Wednesday, November 22, 2017

146 Offshore Banks & Now Financial Advisors Are Turning Over Your Names To The IRS - What Are Your Waiting For?

On April 7, 2017 we posted 145 Offshore Banks & Now Financial Advisors Are Turning Over Your Names To The IRS - What Are Your Waiting For? and since then the Government has add 1 more Financial Advisor Prime Partners SA (effective 8/15/17) to this list bringing the number to 146 Offshore Banks and Foreign Financial Advisors.

The IRS keeps updating its list of foreign banks which are turning over the names of their US Account Holders, who are now subject to a 50% (rather than 27.5%) penalty in the IRS’s Offshore Voluntary Disclosure Program (OVDP). This penalty is based on the highest account balance measured over up to eight years. 

 Under the program, banks are required to:
  • Make a complete disclosure of their cross-border activities;
  • Provide detailed information on an account-by-account basis for accounts in which U.S. taxpayers have a direct or indirect interest;
  • Cooperate in treaty requests for account information;
  • Provide detailed information as to other banks that transferred funds into secret accounts or that accepted funds when secret accounts were closed;
  • Agree to close accounts of account holders who fail to come into compliance with U.S. reporting obligations; and
  • Pay appropriate penalties.
These Banks, Financial Instructions and Foreign Financial Advisors  have made substantial efforts to cooperate with the IRS investigation, including by:
  1. facilitating interviews that their Office with employees, including top level executives;
  2. voluntarily producing documents in response to the Office’s requests;
  3. providing, in response to a treaty request, unredacted client files for the U.S. taxpayer-clients who maintained accounts at their Banks or Financial Instruction; and
  4. committing to assist in responding to a treaty request that is expected to result in the production of un-redacted client files for U.S. taxpayer-clients who maintained accounts at these Banks and Financial Instructions and with these Foreign Financial Advisors. 
The complete list of Offshore Banks and Foreign Financial Advisors who are turning over the names of their US Account Holders, who are now subject to a 50% (rather than 27.5%) penalty in the IRS’s Offshore Voluntary Disclosure Program (OVDP) is as of January 31, 2017: 
  1. UBS AG
  2. Credit Suisse AG, Credit Suisse Fides, and Clariden Leu Ltd.
  3. Wegelin & Co.
  4. Liechtensteinische Landesbank AG
  5. Zurcher Kantonalbank
  6. swisspartners Investment Network AG, swisspartners Wealth Management AG, swisspartners Insurance Company SPC Ltd., and swisspartners Versicherung AG
  7. CIBC FirstCaribbean International Bank Limited, its predecessors, subsidiaries, and affiliates
  8. Stanford International Bank, Ltd., Stanford Group Company, and Stanford Trust Company, Ltd.
  9. The Hong Kong and Shanghai Banking Corporation Limited in India (HSBC India)
  10. The Bank of N.T. Butterfield & Son Limited (also known as Butterfield Bank and Bank of Butterfield), its predecessors, subsidiaries, and affiliates
  11. Sovereign Management & Legal, Ltd., its predecessors, subsidiaries, and affiliates (effective 12/19/14)
  12. Bank Leumi le-Israel B.M., The Bank Leumi le-Israel Trust Company Ltd, Bank Leumi (Luxembourg) S.A., Leumi Private Bank S.A., and Bank Leumi USA (effective 12/22/14)
  13. BSI SA (effective 3/30/15)
  14. Vadian Bank AG (effective 5/8/15)
  15. Finter Bank Zurich AG (effective 5/15/15)  
  16. Societe Generale Private Banking (Lugano-Svizzera) SA (effective 5/28/15)
  17. MediBank AG (effective 5/28/15)
  18. LBBW (Schweiz) AG (effective 5/28/15)
  19. Scobag Privatbank AG (effective 5/28/15)  
  20. Rothschild Bank AG (effective 6/3/15)
  21. Banca Credinvest SA (effective 6/3/15)
  22. Societe Generale Private Banking (Suisse) SA (effective 6/9/15)
  23. Berner Kantonalbank AG (effective 6/9/15)
  24. Bank Linth LLB AG (effective 6/19/15)
  25. Bank Sparhafen Zurich AG (effective 6/19/15)
