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CEO Faces Jail Time, Fines for Criminal Tax Evasion

Offshore Account Update

Posted in on March 27, 2015

In 2008, the United States took legal action to require Union Bank of Switzerland (UBS) to turn over information on U.S. citizens who were keeping money in offshore Swiss accounts in order to avoid paying U.S. taxes.

The CEO of the Atlanta-based company Circle Net, Gregg A. Kaminsky, heard the reports of this effort and was prompted into action. Kaminsky had undeclared money that he was keeping in a UBS account and he promptly moved that money and filed two amended tax returns.

Unfortunately, Kaminsky has now been charged with criminal tax evasion and he pled guilty to those charges. He will be sentenced to a maximum of five years of incarceration. He will also pay criminal fines of up to $250,000 and will need to pay another $250,635.20 in civil penalties as part of his settlement agreement with the Internal Revenue Service. The Department of Justice wants to make an example out of Kaminsky and others like him.

If you have money offshore, you need to be aware of the crackdown against potential tax evaders and you need to know that the Department of Justice and Internal Revenue Service are being very aggressive in going after individuals and financial institutions. Acting proactively in a smart and strategic way is the only way to minimize or limit any potential penalties you must face, and a New Jersey criminal tax lawyer should be consulted for help.

Criminal Tax Evasion Has Serious Penalties

According to the Justice Department, Kaminsky was keeping money in Swiss bank accounts from 2000 to 2008. He moved money into these accounts using direct deposits from at least two different companies. He also made periodic wire transfers out of his account at UBS bank into additional accounts he had in Thailand and Hong Kong. By 2006, he had around $1.1 million in his Swiss bank account.

Like anyone with an offshore account, he was supposed to file a Foreign Bank Account Report (FBAR) with the treasury. He did not do so, and he neither reported nor paid income taxes on money earned in his offshore accounts.

However, after hearing about the efforts to force UBS to disclose details on account holders, he took action. He moved money into a Hong Kong HSBC bank account and filed amended tax returns for 2007 and 2008. These returns had partial disclosures of offshore income, but didn’t include reports of around $150,000 in taxable income earned from his participation in Second Life (an online virtual world that makes it possible to earn real money).

Because of his failures to file FBARs and pay taxes on around $400,000 in income, he was charged with a crime and pled guilty. The consequences of fines and jail time are very severe and are intended, in part, to deter other investors from continuing to keep offshore accounts secret.

The crackdown on Kaminsky is just part of a larger effort to stop people from keeping money hidden in foreign accounts. If you have money or accounts you haven’t reported, you need to explore your options now before you too find yourself accused of a crime. Call New Jersey criminal tax lawyer Kevin Thorn today to get help with voluntary disclosure and other legal steps you can take.


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