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CEO to Face Jail for Undeclared Offshore Accounts

Offshore Account Update

Posted on March 27, 2015 |

From 2000 to 2008, CEO of Circle Net, Gregg Kaminsky, deposited money via wire transfer from two different U.S. companies into an account with Union Bank of Switzerland (UBS).  Kaminsky also moved money out of his Swiss account into other accounts that he had in Hong Kong and Thailand. 

Because Kaminsky had foreign accounts, he was supposed to file a Foreign Bank Account Report (FBAR) with the U.S. Treasury. FBARs are required from all individuals with money kept in foreign banks. Kaminsky did not file his FBARs and he reportedly did not pay income taxes on around $400,000 in income. As a result, he was charged with a crime and he now faces incarceration and large fines.

Kaminsky is one of many investors who has been identified and charged as part of a crackdown on tax evaders with money offshore. The Internal Revenue Service and the Justice Department are taking aggressive legal action to force foreign banks to disclose customers, and to prosecute both bankers and investors who participated in tax evasion schemes. If you have money offshore, you are at risk of becoming the target of an investigation and you need to talk to a Boston criminal tax lawyer today.

Undeclared Offshore Bank Accounts Can Lead to Jail Time

Kaminsky pled guilty to the charges that were brought against him. His penalties include a maximum of five years of incarceration as well as criminal penalties of as much as $250,000. As part of the plea bargain, he also agreed to pay civil penalties of $250,635.20. This is 50 percent of the value of his undeclared accounts.

Kaminsky reportedly had accumulated approximately $1.1 million in his UBS Swiss account by 2006.  In 2008, he heard a report that indicated the U.S. government was taking legal action to force UBS bank to turn over information on investors.

After learning about the steps the government was taking to find the identities of offshore account holders trying to evade taxes, he moved money from his Swiss account into an HSBC account in Hong Kong. He also filed an amended tax return for 2007 and 2008, declaring some of the income that he had not previously disclosed. However, he allegedly still failed to declare around $150,000 in money he had made from his participation in an online virtual world called Second Life.

In total, Kaminsky may have avoided paying around $400,000 in income taxes as a result of not disclosing his income, dividends and interest from his offshore accounts. The government wanted to make an example out of him for his failures to pay and pressed for harsh penalties. 

This criminal action is part of a large-scale effort the IRS and DOJ are making to encourage investors not to try to evade taxes by moving money into foreign banks. If you have money in offshore accounts that you have not told the government about, you too could be caught up in an investigation.

You may have options like voluntary disclosure that make it possible to minimize penalties and avoid criminal prosecution, but you need to talk to criminal tax lawyer first to learn what your legal rights are and what steps you should take to protect yourself. Call Kevin Thorn today for help.

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

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