  26. Ersparniskasse Schaffhausen AG (effective 6/26/15)
  27. Privatbank Von Graffenried AG (effective 7/2/15)
  28. Banque Pasche SA (effective 7/9/15)
  29. ARVEST Privatbank AG (effective 7/9/15)
  30. Mercantil Bank (Schweiz) AG (effective 7/16/15)
  31. Banque Cantonale Neuchateloise (effective 7/16/15)
  32. Nidwaldner Kantonalbank (effective 7/16/15)
  33. SB Saanen Bank AG (effective 7/23/15)
  34. Privatbank Bellerive AG (effective 7/23/15)
  35. PKB Privatbank AG (effective 7/30/15)
  36. Falcon Private Bank AG (effective 7/30/15)
  37. Credito Privato Commerciale in liquidazione SA (effective 7/30/15)
  38. Bank EKI Genossenschaft (effective 8/3/15)
  39. Privatbank Reichmuth & Co. (effective 8/6/15)
  40. Banque Cantonale du Jura SA (effective 8/6/15)
  41. Banca Intermobiliare di Investimenti e Gestioni (Suisse) SA (effective 8/6/15)  
  42. bank zweiplus ag (effective 8/20/15)
  43. Banca dello Stato del Cantone Ticino (effective 8/20/15)
  44. Hypothekarbank Lenzburg AG (effective 8/27/15)
  45. Schroder & Co. Bank AG (effective 9/3/15)
  46. Valiant Bank AG (effective 9/10/15)
  47. Bank La Roche & Co AG (effective 9/15/15)
  48. Belize Bank International Limited, Belize Bank Limited, Belize Corporate Services Limited, their predecessors, subsidiaries, and affiliates (effective 9/16/15)
  49. St. Galler Kantonalbank AG (effective 9/17/15)
  50. E. Gutzwiller & Cie, Banquiers (effective 9/17/15)
  51. Migros Bank AG (effective 9/25/15)
  52. Graubundner Katonalbank (effective 9/25/15)
  53. BHF-Bank (Schweiz) AG (effective 10/1/15)
  54. Finacor SA (effective 10/6/15)
  55. Schaffhauser Kantonalbank (effective 10/8/15)
  56. BBVA Suiza S.A. (effective 10/16/15)
  57. Piguet Galland & Cie SA (effective 10/23/15)
  58. Luzerner Kantonalbank AG (effective 10/29/15)
  59. Habib Bank AG Zurich (effective 10/29/15)
  60. Banque Heritage SA (effective 10/29/15)
  61. Hyposwiss Private Bank Genève S.A. (effective 10/29/15)
  62. Banque Bonhôte & Cie SA (effective 11/3/15)
  63. Banque Internationale a Luxembourg (Suisse) SA (effective 11/12/15)
  64. Zuger Kantonalbank (effective 11/12/15)
  65. Standard Chartered Bank (Switzerland) SA, en liquidation (effective 11/13/15)
  66. Maerki Baumann & Co. AG (effective 11/17/15)
  67. BNP Paribas (Suisse) SA (effective 11/19/15)
  68. KBL (Switzerland) Ltd. (effective 11/19/15)
  69. Bank CIC (Switzerland) Ltd. (effective 11/19/15)
  70. Privatbank IHAG Zürich AG (effective 11/24/15)
  71. Deutsche Bank (Suisse) SA (effective 11/24/15)
  72. EFG Bank AG (effective 12/3/15)
  73. EFG Bank European Financial Group SA, Geneva (effective 12/3/15)
  74. Aargauische Kantonalbank (effective 12/8/15)
  75. Cornèr Banca SA (effective 12/10/15)
  76. Bank Coop AG (effective 12/10/15)
  77. Crédit Agricole (Suisse) SA (effective 12/15/15)
  78. Dreyfus Sons & Co Ltd, Banquiers (effective 12/15/15)
  79. Baumann & Cie, Banquiers (effective 12/15/15)
  80. Bordier & Cie Switzerland (effective 12/17/15)
  81. PBZ Verwaltungs AG (effective 12/17/15)
  82. PostFinance AG (effective 12/17/15)
  83. Edmond de Rothschild (Suisse) SA (effective 12/18/15)
  84. Edmond de Rothschild (Lugano) SA (effective 12/18/15)
  85. Bank J. Safra Sarasin AG (effective 12/23/15)
  86. Coutts & Co Ltd (effective 12/23/15)
  87. Gonet & Cie (effective 12/23/15)
  88. Banque Cantonal du Valais (effective 12/23/15)
  89. Banque Cantonale Vaudoise (effective 12/23/15)
  90. Bank Lombard Odier & Co Ltd (effective 12/31/15)
  91. DZ Privatbank (Schweiz) AG (effective 12/31/15)
  92. Union Bancaire Privée , USP SA (effective 1/6/16)
  93. PHZ Privat - und Handelsbank Zürich AG reorganized as Leodan Privatbank AG (effective 1/25/16)
  94. Hyposwiss Privatbank AG reorganized as HSZH Verwaltungs AG (effective 1/27/16)
  95. Bank Julius Baer & Co., Ltd (effective 2/4/16)
  96. Cayman National Securities Ltd. (effective 3/9/16)
  97. Cayman National Trust Co. Ltd. (effective 3/9/16)
  98. Bradley Birkenfeld (effective 11/15/16)
  99. Renzo Gadola (effective 11/15/16)
  100. Martin Lack (effective 11/15/16)
  101. Christos Bagios (effective 11/15/16)
