Monthly Archives: October 2020

According to the DoJ, Robert F. Smith, the Chairman and Chief Executive Officer of a San Francisco based private equity company, Vista Equity Partners, entered into a Non-Prosecution Agreement (the agreement) with the Department of Justice, for his involvement from 2000 through 2015 in an illegal scheme to conceal income and evade millions in taxes by using an offshore trust structure and offshore bank accounts. In that agreement, Smith admits his involvement in the illegal scheme and agrees to cooperate with ongoing investigations and to pay back taxes and penalties and full.

This may be a part of a Voluntary Disclosure, which should prevent him from being federally prosecuted and from jail time?

“It is never too late to do the right thing,” said U.S. Attorney Anderson. “It is never too late to tell the truth. Smith committed serious crimes, but he also agreed to cooperate. Smith’s agreement to cooperate has put him on a path away from indictment.” Could this have been part of a Voluntary Disclosure, which would prevent him from being federally prosecuted and from jail time?

According to the agreement, 

• Smith, a resident of Austin, Texas, formed the Excelsior Trust in Belize, and a shell company, Flash Holdings, in Nevis in 2000. 
• Smith used third-parties to conceal his beneficial ownership and control of the Excelsior Trust and Flash Holdings. 
• In reality, Smith controlled both offshore structures and made all substantive decisions regarding Flash Holdings’ operations, transactions, income, investments and assets. 
• Smith used the Excelsior Trust to conceal his ultimate ownership and control over Flash Holdings. 
• He further used Flash Holdings to hide his interest in private equity investments. 

Smith admits that he formed these foreign entities in order to use them to avoid the payment of U.S. taxes. Furthermore, Smith admits that he knowingly and intentionally used the Excelsior Trust and Flash Holdings and their associated foreign bank accounts in the British Virgin Islands and Switzerland to conceal from the IRS, and the U.S. Treasury Department, income earned and distributed to Flash Holdings from private equity funds. 

As a result of the overall scheme, 

• Smith willfully did not report to the IRS over $200 million of partnership income. 
• Smith also failed to report his ownership of his foreign bank accounts in BVI and Switzerland as required by law. 

Over the years, Smith used millions of this unreported income to acquire and make improvements to real estate used for his personal benefit. 

• Smith admits that, in 2005, he used approximately $2.5 million in untaxed funds to purchase and renovate a vacation home in Sonoma, California. 
• In 2010, Smith again used untaxed funds to purchase two ski properties and a piece of commercial property in France. 
• In 2011 and 2012, Smith used approximately $13 million of untaxed funds to build and make improvement to a residence in Colorado and to fund charitable activities at the property. 

Under the terms of the agreement, Smith has agreed to continue cooperating with the Department of Justice in other related investigations. Further, Smith has agreed to pay approximately $56 million in taxes and penalties stemming from the unreported income and another $82 million in penalties stemming from his concealment of his offshore bank accounts. 

Taken altogether, Smith will pay more than $139 million in taxes and penalties. Additionally, Smith agrees to abandon his protective claims for a refund totaling approximately $182 million that were filed with the IRS. The protective refund claims consisted, in part, of claims filed with the IRS for charitable contribution deductions on Sept. 21, 2018, and Oct. 11, 2019. As a result of the agreement, Smith shall take no further direct or indirect tax benefit from such claims.

Do You Have Undeclared (Offshore) Income ?

 

Want to Know if which Voluntary Disclosure
Program is Right for You? 

Contact the Tax Lawyers at 

Marini & Associates, P.A.   

for a FREE Tax Consultation contact us at:

www.TaxAid.com or www.OVDPLaw.com or

Toll Free at 888-8TaxAid (888) 882-9243

Read more at: Tax Times blog

According to the DoJ, a federal grand jury in San Francisco, California, returned a 39 count indictment charging Robert T. Brockman, the Chief Executive Officer of an Ohio-based software company (Reynolds and Reynolds Company), with tax evasion, wire fraud, money laundering, and other offenses on October 15, 2020.

The charges stem from an alleged decades-long scheme to conceal approximately $2 billion in income from the IRS as well as a scheme to defraud investors in the software company’s debt securities. 

“Today’s Indictment Reflects The Department Of Justice’s Commitment To Finding And Prosecuting The Costliest And Most Sophisticated Tax Crimes In The United States,”
Said Principal Deputy Assistant Attorney General Of The Tax Division Richard E. Zuckerman.

“Complexity will not hide crime from law enforcement,” said U.S. Attorney Anderson. “Sophistication is not a defense to federal criminal charges. We will not hesitate to prosecute the smartest guys in the room.” 

“As Alleged, Mr. Brockman Is Responsible For Carrying Out An Approximately Two Billion Dollar ($2,000.000,000)
Tax Evasion Scheme,”
Said Jim Lee, Chief Of IRS Criminal Investigation. 

“IRS Criminal Investigation aggressively pursues tax cheats domestically and abroad. No scheme is too complex or sophisticated for our investigators. Those hiding income or assets offshore are encouraged to come forward and voluntarily disclose their holdings.” 

