[Post updated through 2020] Urgent call for whistleblowers! Earlier today the International Consortium of Investigative Journalists (ICIJ) released a treasure trove of documents to the press. Much of what has been released deals with suspected dirty money and Vladimir Putin. Other international leaders have been implicated as well. It should come as no surprise that the ICIJ has linked many politicians to hidden offshore accounts.
The Consortium says they have over 11.5 million documents. They plan on releasing those next month. Until then, we have a teaser or sampler of what they have discovered.
The documents were obtained by German journalist and come from a Panamanian law firm, Mossack Fonseca (hence the name Panama Papers). No ordinary law firm, Mossack Fonseca has created thousands of offshore companies. Now that their data has been leaked, the firm is loudly proclaiming that it has done nothing wrong. We expect to hear the same nonsense from Putin and all other the leaders with their hands in the cookie jar.
Although the ICIJ has not released the actual data – just excerpts – we know that they claim to have records of ten banks that sought offshore constructs for their clients. Is this evidence of tax evasion? Not directly but based on years of experience, we suspect that many of those companies were used for nefarious purposes. And that is great news for whistleblowers with inside information about banks and their customers engaged in tax evasion.
The IRS has a robust whistleblower program that pays awards for information about taxpayers underreporting their taxes. Many folks use offshore accounts to engage in tax evasion.
Before going further, it is important to note that there are legitimate uses for offshore accounts. We have represented many folks who send money home to relatives, dual nationals, expats living overseas and U.S. companies doing business in multiple countries. As a former agent and tax prosecutor, I also know that some folks create shell or nominee accounts to hide their money from Uncle Sam. One is legal and the other is a felony.
That Mossack Fonseca does business in Panama, the British Virgin Islands, Anguilla, Switzerland, Gibraltar, Liechtenstein, Hong Kong, China, the UAE, Seychelles, Isle of Man, Malta, Israel, Singapore and Jersey makes us suspicious. The only place missing from the popular tax havens where they do business is Monaco.
Representatives from all these countries will howl and claim they are OECD compliant and not tax havens. In fact, Mossack Fonseca is already saying the same thing to the press! We don’t believe it.
So how does all this work for would be whistleblowers? Glad you asked.
According to the ICIJ, the ten top banks requesting offshore constructs were:
- EXPERTA CORPORATE & TRUST SERVICES
- BANQUE J. SAFRA SARASIN – LUXEMBOURG S.A.
- CREDIT SUISSE CHANNEL ISLANDS LIMITED
- HSBC PRIVATE BANK (MONACO) S.A.
- HSBC PRIVATE BANK (SUISSE) S.A.
- UBS AG (SUCC. RUE DU RHÔNE)
- COUTTS & CO. TRUSTEES (JERSEY) LIMITED
- SOCIÉTÉ GÉNÉRALE BANK & TRUST LUXEMBOURG
- LANDSBANKI LUXEMBOURG S.A.
- ROTHSCHILD TRUST GUERNSEY LIMITED
If some of these banks sound familiar, they should. HSBC seems to be in constant trouble for money laundering, the LIBOR scandal and tax evasion. When suspicions recently arose that HSBC was helping Syrian strongman Bashir-al-Assad launder money, HSBC’s CEO told British lawmakers that the bank had a “terrible list of problems” but expressed hope that there were no more “skeletons” to be found.
Now that confidential documents obtained from Mossack Fonseca have come to light, HSBC need not worry about finding more skeletons; it appears that they may have a mass grave to deal with it.
Many of the remaining banks on ICIJ’s list have recently settled claims with the U.S. Department of Justice regarding unreported offshore accounts. Those settlements shouldn’t stop the IRS from going after both the banks and their customers, however.
From Panama Papers to Paradise Papers
When we originally began publishing Panama Papers stories, the year was 2015. Two years later ICIJ would announce another huge data dump, this one dubbed the Paradise Papers.
At the heart of the Paradise Papers was another law firm that was apparently hacked, Appleby. Documents were also allegedly taken from two offshore service companies, Estera and Asiaciti Trust. All in all some 13.4 million documents were leaked to the press and published by the ICIJ.
The takeaway is that bank secrecy is no more. It’s one thing to engage in legitimate estate planning techniques but quite another to hide money from the IRS. Sooner or later you are going to get caught.
Are Stolen / Hacked Papers Admissible in Court?
Defendants charged with money laundering or tax evasion say the government shouldn’t rely on stolen information. We understand and by paying rewards, one could argue the IRS is encouraging people to hack and steal. Despite those concerns, in December 2019, a federal judge in Manhattan ruled documents found in the Panama Papers could be used in the prosecution of an accountant.
Elder Gaffey & Paine PC accountant Richard Gaffey was charged with helping Americans evade taxes. He was working with Mossack Fonseca. His lawyer unsuccessfully argued that “It is offensive to public policy to prosecute individuals by relying on documents only obtained through criminal conduct at the same time that the government aggressively prosecutes people who engage in exactly the same conduct.”
Tax Whistleblowers, Unreported Foreign Accounts and IRS Awards
To qualify for the IRS award program, whistleblowers need “specific and credible information” that results in the collection of taxes, penalties, interest or other amounts from a noncompliant taxpayer.
Who qualifies? Anyone with inside information about tax evasion or hiding money from the government. We are seeking employees or former employees of EXPERTA CORPORATE & TRUST SERVICES, BANQUE J. SAFRA SARASIN – LUXEMBOURG S.A., CREDIT SUISSE CHANNEL ISLANDS LIMITED, HSBC PRIVATE BANK (MONACO) and (SUISSE) S.A., UBS AG (SUCC. RUE DU RHÔNE), COUTTS & CO. TRUSTEES (JERSEY) LIMITED, SOCIÉTÉ GÉNÉRALE BANK & TRUST LUXEMBOURG, LANDSBANKI LUXEMBOURG S.A., and ROTHSCHILD TRUST GUERNSEY LIMITED. [These were our investigations in 2016, today we are interested in any law firm, bank, accountant or offshore service company that helps Americans or US taxpayers illegally launder money or hide accounts from the IRS.]
If you have client lists or other information that documents helping U.S. taxpayers (including dual nationals) evade taxes, we are interested.
The laws protecting whistleblowers vary from country to country. UBS whistleblower Bradley Birkenfeld received a $102 million award (USD) but can’t return to Switzerland. HSBC whistleblower Herve Falciani is wanted in Switzerland. Before you take any action, speak to us first.
Whistleblowers are heroes but not everyone likes a hero. Because they take a risk, Congress authorized the IRS to pay awards. The awards can be as high as 30% of what the government collects from wrongdoers.
The clock is ticking on the Panama and Paradise Papers. We don’t know how much information the ICIJ will release or what it will contain, but there are plenty of other law firms, banks and offshore service providers helping Americans evade taxes.
Generally, the IRS only pays an award to the person who steps forward first with inside information. If you have been sitting on the fence, the earlier you come forward the better the chance of a reward.
About MahanyLaw. Attorney Brian Mahany is a former Assistant Attorney General – Tax and a former state revenue commissioner. His whistleblower clients have been awarded over $100 million USD. We welcome new whistleblowers and will do everything to maximize any award and protect you from retaliation.
For more information, visit our IRS Whistleblower Reward information page. Ready to see if you have a case? Contact attorney Brian Mahany online, at or by telephone at . All inquiries are protected by the attorney – client privilege and kept completely confidential. We handle IRS whistleblower cases worldwide.
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