  102. Joshua Vandyk (effective 11/15/16)
  103. Eric St-Cyr (effective 11/15/16)
  104. Patrick Poulin (effective 11/15/16)
  105. Andreas Bachmann (effective 11/15/16)
  106. Josef Dörig (effective 11/15/16)
  107. David Kalai and Nadav Kalai (effective 11/15/16)
  108. David Almog (effective 11/15/16)
  109. Hansruedi Schumacher (effective 11/15/16)
  110. Matthias Rickenbach (effective 11/15/16)
  111. Cem Can (effective 11/15/16)
  112. IPC Management Services, LLC (effective 11/15/16)
  113. IPC Corporate Services Inc. (effective 11/15/16)
  114. IPC Corporate Services LLC (effective 11/15/16)
  115. Titan International Securities, Inc. (effective 11/15/16)
  116. Legacy Global Markets S.A. (effective 11/15/16)
  117. Unicorn International Securities LLC (effective 11/15/16)
  118. Andrew Godfrey (effective 11/15/16)
  119. Michael Little (effective 11/15/16)
  120. Edgar Paltzer (effective 11/15/16)
  121. Peter Amrein (effective 11/15/16)
  122. Daniela Casadei (effective 11/15/16)
  123. Fabio Frazzetto (effective 11/15/16)
  124. Michele Bergantino (effective 11/15/16)
  125. Mario Staggl (effective 11/15/16)
  126. Beda Singenberger (effective 11/15/16)
  127. Gian Gisler (effective 11/15/16)
  128. Felix M. Mathis (effective 11/15/16)
  129. Michael Berlinka (effective 11/15/16)
  130. Urs Frei (effective 11/15/16)
  131. Roger Keller (effective 11/15/16)
  132. Josef Beck (effective 11/15/16)
  133. Hans Thomann (effective 11/15/16)
  134. Stephan Fellmann (effective 11/15/16)
  135. Otto Huppi (effective 11/15/16)
  136. Christof Reist (effective 11/15/16)
  137. Stefan Buck (effective 11/15/16)
  138. Marco Parenti Adami (effective 11/15/16)
  139. Emanuel Agustino (effective 11/15/16)
  140. Roger Schaerer (effective 11/15/16)
  141. Markus Walder (effective 11/15/16)
  142. Susanne D. Rüegg Meier (effective 11/15/16)
  143. Martin Dunki (effective 11/15/16)
  144. Robert Bandfield (effective 11/15/16)
  145. Michael A. Behr (effective 1/25/17)
  146. Prime Partners SA (effective 8/15/17)
Outside of these banks and financial advisors, the norm within the OVDP remains 27.5%. That is far better than prosecution or much bigger civil penalties. Some taxpayers, including taxpayers with accounts at one of the 145 Foreign Banks and Financial Advisors listed above can opt for the easier and less costly Streamlined program. This list does not impact the Streamlined programs because you must be non-willful to qualify. All of this is part of the June 2014 improvements to the OVDP, which sparked new interest in cleaning up offshore accounts.
  1. With roughly 145 Foreign Banks and Financial Advisors cooperating with the DOJ & IRS and 
  2. FATCA requiring the entire world to report to the IRS
it is INEVITABLE that this increased disclosure, will result in EVERY AMERICAN eventually being discovered. Banks worldwide want to know if there US clients are compliant with the IRS.
Within the OVDP, people who Pre-Cleared
Before the various Effective  Dates
are generally Safe From the Higher 50% Penalty.
As additional banks are added to the list, only those American taxpayers that request pre-clearance before their bank is listed, will get the 27 1/2% OVDP penalty. The 50% penalty now applies to all taxpayers with accounts at financial institutions or with facilitators which are named, are cooperating or are identified in a court filing such as a John Doe summons.
Although the 50% penalty is high, willful civil violations can result in tax, penalties and interest totaling 325% of the highest balance in the account for the  most recent six years period. Recent guidance suggests that the IRS could be more lenient in the future, but the IRS’s definition of leniency can still make the OVDP a very good deal that provides certainty.  
Do You Have Undeclared Income from one of 
these Offshore Banks or 
Financial Advisors?
Is Your Name Being Handed Over to the IRS?
Want to Know if the OVDP Program is Right for You?
Contact the Tax Lawyers at 
Marini& Associates, P.A.  
for a FREE Tax Consultation
Toll Free at 888-8TaxAid (888) 882-9243

