Failure to File FBARs is a Crime

The chairman of Parsons & Whittemore, an international pulp mill company, recently pled guilty to a willful failure to declare offshore accounts to the IRS.  The CEO, George Landegger, will be sentenced in May of 2015 and could face up to five years of incarceration. As part of a guilty plea, he has also agreed to pay back taxes of $71,000, as well as a civil penalty of more than $4.2 million.

This guilty plea is one of a long line of pleas entered by investors, banks and bankers in tax evasion cases. The Internal Revenue Service, the Justice Department and other U.S. authorities have made a very aggressive push to pursue legal action in tax evasion cases.

Those with offshore accounts and those who helped investors hide money offshore are all at risk of being prosecuted. If you believe you could face charges, or if you are already under investigation, you need to contact a Washington DC tax attorney right away.

Failure to File FBARs Leads to Criminal Charges

George Landegger admitted to maintaining secret bank accounts in a Swiss Bank from the early 2000s through 2010. Individuals who are United States citizens with money in offshore accounts are required by law to file a Report of Foreign Bank and Financial Accounts (FBAR). Each instance in which this required report is not filed can result in civil fines and criminal penalties.  Landegger did not file these FBARs according to Corporate Crime Reporter.

Not only did Landegger neglect to file reports informing the IRS of his offshore holdings, but he reportedly also took steps to intentionally conceal the fact that he owned accounts in foreign banks. In 2005, a Swiss bank representative recommended that Landegger consult with a Zurich-based lawyer to create a sham entity to take ownership of his undeclared accounts.  A sham trust was created and named Onicuppac, which is the reverse of the word Cappucino.

Bank executives subsequently became nervous when the IRS began its aggressive crack downs on offshore investors and the bankers who helped them evade taxes. When the news became public that U.S. authorities were investigating the Swiss bank UBS Ag, Landegger’s bankers scheduled a meeting in 2009. The possibility was raised that Landegger could disclose his offshore accounts using the Offshore Voluntary Disclosure Program (OVDP) that the IRS had established.

Landegger declined to disclose his accounts through OVDP or through any other type of voluntary disclosure and instead a plan was created to move the undeclared assets slowly out of Switzerland.  From May of 2009 through July of 2010, Swiss bankers and Landegger worked together to empty Landegger’s Swiss accounts into new accounts in Canada and Hong Kong. There was as much as $8.4 million in Landegger’s secret offshore accounts at times during this period.

Landegger, of course, was caught by the IRS in this tax evasion scheme and he now faces millions in fines and jail time. Participation in OVDP could have limited his fines and allowed him to avoid criminal conviction if he was eligible for the voluntary disclosure program, but now it is much too late.

This case and the serious penalties faced by Landegger are part of an ongoing effort by the IRS to make sure investors realize the significant risks associated with trying to conceal offshore income.  If you have money offshore you have not declared, now is the time to talk to DC tax attorney Kevin Thorn about your options under the law.