IRS Whistleblower Post – Another Offshore Tax Scam Fails

[Post Updated March 2020to include a response from Mr. Cooley.] When will they learn? Otherwise educated, smart and very wealthy Americans continue to hide money offshore in an effort to evade taxes. And the U.S. Department of Justice and IRS Criminal Investigations Division continues to find and prosecute these folks. Whistleblowers who report these schemes are eligible for large cash rewards.

On Thursday January 16^th, 66 year old Jeffrey Cooley was sentenced to one month of incarceration and fined $210,000 for filing a false tax return. The sentence and fines were minimal but Cooley is now a convicted felon. As to the fine, what he pays the court is separate from what he must pay the IRS and the civil penalties for offshore tax violations are off the charts! Was it really worth it?

According to court records, Jeffrey Cooley was the global president of a huge consumer brands company headquartered in Atlanta. The company makes and sells a wide range of products under popular brand names such as Rubbermaid, Calphalon, Marmot, Yankee Candle and Coleman.

Prosecutors said that in 2005 after his retirement from the company, Cooley purchased an offshore trust company named Southpac Trust, a British Virgin Islands company. That company was supposedly an asset protection company that owned a bank located in the Cook Islands.

Federal law requires U.S. citizens and green card holders to report their offshore financial holdings and file accurate returns. Having an offshore account isn’t illegal if properly reported and not used to launder money or evade taxes.

Prosecutors say that Cooley’s tax returns falsely claimed he purchased Southpac in 2012, some 7 years after he acquired the company. They also say he opened a bank account in Switzerland so that he could “covertly” receive the income from Southpac. To repatriate the money into the United States, Cooley would travel to Canada and withdraw the money from the Swiss account via debit cards.

In announcing the sentencing, Philadelphia’s United States Attorney said, “This case is an example of sheer greed. Cooley was already wealthy through his earnings as the president of a globally recognized company, but that simply wasn’t enough for him. Instead, he felt the need to cheat in order to line his pockets through fraud. He invested in a company and then went to great lengths to hide that investment so he wouldn’t have to pay his fair share of taxes. That was an intolerable affront to every honest American taxpayer.”

If there is any silver lining in this case, Cooley was wise enough to cooperate when caught. His cooperation probably saved him from a lengthy prison sentence. Unfortunately, he is still left with the stigma of the conviction. After a long and successful career, he is now a convicted criminal. Hopefully others will learn from his experience.

IRS Whistleblower Program and Cash Rewards

How did Mr. Cooley get caught? The IRS isn’t saying. In our experience*, many offshore tax cheats are caught because of whistleblowers. No one likes paying the IRS. And everyone understands that some folks can’t pay because of illness or loss of a job. If there is one thing that everyone dislikes even more than paying taxes, however, it is those who cheat the system and refuse to pay their fair share.

Did Mr. Cooley cheat the system or just get caught up in a mess because of bad advice? We can’t say as the sentencing memoranda and plea allocution remain sealed by the court. He won’t be the first person to get roped in by offshore promoters who promise “legal” ways of avoiding taxes.

The IRS Whistleblower Program allows those with inside information about tax fraud to report those who wrongfully fail to properly file returns or pay taxes. The IRS can pay rewards of up to 30% of whatever monies are collected by the IRS from the wrongdoer. That includes interest and penalties too!

In most instances, the identity of the whistleblower is kept confidential.

To learn more, visit our offshore tax fraud whistleblower rewards claims page. To see if you qualify for a reward, contact us online, by email or by phone 800.669.7782. We take IRS whistleblower cases anywhere in the world. All inquiries are protected by the attorney – client privilege and kept confidential.

*Attorney Brian Mahany is a former tax prosecutor. Our whistleblower team includes former prosecutors and special agents. We know how to present a case so that the IRS takes interest.

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On March 27th, we received a letter from an attorney purporting to represent Mr. Cooley. (We have no reason to disbelieve the veracity of the letter.) While we disagree with the Mr. Cooley’s position, he asks that we present facts supporting his position. “Certainly, no statements are set forth in your article supporting Mr. Cooley’s position.”

So that we do not appear biased, the letter Mr. Cooley’s lawyer appears below and has not been edited.

To the extent that Mr. Coooley believes that we are attempting solicit clients that would testify against him, nothing further could be true. We encourage whistleblowers to report tax cheats. Doing so keeps the system fair and can earn the whistleblower a cash reward.

To the extent that there is an inaccuracy, it is tough to ascertain that from his lawyer’s letter. Perhaps a third party did lie to investigators or perhaps the prosecutor did make “outrageous claims.” If that is true, we are unsure why he changed his plea.

