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First FATCA Violation Conviction With Bank Executive's Plea Deal

The former head business officer and CEO of offshore Loyal Bank Ltd. admitted to setting up multiple opaque bank accounts for a purported stock fraudster in order to evade detection by U.S. authorities in violation of the Foreign Account Tax Compliance Act, the first conviction of its kind. 
Adrian Baron 63, who was extradited from Hungary to face charges in New York, pled to one count of conspiring to defraud the U.S. Dressed in jail fatigues, Baron admitted to directing others at Loyal Bank to set up bank accounts for an individual identified in court papers as an undercover law enforcement agent, who posed as a U.S. fraudster involved in multiple stock manipulation schemes on the hunt for corporate bank accounts he could control but that couldn’t be traced back to him.
According to the DoJ, a grand jury in Brooklyn has returned a five-count superseding indictment charging

The Defendants:
PANAYIOTIS KYRIACOU, also known as “Peter Kyriacou” Age: 26, Residence: London, England
ARVINSIGH CANAYE, also known as “Vinesh Canaye” Age: 30, Residence: Mauritius
ADRIAN BARON Age: 63, Residence: Budapest, Hungary
LINDA BULLOCK Age: 57, Residence: St. Vincent/Grenadines

with conspiracies to defraud the United States by obstructing the functions of the Internal Revenue Service in its administration of the Foreign Account Tax Compliance Act (“FATCA”).   
FATCA is a federal law that requires foreign financial institutions to identify their U.S. customers and report information (“FATCA Information”) about financial accounts held by U.S. taxpayers either directly or through a foreign entity.  FATCA’s primary aim is to prevent U.S. taxpayers from using foreign accounts to facilitate the commission of federal tax offenses.

Last month, a grand jury in Brooklyn charged Kyriacou, Canaye, Baron, Bullock, and others with conspiracy to commit securities fraud and money laundering conspiracy.

 "As Alleged in the Superseding Indictment, Kyriacou, Canaye, Baron, and Bullock Agreed to Defraud the United States by Opening Foreign Bank and Brokerage Accounts without Collecting FATCA Information to Report to the IRS,"
Stated United States Atty. Donoghue.


"The Charges Announced Today Reflect the Commitment of This Office and Our Law Enforcement Partners to Combat Tax Evasion by Identifying Fraudulent Offshore Safe Havens That Facilitate Hiding Financial Assets from the IRS and to Prosecute Those Individuals Who Violate US Tax Laws."


The Beaufort Scheme         
As alleged in the superseding indictment, between August 2016 and February 2018, Kyriacou, an investment manager at Beaufort Securities, and Canaye, a general manager at Beaufort Management, together with others, conspired to defraud the United States by failing to comply with FATCA. 

Specifically, in the fall of 2016, an Undercover Agent contacted Kyriacou and stated that he was a U.S. citizen interested in opening brokerage accounts at Beaufort Securities from which he could execute trades in several multi-million dollar stock manipulation deals.  In furtherance of the stock manipulation scheme, Kyriacou and Beaufort Securities opened six brokerage accounts for the Undercover Agent.  Notwithstanding that a U.S. citizen would be the beneficial owner of each of the accounts, at no time did Kyriacou or Beaufort Securities request FATCA Information from the Undercover Agent.

In July 2017, Kyriacou introduced the Undercover Agent to Canaye and advised that Canaye could assist with the Undercover Agent’s schemes.  After meeting with the Undercover Agent and discussing the stock manipulation scheme, in January 2018, Canaye and Beaufort Management opened six global business corporations for the Undercover Agent.  The Undercover Agent’s name did not appear on any of the account opening documents. 

The Loyal Scheme                          
In June 2017, the Undercover Agent met with Baron, Loyal Bank’s Chief Business Officer.  During the meeting, the Undercover Agent explained that he was a U.S. citizen and was involved in stock manipulation schemes.  The Undercover Agent further explained that he was interested in opening multiple corporate bank accounts at Loyal Bank.  In July 2017, the Undercover Agent met with Baron and Bullock, Loyal Bank’s Chief Executive Officer.  During the meeting, the Undercover Agent described how his stock manipulation deals operated, including the need to circumvent the IRS’s reporting requirements under FATCA.  In July and August 2017, Loyal Bank opened multiple bank accounts for the Undercover Agent.  At no time did Loyal Bank request or collect FATCA Information from the Undercover Agent.

The charges in the superseding indictment are merely allegations, and the defendants are presumed innocent unless and until proven guilty. However for  Adrian Baron who Pled Guilty, he is due to be sentenced on December 10, 2018.

Do You Have a Criminal Tax Problem?

