by Brian Mahany
Lest anyone think the government is easing up on offshore account violations, look at what happened to Mauricio Assor and his son, Levy Cohen-Levy. Both were sentenced last month in a Ft. Lauderdale courtroom to 10 years in prison. A federal court jury convicted the men of conspiracy to defraud the IRS and filing false income tax returns.
The father, Mauricio, was also ordered to pay almost $10 million and fines and restitution. His son, Levy was ordered to pay almost $8 million.
Originally from Spain, father and son emigrated to the U.S. quite some time ago and later became permanent U.S. residents. Both men became very successful businessmen controlling software companies and hotels. According to the indictment, the two used Panamanian and Bahamian bearer share corporations to conceal their assets. The father opened an account in the name of the Panamanian company at International Bank located in Geneva. (Bearer shares are frequently used by people seeking to hide assets from creditors or avoid taxes.)
Although having significant income and assets (dad’s home was valued at $20 million while the son’s is worth $26 million), the pair reported virtually no income. During the years in question, Mauricio’s reported income varied between $10,000 and $30,000. The son’s was not much higher. Despite the low income, the pair enjoyed a $45 million investment portfolio, a Rolls Royce Phantom, Ferrari Testarossa, a helicopter and many other toys.
It bears noting that International Bank had a branch in New York making it subject to the court’s jurisdiction. In other words, the court could compel the bank to provide information on the pair’s accounts.
The case against these two men is not isolated. In recent months, the IRS continues to seek more information from major multinational banks such as UBS, HSBC and Deutsche Bank. Most major banks have branches in the U.S. making them fair game for aggressive revenue agents and prosecutors.
The most recent trend is for money to flow to smaller cantonal banks in Switzerland with no U.S. ties. While that may buy some time, it too is a risky strategy. The Swiss are under increasing pressure to assist the IRS. A 2009 tax exchange agreement now permits the IRS to obtain information from even small regional Swiss banks.
It’s not just the Swiss that are under scrutiny. The IRS has opened an office in Panama and has announced it is closely examining banks in Singapore, India and Israel. Some taxpayers will keep moving their money from bank to bank and country to country trying to stay ahead of the IRS. The odds of getting caught, however, increase daily.
The sentences handed down in the Assor and Cohen-Levy case are quite steep. Until now, most taxpayers prosecuted for unreported offshore income or accounts received probation or house arrest sentences.
There is an amnesty for offshore accounts that runs through the end of August. The so called offshore voluntary disclosure initiative offers some saving in penalties and the ability to avoid spending the next decade in “Club Fed”, like Assor and Levy. For more information, call Brian Mahany at (414) 704-6731 or type in “amnesty” in the search box of our blog, Due Diligence.
The court did permit the father and son to be housed in the same prison.