The fallout extended to U.S. depositors at LGT who were investigated by the IRS. One of the US depositors that got caught in this expanded IRS investigation was the defendant Steven Greenfield.
One exception to the Fifth Amendment privilege against self-incrimination is the foregone conclusion doctrine, which holds that the government can compel the production of certain documents if the production of the documents does not amount to testimony.
"A remarkable amount of American wealth is held offshore, often in an effort to evade taxation. One recent study estimated that $1.2 trillion—some four percent of this nation’s wealth—is held offshore and that this results in an annual loss in tax revenue of $35 billion. Gabriel Zucman, The Hidden Wealth of Nations: The Scourge of Tax Havens 53 (Teresa Lavender Fagan trans., 2015). Such lost income diminishes the Treasury and exacerbates problems of inequality since, generally, only the wealthiest of individuals can take advantage of foreign tax havens."
The need to curtail tax evasion, however pressing, nevertheless cannot warrant the erosion of protections that the Constitution gives to all individuals , including those suspected of hiding assets offshore. In the present case, Steven Greenfield was implicated in tax evasion as a result of a document leak from a Liechtenstein financial institution.
The district court held that the summonses were enforceable because the foregone-conclusion exception applied. It cited an earlier case involving the same document leak, in which the court had enforced the summons because the government had “specific knowledge of the accounts and the individual who controlled the accounts” (Greenfield, slip op. at 9, citing Gendreau, No. 12-Misc-303 (S.D.N.Y. 1/22/14)). In vacating and remanding the district court’s decision, the appeals court first looked at the Fifth Amendment privilege against self-incrimination, explaining that constitutional rights are broadly construed.
Do You Have Undeclared Income from an Offshore Bank?