Contact the Tax Lawyers of

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



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Former Swiss Banker Charged in $1.2 Billion Venezuelan International Money Laundering Operation

According to DoJ, the former managing director and vice chairman of Julius Baer pleaded guilty on August 22, 2018, for his role in a $1.2 Billion international scheme to launder funds embezzled from Venezuelan state-owned oil company Petróleos de Venezuela, S.A. (PDVSA).

Matthias Krull, 44, a German national and Panamanian resident, pleaded guilty to one count of conspiracy to commit money laundering.  He is scheduled to be sentenced on Oct. 29, 2018 by U.S. District Judge Cecilia M. Altonaga of the Southern District of Florida, who accepted his plea on August 22, 2018.

As part of his plea, Krull admitted that in his position with the Swiss bank, he attracted private clients, particularly clients from Venezuela, to the bank.  In this role, Krull’s clients included Francisco Convit Guruceaga, who was indicted on money laundering charges on Aug. 16, 2018. Krull’s clients also included three unnamed conspirators described in the Aug. 16, 2018 indictment. 

Krull admitted that the conspiracy began in December 2014 with a currency exchange scheme that was designed to embezzle around $600 million from PDVSA, obtained through bribery and fraud, and the conspirators’ efforts to launder a portion of the proceeds of that scheme. 

By May 2015, the conspiracy had doubled in amount to $1.2 billion embezzled from PDVSA.  PDVSA is Venezuela’s primary source of income and foreign currency (namely, U.S. Dollars and Euros).  Krull joined the conspiracy in or around 2016, he admitted, when a co-conspirator contacted him to launder the proceeds of a PDVSA foreign-exchange embezzlement scheme. Ultimately, Krull joined the conspiracy to launder $1.2 billion worth of funds that were embezzled from PDVSA, he admitted. 

Krull and Members of the Money Laundering Conspiracy Used Miami, Florida Real Estate and Sophisticated False Investment Schemes to Conceal That the $1.2 Billion Was in Fact Embezzled from PDVSA. 

Krull also admitted that surrounding and supporting these false-investment laundering schemes are complicit money managers, brokerage firms, banks and real estate investment firms in the United States and elsewhere, operating as a network of professional money launderers
Krull’s co-conspirators indicted on Aug. 16 include former PDVSA officials, professional third-party money launderers, and members of the Venezuelan elite, sometimes known as “boliburgués.”
An indictment is merely an allegation and all defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law. 
Accord to Bloomberg, the Julius Baer Group Ltd. has started an investigation after the arrest of Matthias Krull,  the ex-employee who has since admitted to participating in a billion-dollar scheme to launder money bilked from Venezuela’s state oil company. The private bank is not being charged, Chief Executive Officer Bernhard Hodler said in Zurich on August 26,2018, declining to comment further.
Do You Have a Criminal Tax Problem?

Contact the Tax Lawyers of

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

Pa Nurse May Need Anesthesia For Tax Evasion Pain

According to the DoJ, a Penn Hills, Pennsylvania resident pleaded guilty in federal court to 2 counts of income tax evasion. According to documents and information provided to the court, Loren Pulliam, 53, a certified registered nurse anesthetist, pleaded guilty to 1 count of evasion of payment and 1 count of evasion of assessment. 

Between 2002 and 2005, Pulliam earned over $500,000 in income, and over $1.2 million in additional income, totaling over $1.7 million, between 2008 and 2016, working as a nurse anesthetist at medical facilities in the Pittsburgh area. In 2008, the U.S.  Tax Court entered an order against Pulliam finding over $280,000 in tax and penalties due and owing for tax years 2002 through 2005. 

Pulliam evaded these tax liabilities by establishing a nominee entity called LJP Enterprises in 2006, directing her employers to pay compensation to a bank account for that entity, and then using the LJP Enterprises bank account to pay personal expenses.  These actions also prevented the Internal Revenue Service (IRS) from assessing the amount of Pulliam’s tax liability for tax years 2011 through 2014. 

The Total Tax Loss Resulting from Pulliam's Conduct for Tax Years 2002 through 2006 and 2008 through 2014 Is Approximately $766,624.67!

Senior United States District Judge Donetta W. Ambrose scheduled sentencing for January 8, 2019.  Pulliam faces a statutory maximum sentence of 5 years in prison for each count of tax evasion, as well as a period of supervised release, restitution, and monetary penalties.

Do You Have a Criminal Tax Problem?

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

LB&I Has Announced the Approval of 5 Additional Compliance Campaigns

The IRS Large Business and International division (LB&I) has announced the approval of five additional compliance campaigns.  LB&I announced on January 31, 2017, the rollout of its first 13 campaigns, followed by 11 campaigns on November 3, 2017, five campaigns on March 13, 2018, six campaigns on May 21, 2018, and five more on July 2, 2018.