According to the indictment, Brockman, a resident of Houston, Texas, and Pitkin County, Colorado, 

• used a web of offshore entities based in Bermuda and Nevis to hide from the IRS income earned on his investments in private equity funds which were managed by a San Francisco-based investment firm. 
• As part of the alleged scheme, Brockman directed untaxed capital gains income to secret bank accounts in Bermuda and Switzerland. 
• The indictment further alleges that to execute the fraud, between 1999 and 2019, Brockman took measures such as backdating records and using encrypted communications and code words to communicate with a co-conspirator, among other alleged actions. 

In addition to the tax offenses, the indictment alleges that, between 2008 and 2010, Brockman engaged in a fraudulent scheme to obtain approximately $67.8 million in the software company’s debt securities. 

As CEO, Brockman was contractually restricted from purchasing any of the software company’s debt securities without prior notice, full disclosure, and amending the associated credit agreements. The indictment alleges that Brockman used a third-party to circumvent those requirements, to acquire the debt securities, and to conceal from the sellers valuable economic information. 

The indictment further alleges that Brockman used material, non-public information about the software company to make decisions about purchasing the debt. In addition, Brockman allegedly persuaded another individual to alter, destroy, and mutilate documents and computer evidence with the intent to impair the use of such evidence in a grand jury investigation. 

Brockman is charged with:

1. conspiracy, in violation of 18 U.S.C. § 371; 
2. 

   seven (7) counts of tax evasion, in violation of 26 U.S.C. § 7201; 

3. six (6) counts of failing to file foreign bank account reports, in violation of 31 U.S.C. §§ 5314 & 5322(b); 
4. 20 counts of wire fraud affecting a financial institution, in violation of 18 U.S.C. § 1343; 
5. two (2) counts of concealment money laundering, in violation of 18 U.S.C. § 1956(a)(1)(B)(i)), and 
6. tax evasion money laundering, in violation of 18 U.S.C. § 1956(a) (1)(A)(ii)); and 
7. one count each of international concealment money laundering, in violation of 18 U.S.C. § 1956(a)(2)(B)(i)); 
8. evidence tampering, in violation of 18 U.S.C. § 1512(b)(2)(B), and 
9. destruction of evidence, in violation of 18 U.S.C. § 1512(c)(1). 

An indictment merely alleges that crimes have been committed. The defendant is presumed innocent until proven guilty beyond a reasonable doubt. 

Havea Criminal Tax Problem?

 Contact the Tax Lawyers at 

Marini & Associates, P.A.  

for a FREE Tax HELP Contact Us at:

www.TaxAid.com or www.OVDPLaw.com 

or Toll Free at 888-8TaxAid

Read more at: Tax Times blog

On October 6, 2020, FinCEN announced that victims of the California Wildfires, the Iowa Derecho, Hurricane Laura, the Oregon Wildfires, and Hurricane Sally have until December 31, 2020, to file Reports of Foreign Bank and Financial Accounts (FBAR) for the 2019 calendar year.

The FBAR for calendar year 2019 otherwise would be due on or before October 15, 2020.

FinCEN is offering this expanded relief to any area designated by the Federal Emergency Management Agency (FEMA) as qualifying for individual assistance as a result of the California Wildfires,1 the Iowa Derecho,2 Hurricane Laura,3 the Oregon Wildfires,4 and Hurricane Sally5 (the “affected areas”). Should FEMA designate FBAR filers in other localities affected by these natural disasters as eligible for individual assistance at a later date, they will receive the same filing relief automatically.

In addition, FinCEN will work with any FBAR filer who lives outside the disaster areas and whose records that are required to meet the deadline are located in the affected areas. FBAR filers who live outside the affected areas seeking assistance in meeting their filing obligations (including workers assisting the relief activities who are affiliated with a recognized government or philanthropic organization), should contact the FinCEN Regulatory Support Section at 800-767-2825 or electronically at [email protected].

FBAR relief is part of a coordinated federal response to the damage caused by natural disasters and is based on local damage assessments by FEMA. For information on disaster recovery, visit https://www.disasterassistance.gov/.

Have an FBAR Problem?

Read more at: Tax Times blog

In a one sentence notice, the Financial Crimes Enforcement Network (FinCEN) announced yesterday that it is extending the deadline for filing FinCEN Form 114, Reports of Foreign Bank and Financial Accounts (the “FBAR”), for all filers who had reportable foreign accounts in the year 2019 from today, October 15, until December 31, 2020.

The announcement provides no explanation for the reasons for the extension. Yesterday’s announcement expands FinCEN’s announcement issued on October 6, 2020, which extended the FBAR deadline until December 31, 2020 only for persons located in areas designated by FEMA as qualifying for disaster relief as a result of the California Wildfires, the Iowa Derecho, Hurricane Laura, the Oregon Wildfires, and Hurricane Sally. Yesterday’s announcement applies to all FBAR filers.

All U.S. persons who possess an ownership interest, or signatory or other authority, over one or more foreign accounts with an aggregate balance exceeding $10,000 in a given year are required by law to file an FBAR. Failure to timely file an FBAR can result in civil penalties and, in willful cases, criminal prosecution. The present FBAR filing deadline for accounts held in 2019 is October 15, 2020.

Have an FBAR Problem?

Read more at: Tax Times blog