Deputy Judge at the Court of Justice of Geneva, an appellate court.  He too served as a substitute criminal judge and is the Deputy Secretary of the Supervisory Board of the Swiss Bank’s Code of Conduct.  During the program, Advocate Fiechter will describe the ins and outs of Swiss bank secrecy laws.  He will additionally review the legal remedies available for recovering assets hidden in Switzerland and elsewhere across the globe.

Continue Reading Swiss Banks, Smuggling & Other Asset Recovery Issues

As demonstrated by the $104 million dollar IRS award to UBS Swiss bank whistleblower Bradley Birkenfeld, one may hit a home run by blowing the whistle.  Some however, face criminal charges or other extraordinary difficulties because of their whistleblowing.

The New York City Bar Association seminar “The Ins & Outs Of Recovering Assets…