 While LB&I continues to review legislation enacted on December 22, 2017, to determine which existing campaigns, if any, could be impacted as a result of a change in the law, it is moving toward issue-based examinations and a compliance campaign process in which the organization decides which compliance issues that present risk require a response in the form of one or multiple treatment streams to achieve compliance objectives. This approach makes use of IRS knowledge and deploys the right resources to address those issues.

The campaigns are the culmination of an extensive effort to redefine large business compliance work and build a supportive infrastructure inside LB&I. Campaign development requires strategic planning and deployment of resources, training and tools, metrics and feedback. LB&I is investing the time and resources necessary to build well-run and well-planned compliance campaigns.

These five additional campaigns were identified through LB&I data analysis and suggestions from IRS employees. LB&I's goal is to improve return selection, identify issues representing a risk of non-compliance, and make the greatest use of limited resources.

The five campaigns selected for this rollout are:

            1. IRC Section 199 – Claims Risk Review

Public Law 115-97 repealed the Domestic Production Activity Deduction (DPAD) for taxable years beginning after December 31, 2017.

This campaign addresses all business entities that may file a claim for additional DPAD under IRC Section 199. The campaign objective is to ensure taxpayer compliance with the requirements of IRC Section 199 through a claim risk review assessment and issue-based examinations of claims with the greatest compliance risk. 


  • 2. Syndicated Conservation Easement Transactions

  • The IRS issued Notice 2017-10, designating specific syndicated conservation easement transactions as listed transactions, requiring disclosure statements by both investors and material advisors.
    This campaign is intended to encourage taxpayer compliance and ensure consistent treatment of similarly situated taxpayers by ensuring the easement contributions meet the legal requirements for a deduction, and the fair market values are accurate.
    The initial treatment stream is issue-based examinations. Other treatment streams will be considered as the campaign progresses.
    3. Foreign Base Company Sales Income: Manufacturing Branch Rules
    In general, foreign base company sales income (FBCSI) does not include income of a controlled foreign corporation (CFC) derived in connection with the sale of personal property manufactured by such corporation. However, if a CFC manufactures property through a branch outside its country of incorporation, the manufacturing branch may be treated as a separate, wholly owned subsidiary of the CFC for purposes of computing the CFC’s FBCSI, which may result in a subpart F inclusion to the U.S. shareholder(s) of the CFC.
    The goal of this campaign is to identify and select for examination returns of U.S. shareholders of CFCs that may have underreported subpart F income based on certain interpretations of the manufacturing branch rules. The treatment stream for the campaign will be issue-based examinations.
    4. 1120F Interest Expense/Home Office Expense
    This campaign addresses compliance on two of the largest deductions claimed on Form1120-F U.S. Income Tax Return of a Foreign Corporation. Treasury Regulation Section 1.882-5 provides a formula to determine the interest expense of a foreign corporation that is allocable to their effectively connected income. The amount of interest expense deductions determined under Treasury Regulation Section 1.882-5 can be substantial. Treasury Regulation Section 1.861-8 governs the amount of Home Office expense deductions allocated to effectively connected income. Home Office Expense allocations have been observed to be material amounts compared to the total deductions taken by a foreign corporation.
    The campaign compliance strategy includes the identification of aggressive positions in these areas, such as the use of apportionment factors that may not attribute the proper amount of expenses to the calculation of effectively connected income. The goal of this campaign is to increase taxpayer compliance with the interest expense rules of Treasury Regulation Section 1.882-5 and the Home Office expense allocation rules of Treasury Regulation Section 1.861-8. The treatment stream for this campaign is issue-based examinations.
    5. Individuals Employed by Foreign Governments & International Organizations

    In some cases, individuals working at foreign embassies, foreign consular offices, and various international organizations may not be reporting compensation or may be reporting it incorrectly. Foreign embassies, foreign consular offices and international organizations operating in the U.S. are not required to withhold federal income and social security taxes from their employees’ compensation nor are they required to file information reports with the Internal Revenue Service.
    This lack of withholding and reporting results in unreported income, erroneous deductions and credits, and failure to pay income and Social Security taxes. Because this is a fluid population, there may be a lack of knowledge regarding tax obligations. This campaign will focus on outreach and education by partnering with the Department of State’s Office of Foreign Missions to inform employees of foreign embassies, consular offices and international organizations. The IRS will also address noncompliance in this area by issuing soft letters and conducting examinations. 
    Being Audited by the IRS ? 

    Contact the Tax Lawyers at
    Marini & Associates, P.A.
     for a FREE Tax Consultation Contact us at:
    or Toll Free at 888-8TaxAid (888 882-9243).




    Read more at: Tax Times blog