Friday, November 17, 2017

Will Marinello Be The McDonnell Of Tax Crimes?

According to Law360, Carlo Marinello will argue to the U.S. Supreme Court next month that a vague tax law gives prosecutors power to criminalize anything that makes the IRS' job harder, in a case that could see the high court continue limiting broad criminal laws as it did last year in U.S. v. McDonnell.

Marinello was convicted in 2014 for failing to file tax returns for his New York freight business. He was also found guilty of “corruptly” obstructing the “due administration” of the tax code, a crime under the so-called omnibus clause.

But where some see a tool allowing prosecutors to more accurately capture a scheme to thwart tax enforcement, others like U.S. Circuit Judge Dennis Jacobs see a “capacious, unbounded and oppressive opportunity for prosecutorial abuse.”

The Second Circuit upheld Marinello's conviction and then rejected his bid for a rehearing before the full court. Judge Jacobs penned a scathing dissent, comparing the omnibus clause to broad criminal statutes like the one that formed the basis for Virginia Gov. Bob McDonnell's corruption conviction, which the high court overturned last year.

Jurors in both McDonnell's and Marinello's cases were told they could find guilt based on a number of acts. Prosecutors had said McDonnell was bribed in exchange for official acts including arranging meetings, hosting events and contacting constituents.

Similarly, in Marinello's case, the jury was told it could find him guilty of obstruction for taking any of eight actions, including destroying or failing to keep adequate records and not giving records to his own accountant. The Second Circuit said the verdict stands under the law, and that prosecutors were not required to allege that Marinello acted with knowledge of an IRS investigation.

“If this is the law,” Judge Jacobs wrote in the
Marinello dissent, “Nobody is Safe.”

Attorneys who agree with that assessment say the omnibus clause covers not just arguably innocent conduct, but also acts that constitute standalone tax crimes, letting prosecutors do an end run around higher criminal intent standards in those laws.

Former tax division head Kathy Keneally, now a partner at Jones Day, said the omnibus clause carries a lower standard of criminal intent than other tax crimes, as the violator only need act “corruptly” rather than “willfully.” The rest of the criminal tax laws are aimed directly at specific conduct like tax evasion, but the omnibus clause is vague enough to cover the same ground, Keneally said.

“If interpreted too broadly, the omnibus clause can subsume the rest," Keneally said. "And if you let that happen, you undercut the clear intention of the tax statutes."

 A judge in a recent case agreed with that line of thinking. U.S. District Judge Richard Leon cut a tax obstruction charge against Patricia Driscoll, the former director of a veterans' charity.

Judge Leon said he had found Judge Jacob's dissent in Marinello persuasive, and ruled that violating the omnibus clause requires knowing about and trying to thwart a pending audit — a view the Sixth Circuit has espoused.

