Recently there have been a slew of convictions on charges made by the Department of Justice regarding individuals involved in conspiring to hide their foreign bank accounts by using back-to-back loans. The convictions thus far have been against individuals but it is said that they, in turn, are cooperating with the Justice Department which has also turned its attention to the banks involved, much as it did against the Swiss Bank USB in February 2009.
Taking active steps to hide income in a foreign bank account, or secret compartment, can be all the mental state evidence the DOJ needs to convict of tax evasion. For instance a woman from Iran, Guity Kashfi, made a plea agreement in her case. She explained during the proceedings that her bank had suggested and explained to her how to move her money to an Israeli bank, where they would then use her foreign bank account there to secure a loan given to her in the United States. They wanted additional collateral from her in order to continue lending to her for her USA clothing business.
The problem of going to lengths to hide foreign bank accounts and income
Did you know it is really hard to prove someone had the specific intent necessary to prove tax evasion? Really, how do you prove — beyond a reasonable doubt — what someone was thinking at a certain time? When people go to lengths to hide something, the law allows a jury to infer the only reason that someone attempted to hide assets or income was that they were acting intentionally to defraud the United States treasury. Active attempts at concealment of foreign bank accounts make tax evasion charges very easy for the DOJ/IRS to prove.
Guity's attorney, Ed Robbins, stated that she's been cooperating with the Justice Department against the banks involved, in order to reduce the penalties against her (which will still likely be severe), and that the banks presented the arrangement as part of their "services". Apparently some of the language involved in the transactions clearly indicated that the intent was for the IRS not to be able to detect the foreign account. It also indicated that the interest paid to the account in Israel would not be reported to the IRS and therefore taxes on the interest, which amounted to some hundreds of thousands of dollars, would not have to be paid.
If it is indeed the case that the Justice Department is about to crack down, or is already cracking down on the Israeli banks in a fashion similar to their case against the Swiss bank, it would appear that anyone involved in such foreign bank accounts transactions with the Israeli banks should be prepared to defend themselves against the case that is likely to be found and made against them, as individuals who "participated". If the Israeli banks are forced to disclose the foreign bank accounts that have been used in this way, many more individuals will find themselves in the limelight of the scrutiny of the IRS, the DOJ, or both.
If you find yourself concerned about this matter, thinking it may pertain to you, don't wait to set things in motion to correct the problem before it becomes worse. Contact us to schedule your free, confidential consultation.