Category Archives: criminal tax law

According to DoJ, a Swiss national pleaded guilty on December 21, 2023 to conspiring to defraud the United States for his role in a scheme to help high-net-worth U.S. taxpayers conceal their income and assets in offshore accounts.

According to court documents and statements made in court, Rolf Schnellmann was the former head of Allied Finance Trust AG, a ZuJanuary come in andrich-based financial services company and a subsidiary of the Allied Finance Group in Liechtenstein. Rolf Schnellmann, Daniel Wälchli and Zurich, Switzerland-based Allied Finance Trust AG were indicted in 2020 for conspiracy to defraud the US.

From approximately 2008 to 2014, Schnellmann and his co-conspirators defrauded the IRS by concealing income and assets of high-net-worth U.S. taxpayer-clients in undeclared bank accounts at Privatbank IHAG Zurich AG (IHAG), a Swiss private bank. 

Schnellmann And His Co-Conspirators Devised And Implemented A Scheme Dubbed The “Singapore Solution” To Fraudulently Conceal The Bank Accounts Of The U.S. Taxpayer-Clients, Their Assets And Their Income From U.S. Authorities.

As part of the scheme, Schnellmann and his co-conspirators conspired to transfer more than $60 million from the U.S. taxpayer-clients’ undeclared IHAG bank accounts through a series of nominee accounts in Hong Kong and other locations before returning the funds to newly opened accounts at IHAG in the name of a Singapore-based asset-management firm that a co-conspirator helped establish. The U.S. taxpayer-clients paid large fees to IHAG and others to help them conceal their funds and assets and evade taxes. 

Schnellmann Was Indicted For Helping 3 U.S.
Taxpayer-Clients Conceal More Than $60 Million Offshore.

Schnellmann was arrested in August in Italy and extradited to the United States. He is scheduled to be sentenced on July 19, 2024, and faces a maximum penalty of five (5) years in prison, as well as a period of supervised release, restitution and monetary penalties. A federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors.

Read more at: Tax Times blog

According to Daily Tax Report the IRS has rescinded some criminal summonses from its crackdown on Malta pension plans, raising questions about whether the agency is backing off or retooling its aggressive campaign targeting the offshore tax schemes.

Three Attorneys Interviewed By Bloomberg Tax Said More Than 30 Of Their Clients Had Received A Withdrawal Letter Last Week.

The IRS declined to comment.  It’s not clear whether the withdrawal letters represent a revision to the investigation’s focus into the potentially abusive schemes. If so, it would be a striking reversal after the agency sent out hundreds of summonses in June to wealthy Americans sheltering assets in Malta and their advisors. A letter announcing the rescinded summons, obtained by Bloomberg Tax, states that 

The brief letter, dated Dec. 4, specifies the agency hasn’t used any information or records collected by IRS Criminal Investigation, adding physical records will be returned and “any electronic responsive records have been destroyed.” The letter, signed by IRS Criminal Investigation special agent Brian Visalli, gives no rationale or legal basis for the agency’s decision, but advises taxpayers to retain any records responsive to the summons “as you may receive subsequent legal process for those records.”

Former IRS commissioner Charles Rettig said any adjustment to the criminal probe wouldn’t affect the current pattern of civil audits. “Withdrawing the Summons’ does not translate, at least not yet, into walking away from civilly examining the transaction,” he said in an emailed message.

Bryan Skarlatos, a partner in the New York office of Kostelanetz, characterized the action as “a recognition that the summonses were improperly issued” and a decision to “focus the criminal investigation more narrowly while allowing many of the civil audits to proceed.”

Tom Cullinan, a shareholder in the Atlanta office of Chamberlain Hrdlicka, suspects Criminal Investigation concluded it wouldn’t be able to demonstrate criminal fraud because the tax controversies boil down to technical interpretations of a treaty.

Ventry, the California law professor, said IRS shouldn’t back down if it has reasonable evidence of fraudulent conduct and to the extent the agency’s information demands might have been “over-inclusive,” the IRS could and should issue a narrower batch of summonses targeting the individuals and the conduct of greatest concern. 

Taxpayers who have already claimed the purported tax benefits of one of these four transactions on a tax return should consider taking corrective steps, such as filing an amended return and seeking independent advice. 

Where appropriate, the IRS will challenge the purported tax benefits from the transactions on this list, and the IRS may assert accuracy-related penalties ranging from 20% to 40%, or a civil fraud penalty of 75% of any underpayment of tax. 

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Read more at: Tax Times blog

As part of December 4, 2023’s resolution, Banque Pictet entered into a deferred prosecution agreement and agreed to pay approximately $122.9 million to the U.S. Treasury. 

Today’s Resolution Is One of a Series of Cases by The Justice Department in Connection With its Investigations Since 2008 Into Facilitation of Offshore U.S. Tax Evasion by Foreign Banks.

The case has been assigned to U.S. District Judge Edgardo Ramos for the Southern District of New York. 

Read more at: Tax Times blog

The Swiss tax office notified 12 Swiss banks and one fiduciary that the U.S. is asking for legal assistance in rooting out tax cheats, according to a government bulletin made public this week. The requests cite FATCA, a U.S. banking and tax law which is applied abroad.

The requests represent vestiges of American clients at Swiss banks which haven't agreed to a data handover. FATCA is an offshoot of a decade-long U.S. hunt for money hidden offshore, including in Switzerland. 

Additionally, U.S. and Swiss officials in 2012 agreed on a program for Swiss banks to come clean on undeclared accounts and avoid prosecution. Many of the banks listed in the most recent Swiss bulletin, like Vontobel and Mirabaud, elected simply not to take part in the program.

Pictet, which is also listed in the bulletin, couldn't take part because it is still in the crosshairs of a U.S. criminal investigation for its offshore dealings with America's wealthy. Other banks include Barclays' Swiss arm and Union Bancaire Privée, both of which did participate.

The remaining banks listed are CA Indosuez, Hinduja Banque, of which didn't take part, as well as Schroder & Co, PKB Private Bank, and Zuger Kantonalbank, which did. The Swiss fiduciary listed in the legal aid is Arofin.

Fibi, a defunct bank whose assets were bought by Compagnie Bancaire Helvetique, is also on the list, as is Notenstein La Roche, which was purchased by Vontobel three years ago.

The legal aid comes in response to requests from U.S. tax investigators under FATCA, or the Foreign Account Tax Compliance Act. Switzerland and the U.S. last year finally ratified a double taxation agreement, paving the way to cooperate.

Read more at: Tax Times blog