“As a practical matter, I note that little is lost to the government in this case by affording a narrow construction to the omnibus clause,” Judge Leon said at an August hearing dismissing the count. The judge said the alleged false statements underlying the obstruction charge were the basis for other charges that “do not raise the same due process concerns.”

Not all experts agree the obstruction law is too broad. Jay Nanavati, who worked in the tax division between 2005 and 2012 and now practices at Kostelanetz & Fink LLP, said he’d be surprised if the Supreme Court overturns the Marinello ruling. Nanavati said overlap between criminal laws is the nature of the beast.

“There are actions that people take that, in theory, violate lots of statutes,” Nanavati said. “It's hard to draw perfect boundaries between each separate offense.”

The DOJ’s tax division initially tried to draw a line in its charging policies. A memo dating to the late 1980s advised prosecutors to save the tax obstruction charge “for conduct occurring after a tax return has been filed.”

However, the memo allowed for omnibus clause charges in cases involving “numerous large-scale violations,” like helping a large number of taxpayers file false returns. Cases like that square with the “overall purpose” of the section, “to penalize conduct aimed directly at IRS personnel in the performance of their duties,” the head of the tax division wrote at the time.

In 2004, then-tax division head Eileen J. O’Connor issued a new memo superseding the old guidance. Prosecutors were no longer told the omnibus clause should be generally reserved for post-tax return mischief. The new memo suggested the clause applied to a broader set of conduct including “providing false information” and “destroying evidence.”

While the 2004 memo reiterates that the clause shouldn't be used in lieu of other, more direct charges, it notes that tax evaders who try to cover their tracks after the fact can be “punished more severely” than those who have not attempted obstruction.

The reasons for the shift aren't completely clear. Scott Schumacher, the tax program director at University of Washington School of Law who worked at the DOJ's tax division in the 1990s, said he remembered hearing the omnibus clause referred to at a panel presentation around that time as “the government's new weapon.”

“They must have said, why are we limiting it?” Schumacher said of the broader interpretation.

Often referred to as a “one-man conspiracy” charge, the omnibus clause allows prosecutors to bring in evidence of a longer scheme that would not necessarily be admitted for one-off tax charges.

Morgan Lewis & Bockius LLP partner Nathan Hochman, who led the tax division after O’Connor, said the omnibus clause allows prosecutors to “fill in gaps” and charge the corrupt actions around a tax fraud.

“A lot of the statutes require a tax return as the centerpiece. But they don't encompass the actions before or after to conceal money or falsify documents, particularly if those documents are not submitted directly to the IRS,” Hochman said.

Hochman said the division has many "weapons" at its disposal. If the Supreme Court limits use of the omnibus clause, “I don't see it crimping tax enforcement by any significant degree,” Hochman said.

That's a scenario that tax prosecutors may want to get ready for, said Schumacher, who thinks the high court will overturn the conviction.

"They are taking it for a Reason, and it's Not to Say 'AFFIRMED,'" Schumacher said.

Have a Criminal Tax Problem?
Contact the Tax Lawyers at 
Marini& Associates, P.A.  
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Toll Free at 888-8TaxAid (888) 882-9243 


Minority Shareholders Have Transferee Liability for Unpaid Corporate Taxes Due to Wrongdoing of Majority Shareholders!

The Eleventh Circuit affirmed the Tax Court's determination that petitioner was liable as a transferee under 26 U.S.C. 6901 for his former employer's unpaid taxes, in Kardash v. Commissioner of IRS, US Court of Appeals for the Eleventh Circuit, Docket: 16-14254.

The Tax Court had previously found two minority shareholders liable to return several million of dividends they received from a corporation when the corporation failed to pay federal income taxes at the direction of majority shareholders, which majority shareholders also drove the company into insolvency by siphoning off corporate funds.

The minority shareholders were found liable under the Internal Revenue Code transferee liability statute (Code Section 6901). Since the application of that statute is predicated under the applicable state law, the fraudulent conveyance aspects of the case would likewise apply to create similar liabilities for the minority shareholders as to amounts due to creditors by the corporation other than the IRS. Here, the state at issue was Florida.

