Raoul Weil, former number 3 banker at UBS – Not Guilty!
Shokrollah Baravarian, retired Senior Vice President at Mizrahi Tefahot Bank Ltd – Not Guilty!
Have these two back-to-back acquittals slowed down the IRS and U.S. Department of Justice? Apparently not. An indictment was just unsealed in Manhattan against Martin Dunki, a former Senior Vice President of the “oldest private bank in Zurich.” While the indictment does name the bank, the description suggests the bank is Rahn & Bodner.
The indictment charges Dunki with conspiracy to defraud the IRS, a felony punishable by 5 years in prison. He has not yet been arrested. The charges were just unsealed yesterday.
Switzerland isn’t likely to arrest Dunki and allow his extradition to the United States but other European nations will; a reality not lost on Swiss bankers. Many are afraid to leave Switzerland for fear that they may be arrested.
Some bankers thought last months back-to-back not guilty verdicts would slow down the Justice Department but this week’s indictment suggests the opposite. More ominously for Dunki, this prosecution is being brought in New York and headed by two very seasoned DOJ trial lawyers.
U.S. Attorney Preet Bharara said, “As alleged, Martin Dunki went to great lengths to help his U.S. taxpayer clients secret away millions of dollars in Swiss bank accounts. With today’s Indictment, Dunki joins the ranks of many other individuals this Office has charged in connection with hiding money in offshore bank accounts from the Internal Revenue Service.”
In a prepared statement, an IRS criminal division spokesperson said, “The vigorous pursuit of unreported income in hidden offshore accounts is a top priority for the Internal Revenue Service. As part of our strategy, we will continue to identify and investigate banking and finance professionals who advise U.S. clients about ways to conceal their assets from the U.S. Government.”
So what did Dunki do?
The indictment says Dunki helped American taxpayers avoid filing FBAR forms and declaring their offshore accounts. Having a Swiss account is legal but only if properly reported. Foreign accounts with an aggregate balance of over $10,000 must be reported on one’s income tax form and on an FBAR form.
A taxpayer who fails to file an FBAR can also be charged with a felony and faces huge IRS civil penalties.
Dunki is accused of helping Americans hide their Swiss accounts for many years. The indictment lists many instances of illegal acts that span between 1995 and 2012.
Included in the indictment are allegations that Dunki helped taxpayers avoid detection by the IRS by using sham foundations and entities created in other privacy jurisdictions such as Liechtenstein and Panama. So-called nominee entities have long been a hot button issue with the IRS.
Prosecutors also claim that Dunki advised clients to fly to Switzerland to review their account statements. They say statements were deliberately not sent to the United States for fear they may be intercepted and the scheme detected.
One taxpayer, only identified as “Client 6” in the indictment, is alleged to have hidden $300 million with Dunki’s help.
The indictment also says that several unidentified U.S. lawyers and one Swiss lawyer participated in the scheme. The Swiss lawyer, Edgar Paltzer, is a U.S. citizen and pleaded guilty last year to conspiracy charges. He is cooperating with the government.
What does this mean for clients of Rahn & Bodner with unfiled FBARs and unreported accounts? It means, big trouble.
By indicting lawyers and bankers, the Justice Department is often able to get those folks to cooperate and identify their clients. Press reports say that Rahm & Bodner is cooperating with authorities as well.
The willful failure to file an FBAR is a felony but few Americans are prosecuted. The IRS, however, routinely hits those taxpayers with huge civil penalties that equate to up to the higher of $100,000 or 50% of the highest historical balance of the unreported account. In the case of “Client 6” that could mean a fine of $150,000,000 plus any taxes and penalties on whatever portion of the account represents unreported income.
If you have an unreported Swiss account or are delinquent on FBAR filings, seek competent legal representation immediately. Don’t wait. For more information contact attorney Bethany Canfield today at or by telephone at (414) 223-0464. All inquiries protected by the attorney client privilege and kept in confidence.