Articles Posted in Tax evasion


A self-described psychic and spiritual leader Sally Ann Johnson, 41, of Martha’s Vineyard, ran businesses including Psychic Match Inc and Flatiron Psychic, admitted in Boston federal court that she tried to impede the administration of tax laws. Johnson was paid to purportedly perform spiritual cleansing and healing services and repeated exorcisms. Johnson, who told the court she never passed the second grade, called herself a Romani “spiritual consultant.” She said  she had not paid taxes in connection with the money she received as income as well as a gift.“I honestly did not do the right thing,” she said. Sentencing is scheduled for January 17, 2018 and she could face upto three years in prison. In addition, she could also face a fine from $250,000 or double the gain or loss the offense caused.

Johnson, who has resided in New York, Florida, Illinois and at times Massachusetts, faces up to three years in prison. She is scheduled to be sentenced on January 17. Her lawyers declined to comment. According to court papers, Johnson at various times lived with the unnamed woman on Martha’s Vineyard, a favorite vacation spot for the rich and famous.

Two financial firms, Cayman National Securities Ltd. and Cayman National Trust Ltd. both affiliates with Cayman National Corp., based in the Cayman Islands have pleaded guilty to helping U.S. taxpayers hide more than $130 million in offshore accounts, the Justice Department said Wednesday.

All of those companies provided investment brokerage and trust management services to individual and entities.

The two firms must pay more than $6 million in fines and will provide U.S. authorities with the files of up to 95% of their U.S. clients trying hide assets or income from the Internal Revenue Service. The IRS is expected to examine potential cases against them.

A federal jury Wednesday convicted a former owner of  frozen food company Gourmet Express for his role in a $3.9 million tax fraud scheme.

Robert Warren Scully, 70, was found guilty of conspiracy to defraud the United States, conspiracy to commit wire fraud and three counts of wire fraud. They acquitted him of three tax evasion counts. He faces up to 20 years in prison.

Prosecutors alleged that between April 2001 and July 2009, Scully brought in his nephew, Kevin Scully,  as a minority partner after one of the founders left and that the Scullys used shell companies in Thailand to inflate the prices Gourmet Express paid for shrimp and other ingredients. They also siphoned off a cut of those excess costs, or profits, but did not declare them on taxes, the prosecutors alleged.

Troy X. Kelley, Washington State Auditor has been indicted for federal income tax evasion, lying to investigators, concealing millions of dollars, and making repeated false statements.  Governor Jay Inslee wants Mr. Kelley to resign but Mr. Kelley said he plans to go on leave instead. A Democrat and former state legislator, Mr. Kelley was elected the state’s auditor in 2012.

In a prepared statement he said the federal indictment has “no merit,” and that:

none of the allegations touch on my work as an elected official in any way. They’ve been able to obtain an indictment, but they are a long way from proving any wrongdoing. Put more directly, I am very confident that I will be able to prove my innocence.

Swiss bank BSI SA will pay $211 million to settle charges it secretly helped American clients evade U.S. taxes, the Department of Justice said. The private bank is the first to admit responsibility under a federal program that encourages overseas banks to disclose their role in undeclared offshore accounts held by wealthy U.S. citizens.

In addition to payment of the $211 million, the bank has agreed to provide detailed information on an account-by-account basis for every account it has in which a U.S. taxpayer has a direct or indirect interest.

Additionally, the bank will explain  how its cross-border business for U.S.-related accounts operated, provided the name and function of those involved in the operation and turned over the total number of accounts and aggregate maximum value they held as of August 2008 and afterward.

U.S. taxpayers and U.S. companies shifting profits and come to other countries robs the Government of more than $100 billion in tax revenue each year according to a report by a congressional research group the Congressional Research Service.

The federal government loses both individual and corporate income tax revenue from the shifting of profits and income into low-tax countries, the report says. The revenue losses from this tax avoidance and evasion are difficult to estimate, but some have suggested that the annual cost of offshore tax abuses may be around $100 billion per year.

A large portion of the tax evasion relating to individuals occurs when they take actions to move their investments to foreign companies and then do not report the holdings of these assets on their tax returns.When a person does this, they evade a tax that they are legally required to pay. according to CRS.

The Vanguard Group one of the world’s largest investment funds with $3 trillion under management illegally evaded taxes through transfer pricing, says whistleblower David Danon, a tax attorney at Vanguard for nearly five years.  He became aware of a transfer pricing arrangement while at Vanguard and its affect on corporate taxes. He filed a whistleblower action in 2013 under the New York False Claims Act. He alleges that Vanguard charges its own funds at cost prices for management services, which is below market pricing. Vanguard says that the Securities and Exchange Commission issued an order approving :joint participation arrangement. Danon says that order allowed the transactions for securities purposes not taxes. Continue reading

A Massachusetts businessman pleaded guilty to tax evasion for using nominee entities to hide ownership and control over his businesses and assets from the Internal Revenue Service (IRS), announced Acting Deputy Assistant Attorney General Larry J. Wszalek for the Justice Department’s Tax Division and U.S. Attorney Carmen M. Ortiz for the District of Massachusetts.

According to the indictment, Richard L. Furnelli, a former resident of Holyoke and South Hadley, Mass., evaded payment of his federal income taxes for 2006 through 2009, among other years, and also failed to file his federal individual income tax returns for those years.

The indictment alleges that from 2006 through 2009, Furnelli earned more than $2 million in income. Furnelli operated or held substantial interest in Solid Gold Inc. and Gold Club-SF LLC, which owned and operated the Gold Club, an adult entertainment venue in San Francisco. These corporations allegedly earned annual gross receipts ranging from $2.5 million to more than $10 million dollars. During that time period, the indictment also alleges that Furnelli directed the payment of his income to a nominee entity, RLF Ventures LLC, and utilized a bank account held in a nominee name.

New York State has the most advanced whistleblower law in the country which, among other things, allows for whistleblower claims against state tax cheats and for the whistleblowers to collect a percentage of the moneys reimbursed.  The question is, why is New York the only state to pass such a law? It is well established that millions in state taxes go unpaid each year due to tax evasion. Although the New York law has not been in existence very long, it has been very effective in catching tax cheats. To the benefit of the New York economy. It also gives incentives to whistleblowers who are entitled to up to 30% of the amounts collected by the state.

Note today’s announcement from New York Attorney General Eric T. Schneiderman that Topline Appliance Center and its principal owner, Michael Moretti, have agreed to pay $1.56 million to settle allegations that they knowingly failed to collect and pay sales taxes and corporate franchise taxes to New York over an almost 10-year period. Topline Appliance Center has multiple locations in New Jersey, and it sells and delivers high-end appliances to New York customers.

Attorney General Schneiderman alleges that over the course of almost 10 years, Topline Appliance Center and Moretti sold or delivered high-end appliances to New Yorkers from their New Jersey stores without collecting any New York State and local sales taxes.  Topline also failed to pay proper New York corporate franchise taxes despite doing business in New York.  Failing to collect and pay these taxes gave Topline an improper competitive advantage over appliance stores located in New York.

Recently Switzerland and Singapore agreed to share tax information about American tax evaders. On May 6, 34 members of the Organization for Economic Cooperation and Development (OECD) and 13 other nations signed an agreement on gathering tax-related information from financial institutions and will exchange it every year.

This means that for those trying to evade taxes, nations like Switzerland and Singapore will not longer allow them to hide behind secrecy laws.

However, certain countries in Central Asia and Africa will not abide by such agreements and some experts feel that tax evaders will shift their moneys to banks in those nations in order to keep from paying the tax man. This may include major international corporations.