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Bank Provides Investor Info to DOJ

Offshore Account Update

Posted on February 27, 2015 |

The Department of Justice has added another bank to the list of financial institutions it has successfully targeted as part of its crackdown on tax evasion. Bank Leumi, an Israel bank with a presence in seven countries, has entered into a deferred prosecution with the Department of Justice. 

Bank Leumi is the first Israeli bank to admit to wrongdoing and settle with the Justice Department. Other financial institutions, including numerous Swiss banks, have done the same. Settlements generally involve the financial institutions giving the Department of Justice information on U.S. citizens and residents who have offshore accounts. The DOJ can then use this information to launch investigations and even potential criminal prosecutions against those who have failed to fulfill their U.S. tax obligations.

Anyone with money offshore who is not in full compliance with IRS rules is likely to eventually be caught up in a tax evasion investigation since the Department of Justice is being very aggressive with investigations and prosecutions. It is better to be proactive than reactive when dealing with allegations of tax evasion. Call a Boston tax law firm today so you can get the legal representation you need.

Israeli Bank Admits to Tax Evasion Schemes

As part of the deferred prosecution agreement, Bank Leumi admitted to engaging in various behaviors designed to help U.S. account holders hide money and evade income taxes. Bank Leumi and its subsidiaries, for example, made collateralized loans to U.S. citizens that used the offshore accounts as collateral. This allowed investors to access their money for use in the United States without alerting the IRS that the assets and offshore accounts existed. Bank Leumi also held mail and allowed investors to maintain numbered accounts or accounts under assumed names.

Bank Leumi has agreed to pay $270 million in damages for these and other illegal actions facilitating tax evasion. The settlement includes subsidiary groups including Leumi Private Bank in Switzerland.  Some of the money paid in the deferred prosecution agreement ($157 million) is paid as part of the Department of Justice’s Swiss bank program. This program allows Swiss banks to escape being prosecuted criminally for tax evasion if the bank pays large fines and provides information about account holders.

Bank Leumi will turn over identifying information on 1,500 U.S. account holders. The financial institution has also agreed to cooperate with future investigations and provide the Department of Justice with information on cross-border business conducted in the future.

Investors should know that their own bank will probably provide their information as part of these types of plea deals if the bank comes under investigation, if they have not done so already. Contact Boston tax lawyer Kevin Thorn at the Thorn Law Group for help today if you have any money being kept offshore that you have not reported or paid income taxes on. Voluntary disclosure can sometimes help you minimize penalties but is an option only if you are not already under investigation. 

For a consultation, contact Kevin E. Thorn, Managing Partner, at ket@thornlawgroup.com or (617) 692-2989


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