Besides the somewhat “unfair” result of the minority shareholders suffering for the sins of the bad actor majority shareholders, some other interesting aspects of this case include:

1.    The shareholders did not have to return amounts “advanced” to them under a bonus program in years before the corporation became insolvent. Such amounts related to a continuation of a prior bonus compensation plan, that converted to loans when the company was not doing so well. Even those these amounts were initially treated as loans, and then later recast by the IRS as taxable dividends under audit, the Tax Court nonetheless treated them as compensation for services provided. As such, the corporation was treated as having received fair value for its payments, in that circumstance, a fraudulent conveyance does not arise.

2.   In trying to force a repayment of the above advances, the IRS also tried to argue that the minority shareholders committed actual fraud in receiving those payments. The Tax Court ran through a “badges of fraud” analysis, and ultimately concluded that there was not enough indicia of fraud to support a finding of actual fraud.

3.   The Tax Court found that dividends received by the minority shareholders in the years that the corporation was insolvent did constitute fraudulent conveyances subject to repayment. Keep in mind that a constructive fraudulent conveyance does not require actual fraud or intent to defraud. It can be enough that the payor is insolvent at the time of payment, and the payor did not receive fair value for its payment. A dividend from a corporation does not involve an exchange for fair value.

And in determining whether the corporation is insolvent, the funds inappropriately taken from the corporation must be deducted from the balance sheet, making it easier for the creditor to show insolvency.

4.   In accordance with Florida law, the creditor, the IRS, was not obligated to exhaust its collection efforts first against the corporation, or the majority shareholders, before seeking to collect from the minority shareholders. Perhaps the minority shareholders have a cause of action against those other persons for any amounts paid to the IRS, but I suspect collectability against them may be a big issue.  (See William J. Kardash, Sr., et al., TC Memo 2015-51).
Transferee liability for unpaid employer taxes can be brought under state legal rules or in equity. If the IRS brings the case in equity, exhaustion is required. If not, state legal rules control the exhaustion issue.
Even if an employee-owner is innocent of an actual fraud that caused the insolvency, that employee-owner can still be held liable under section 6901’s transferee liability provision.
Have a Payroll Tax Problems?

IRS Proposing to Assess the
Responsible Party Penalty Against You Personally?

Contact the Tax Lawyers at
Marini & Associates, P.A.
 for a FREE Tax Consultation Contact US at 
or Toll Free at 888-8TaxAid (888 882-9243).

How Will The IRS Know? - The Paradise Papers Exposes US Clients of Asiaciti Trust!

On November 15, 2017 we posted More Then 31,000 US Taxpayers Exposed in Paradise Papers! 
where we discussed that Appleby, an Offshore Law Firm/Corporate Agent's Recent Data Breach is yet Another Example of How the IRS Can Discover your Unreported Foreign Account and how the Super-rich clients of offshore law firm Appleby are bracing themselves for the exposure of their financial secrets, after the firm admitted data had been stolen in a cyber attack last year.
Now the International Consortium of Investigative Journalists (ICIJ) has issued the Paradise Papers which is a global investigation into the Asiaciti files. These Paradise Papers include files from a smaller, family-owned trust company, Asiaciti, and from company registries in 19 secrecy jurisdictions.  

The leak of 556,000 files from Asiaciti passed largely unnoticed within the Paradise Papers, a trove of 13.4 million documents that reveal offshore secrets of politicians, celebrities, billionaires and companies whose brands are household names. Asiaciti’s emails, trust application forms, faxes and bank statements are vastly outnumbered by leaked documents from Appleby, a law firm and corporate services provider with offices around the globe.

Yet the files from Asiaciti – a trust specialist headquartered in Singapore, with branches in tax havens such as the Cook Islands and Samoa in the Pacific and Nevis in the Caribbean, shine a light on the practices of offshore clients ranging from the ultra-wealthy to the unremarkable, with a host of questionable clients in between.

Founded in 1978 by Graeme Briggs, an Australian accountant, Asiaciti expanded throughout the 1980s and 1990s. It has described itself as “one of the leading offshore trust groups in the Asia-Pacific region.”

