Hiding Money from Uncle Sam? Don’t!
Every failed tax scheme started with folks who didn’t think they would get caught. And many of the people who end up in prison are pretty smart people. Doctors, lawyers, business executives and even billionaires. Each thought they had a foolproof idea. Many of those ideas involve tax avoidance schemes.
Our story starts with Albert and Mary Anne Berrettini. Albert was a recent guest at the “Gray Bar Hotel” also known as Club Fed. More on that later.
Back in the 90’s, the Berrettinis got hooked up with Tower Executive Resources. That company “helped” Americans evade taxes by parking unreported income in offshore accounts, often at Barclays Bank in the Turks and Caicos islands.
The indictment against the couple claimed that Tower would establish two companies in the Turks for each of their clients. A local cabbie was the nominee owner of each company but the client retained full control of the money in the phony company accounts.
To further frustrate proper assessment of tax and conceal the transfers, Tower created false invoices for “lease” payments. This allowed clients to show the money going to Tower as a deductible business expense. In the case of the Berrettinis, Tower billed for management and consulting services so that the couple could deduct their money transfers as business expenses.
Clients that wanted to access their money could get their money back through a debit card or in the case of the Berrettinis, through false loans. They acted as if they were borrowing money from a Tower affiliate when they were really just repatriating their own money.
Like many of these scams, Tower collapsed and in its wake the government accessed its list of clients. For the Berrettinis, that ultimately meant criminal prosecution. Defiant to the end, the Berrettinis took the case to trial and lost. (He appeared without counsel.) I say defiant because Albert has accused the court of treason and sedition. Strong words.
Albert was ordered to serve a sentence of 27 months while his wife Mary Anne received two year probation. Still not happy, Albert appealed. That appeal was quickly shot down as well.
According to the Court of Appeals,
“Berrettini makes numerous frivolous arguments that we reject: that the government must produce a valid contract in order to prosecute; that Berrettini’s rights under the Speedy Trial Act were violated because the government failed to comply with American Bar Association standards; that Berrettini was before the District Court under threat, duress, and coercion; that Berrettini has yet to see the indictment against him; that the government violated the clean hands doctrine; that the prosecutor lacked authorization to prosecute his case; that the prosecutor has committed treason, sedition, and other high crimes and misdemeanors; that the prosecutor suppressed and withheld information from Berrettini; that the District Court judge was biased and prejudiced against Berrettini; that the prosecutor tampered with witnesses and the jury; and that the jury members were prejudiced because Berrettini saw them associating with Internal Revenue Service and Treasury Department agents.”
The Supreme Court didn’t even consider his appeal which appeared to suggest that the judge and IRS engaged in crimes against humanity.
There are several lessons here. First, don’t try to represent yourself in a criminal trial. That is usually a ticket to jail.
Second, participating in heavily marketed tax avoidance schemes increases your risk of getting caught goes up exponentially. It’s one thing to quietly park money offshore and hope you don’t get caught. But when you join a group or movement, expect the government knows of it and will ultimately get the member list. Ditto for parking your money in a well known bank – if bank secrecy isn’t dead yet, its certainly bleeding profusely.
Albert “Lee” Berrettinis is what the government calls a “tax defier.” Although there is some logic behind the movement, under our Constitution, the courts interpret the law. There are steep consequences for following bad advice.
For the record, we do not advocate tax evasion in any stripe or flavor. Whatever your views on the Constitutionality of our tax laws, the courts have the final say. If a promoter tells you otherwise, beware.
Whistleblower Rewards for Reporting Tax Defiers and Tax Cheats
The story of the Berrettinis has a final lesson. The IRS pays cash whistleblower rewards to those with inside information about tax cheats. This case began after the IRS busted Tower Executive Resources. Located in Colorado, the IRS says “the primary purposes of Tower were to assist its clients in evading income taxes, filing false tax returns and protecting assets from being seized by the IRS for failure to pay taxes.”
How did Tower get caught? The government doesn’t say but typically, the IRS gets a tip from a whistleblower. Since the IRS protects the identities of whistleblowers, we just don’t know how Tower was caught and whether the government paid a whistleblower reward.
When former UBS Director Bradley Birkenfeld blew the whistle on UBS, he received a $104 million whistleblower check. Not everyone makes that much money but the IRS whistleblower program pays up to 30% of whatever it collects from the wrongdoer including banks and offshore service providers like Tower.
If you work or worked at one of these companies that facilitate the movement of money offshore in order to evade taxes, you may be eligible for a sizable cash reward. To learn more, visit our IRS offshore tax fraud whistleblower information page.
Ready to see if you qualify for a reward? Contact attorney Brian Mahany online, by email at or by phone at . Tax fraud cases accepted worldwide. All inquiries protected by the attorney – client privilege and kept confidential.
Mahany – America’s Whistleblower Lawyers