As noted in this post, Mr. Cooley cooperated and receive a minimal sentence. Filing a false tax return is a relatively minor crime and doesn’t involve the degree of moral turpitude associated with serious fraud charges. Like all folks convicted of minor crimes, we believe in second chances.

If there are specific factual allegations that are inaccurate and not supported by the court records and Justice Department statements, we are happy to correct them. It’s hard to tell from Ms. Gaumer’s letter.

SENT VIA EMAIL

To: Mahany Law

Re: Courtesy Request to Remove Content Causing Distress

Dear Mr. Mahany:

I have been retained to represent Mr. Jeff Cooley to address  his concerns  regarding the financial,  personal and reputational damages caused by the article, entitled IRS Whistleblower Post – Another Offshore Tax Scam Fails, dated January 17, 2020, which article is located on your website at the following link:

https://www.mahanyertl.com/ 2020/irs-whistleblower-offshore-tax-scam/

The article contains misleading and damaging information and we are requesting that you remove the link. The reasons for our request are as follows.

First, your article states that Mr. Cooley participated in hiding monies offshore, and further states that Mr. Cooley was sentenced and fined for filing a false tax return. Your article cites the prosecutor’s allegations that in 2005 after Mr. Cooley’s retirement from his position as the global president of Newell Rubbermaid, which sells popular consumer products including Rubbermaid, Calphalon, Marmot, Yankee Candle and Coleman, he purchased an offshore trust company named Southpac Trust, a British Virgin Islands company. Your article states that Southpac was an asset protection company that owned a bank in the Cook Islands, and that Mr. Cooley misstated the date of the purchase of that company, reporting it seven years after the purchase, violating rules that U.S. citizens report their offshore holdings to the IRS. Additionally, you recite the prosecutor’s claims that Mr. Cooley opened an account in Switzerland to obtain the money from Southpac through debit cards. Further, you conclude with the prosecutor’s statement that Mr. Cooley’s actions are that of a greedy person and an affront to regular tax payers. You conclude your statements as to Mr. Cooley’s plea as an endorsement of these outrageous prosecutorial claims. In reality, however, all of the claims regarding Mr. Cooley resulted from charges made against a third party who was a former business partner of Mr. Cooley’s. In order to lessen his charges, that third party made a variety of false claims implicating Mr. Cooley. As a result of those statements, Mr. Cooley was the subject of an investigation lasting more than three years, and none of the claims were proven. Indeed, as is often the case, Mr. Cooley consented to a plea of tax evasion and paid  an agreed, and much reduced $81,000 penalty, not the amount set forth in your article. Further, that number pales in comparison to the approximately $7 million in taxes that Mr. Cooley paid over the past ten years, showing the conclusion of your article, namely that Mr. Cooley does not pay taxes as contrasted to regular tax payers, is simply not true.

Second, Mr. Cooley spent more than $1 million on legal fees disputing the allegations, resulting in the much lessened fine. Certainly, no statements are set forth in your article supporting Mr. Cooley’s position.

Third, your article seems designed to solicit clients based on Mr. Cooley’s case.  However, Mr. Cooley has already been the subject of a prosecution and cannot be the subject of another.

While the concerns outlined above may have had an inadvertent effect, the article, the inaccuracies and slant in the article, and the way you are presenting this information to the public, are causing tremendous damage to my client and his reputation. And Mr. Cooley and his family are suffering great financial loss and emotional strain as a result of your article. When potential business contacts Google search my client, your article appears near the top of the search results and is consistently causing its readers to pre-judge Mr. Cooley. Mr. Cooley has a long history as a proven business leader, directing many well-known brands, but he has had to step down from multiple boards of directors of which he was a member. Further, Mr. Cooley had to step away from a number of start-up companies in which he was an investor because of the concerns that other investors and partners might have over these public accusations and the way in which this article frames the case.

In sum, the effect of this link is preventing Mr. Cooley from moving on personally or professionally because it puts him at a significant disadvantage based on the tenor of the article. This is especially true given the extremely large sum of $7 million that Mr. Cooley actually paid in taxes without contest or dispute. If your link were removed, and even though Mr. Cooley’s case information could still be available via public records, the effect on Mr. Cooley’s reputation would be substantially lessened, and it would allow Mr. Cooley to move on with his professional life.

Therefore, based on the above, we kindly request that you remove the link referenced above.

Thank you for your attention to this matter, and please feel free to contact me should you wish to discuss it further. We look forward to your prompt response.

Regards,

 

Christie Gaumer