Asiaciti’s Files Include A Significant US Client Base:
a California Dentist, an Alabama Grocer, a U.S. Handgun & Rifle Manufacturer, and a Food-Truck Entrepreneur from LA.
Also found are Chinese millionaires and clients from Switzerland, Romania, Nigeria, Thailand and South Africa, in addition to an Israeli “branding” expert, an Egyptian gynecologist and a 26-year-old British eye serum and moisturizer salesman.

Asiaciti’s services range from tax, accounting and “wealth protection” services for individuals to secretarial services for global corporations. A major moneymaker is trusts.

Offshore trusts are often inscrutable legal instruments with blurred official ownership. The details are rarely a matter of public record. Trusts allow the publicity-shy to act out of sight of creditors, ex-spouses or courts.

Asiaciti has specialized in establishing trusts in Samoa and the Cook Islands, nations of 200,000 and 11,000 people, respectively. Within 24 hours and for less than $300, a client could buy “ ‘state of the art’ offshore products” to build and preserve wealth, according to an archived version of Asiaciti’s website.

“The sad fact is that Cook Islands trusts are routinely used by people to cheat legitimate creditors,” said Jay Adkisson, an attorney and expert witness in a fraud case that involved Asiaciti’s trust division.

It’s difficult and expensive for creditors, attorneys or the tax office to access funds held by a client’s trust, Adkisson said.

Among Asiaciti’s other U.S. Trust Clients were Sean Novis and Gary Denkberg, Marketing Executives who Targeted Pensioners in a Mail-Fraud Scheme, according to a civil complaint filed by the U.S. Justice Department.
Novis, Denkberg and others told elderly victims that they had won more than $1 million and asked them to pay a fee, “generally in the range of $19.99 to $24.99,” to receive the prize, the 2016 civil complaint alleges. Victims often received nothing in return, according to the complaint. Over four years, the marketers and others allegedly pocketed more than $30 million.

Novis and Denkberg had one trust each with Asiaciti that at one stage held more than $1 million each, according to Asiaciti’s files. In February 2007, Novis asked the firm to help him find a bank that did not have “a presence in the USA.” Both men’s trusts were active in 2016 when Asiaciti learned of the civil case.

In 2016, a court imposed an injunction that prohibited Novis and Denkberg from mailing prize offers and sweepstakes in the United States. The Justice Department took no further action, a spokesman told ICIJ.

Denkberg told ICIJ that his trust was not involved in the civil case and that, to his knowledge, it had not held more than $1 million. The trust complied with the law and was declared to tax authorities, he said. Novis did not reply to requests for comment.

Gold and juice trader  Sherman Unkefer III in the Phoenix New used his Cook Islands trust, called the Mango Trust and set up by Asiaciti, to “conceal his accumulated wealth,” according to a county prosecutor in Arizona who brought a civil racketeering claim in 2014.
During and after his eight years in prison on a previous fraud conviction, Unkefer concealed assets to avoid repaying $18 million to more than 1,300 fraud victims, the prosecutor alleged.

Asiaciti was listed as a co-defendant in the case and was served with the complaint in the Cook Islands in June 2014, emails show.

The racketeering claim against Unkefer has been dropped, although alleged victims continue to seek compensation, a spokeswoman for the county prosecutor told ICIJ. Reached by phone, Unkefer’s partner said the couple had no comment.

The money in the Mango Trust was returned to the United States in 2014, said Michael FitzGibbons, the court-appointed officer who is seeking compensation for Unkefer’s victims.

The Paradise Papers Files Include Far More Information
About U.S. Taxpayers, At least 31,000 of Them,
Than Previous ICIJ Investigations!
ICIJ Journalists tracked down court records, obtained financial disclosures of politicians in Africa, Europe, and Latin and North America, filed freedom of information requests and conducted hundreds of interviews with tax experts, policymakers and industry insiders.   
Marini & Associates, PA has assisted several hundred clients with coming into U.S. tax compliance and avoiding the draconian penalties that the IRS may impose on U.S. persons with undisclosed foreign accounts.

Do You Have Undeclared Foreign Income?
 Want to Know if Which OVDP Program is Right for You?

Contact the Tax Lawyers at 
Marini & Associates, P.A.  
for a FREE Tax Consultation
Toll Free at 888-8TaxAid (888) 882-9243