US Green Card Holder Charged With Felonies FBAR Violations
[Post updated Jan. 2019] Victor Lipukhin is a Russian national who is also a U.S. green card holder. His business accomplishments are many and include serving as president of Severstal USA, a steel company headquartered in Elgin, United States. He also ran several property leasing companies in the Chicago area. Now Lipukhin has something new to add to his resume, defendant.
The Justice Department and IRS have charged Lipukhin with four felony counts of filing false tax returns and attempting to interfere with the IRS. If convicted of all counts, Lipukhin faces 12 years in prison.
What is interesting about this case is the decision to charge Lipukhin. His charges relate to conduct that occurred between 2002 and 2006. According to the indictment, Lipukhin moved back to Russia in 2007.
Prosecutors say that while living and working in the U.S., Lipukhin opened an undeclared nominee account at Swiss bank UBS. The account contained $47,000,000. Rather than open the account in his own name, Lipukhin allegedly opened the account under the name Old Orchard, a Bahamian nominee entity.
The indictment says that Lipukhin’s foreign accounts were never reported to the government. Owning a foreign account is completely legal if properly reported. Taxpayers must report foreign accounts on their individual income tax return and on a Report of Foreign Bank and Financial Accounts (FBAR).
Willful failure to file an FBAR is a felony. The government believes that foreign accounts held under a nominee name are evidence of willful intent. Nominee entities are accounts opened in a fictitious name. While it is totally legal to open accounts in business names, the IRS takes a dim view if an account is opened under a phony name or titled to an entity that has no valid business purpose.
n this case, the Justice Department didn’t charge Lipukhin with the FBAR felony. Instead they indicted him on charges of filing false tax returns and obstruction of the IRS. It appears they did so because the FBAR charges were beyond the typical 6 year statute of limitations.
The obstruction charge is interesting and something we have not seen before. According to the indictment, “Lipukhin impeded the administration of Internal Revenue laws by attempting to prevent an automobile dealer from filing a Form 8300 – which is required for certain cash transactions over $10,000 – with the IRS in order to report Lipukhin’s cash payment to purchase an automobile.”
When you try to purchase a car or real estate using more than $10,000 in cash, the seller is required to complete a Currency Transaction Report. Paying for items with cash isn’t illegal, of course, but Uncle Sam gets nosy and wants to know who keeps that much cash on hand.
Updates: As of January 2019, the indictment still remains sealed and Victor Lipukhin remains a fugitive. The sealed indictment suggests that there are other people named in the indictment and that the government doesn’t want to tip them off.
In 2017, the author of this post spoke with the media regarding how Lipukhin’s indictment affects real estate he still owns in the U.S. [Lipukhin is not our client, we represent whistleblowers who report tax cheats and seek rewards.] According to an article in theElgin Courier News, part of the Chicago Tribune, Lipukhin’s fugitive status makes buying or renting a commercial building in Elgin, Illinois problematic.
In the words of Elgin’s mayor, “[B]ased upon what I’ve heard, I wouldn’t touch that building with a 10-foot pole until things are resolved between the current owner [Lipukhin] and the federal government.” Good advice since the IRS can administratively seize the property even if he has never been convicted.
The takeaways from this case are several.
First, the government is extremely aggressive in prosecuting those that hold foreign accounts under a third party or nominee name. If you hold bank, brokerage or other financial accounts under a false name and those accounts are not properly reported, contact an experienced FBAR lawyer immediately.
This case also shows that the government will pursue individuals anywhere in the world and without regard to whether they are citizens. Even though Lipukhin was only a green holder and left the U.S. almost a decade ago, he was still indicted. Some of the criminal conduct he is accused of dates back 12 years.
Remember that an indictment is only a finding of probable cause. Victor Lipukhin, like all defendants, is presumed innocent until proven guilty.
The government has become extremely aggressive in its pursuit of unreported foreign accounts. Reporting a foreign account is easy and can be done electronically. Many taxpayers file FBARs themselves or with the help of an expat tax service or CPA. If you have a year or more of unfilled FBARs or if you have unreported accounts in a nominee name, however, seek the services of an experienced tax lawyer immediately. Even if you aren’t indicted (most folks aren’t), the civil penalties are still tremendous and could wipe most folks out.
Whistleblower Awards + Unreported Foreign Accounts
Having an unreported foreign account is a crime. Having knowledge of an unreported foreign account could earn you a whistleblower award. The IRS Whistleblower Program pays cash awards to individuals with inside knowledge of unreported foreign accounts, tax evasion schemes or intentional underpayment or underreporting of federal taxes. (New York State and Illinois have similar laws for state taxes.)
Depending on the amount of unreported income or unpaid taxes, awaards can range anywhere from 10% to 30% of tax, interest and penalties. FBAR penalties can be as high as the greater of $100,000 or 50% of the account value per year.
Even if just receiving penalties for a single year, that means Lipukhin could owe $23,500,000 to the IRS plus interest! The potential whistleblower on that amount is a staggering $7,050,000.00.
If your boss is cheating the IRS, you may be eligible for an award and the process is completely confidential.
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Need more information? Please visit our comprehensive offshore tax fraud whistleblower page. For more specific information on FBAR whistleblower claims, please also visit our FBAR whistleblower page.
Have questions or ready to see if you qualify for a reward? Contact IRS whistleblower lawyer Brian Mahany online, at or by telephone at (202) 800-9791. Initial consolations are free, without obligation and completely confidential.
Post by Brian Mahany, Esq.