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CEO Sentenced to Four Months in Prison for Tax Evasion

Offshore Account Update

Posted on June 26, 2015 |

U.S. citizens must report all income to the United States, even if that income is kept in accounts outside of the country. Anyone who has an offshore account is required to file an annual Foreign Bank Account Report (FBAR) to alert the treasury department to the fact that the account exists at a foreign bank. If income is earned on offshore investments, taxes must be paid on it.

A failure to follow these rules has serious consequences. Just recently, a CEO was sentenced to prison time for allegedly failing to report income and not filing FBARs alerting the government to accounts held at banks in Switzerland, Hong Kong and Thailand. When tax evasion criminal cases are brought, authorities generally push for prison time to try to make an example of those who are caught keeping money offshore.

Any investor who has funds in an offshore account and has not filed FBARs is potentially at risk of being tried, convicted and imprisoned. There are options to try to avoid this, like participating in an Offshore Voluntary Disclosure Program (OVDP), but these options are not always available and you typically have to come forward voluntarily before you are actually under investigation.

A New Jersey tax attorney can provide help to those who are under investigation or to individuals who want to be proactive in exploring participation in OVDP or other amnesty programs before they are caught with offshore funds.

CEO to Do Time in Federal Prison

Gregg A. Kaminsky is the CEO of Circlenet, LLC and is an Atlanta investor who has been sen-tenced to prison time. Kaminsky reportedly had an offshore bank account he owned and con-trolled between 2000 and 2008. The account was held at Union Bank of Switzerland, or UBS, which is one of the largest Swiss banks.

During the years when he had the account, it grew to almost $1.1 million by 2006. Money was transferred into the account periodically from at least two different U.S. companies via direct deposit. Between 2002 and 2009, Kaminsky also caused funds from his UBS account to be wire transferred into other foreign bank accounts in Thailand and in Hong Kong.

Despite the requirements to do so, Kaminsky did not file FBARs on his accounts, nor did he otherwise disclose any of his foreign financial accounts to the Treasury Department. He did not report income earned from the virtual world Second Life, nor did he declare taxes on income, interest and dividends earned and deposited into the Swiss bank.

When he completed a Free Application for Federal Student Aid (FAFSA), he also did not disclose the fact that he had more than $500,000 in funds in his UBS account, as having this much money would have disqualified him from federal assistance.

As a result of his failures to file FBARs and report all income, Kaminsky was found guilty and was sentenced to four months in federal prison. He will also be required to pay $91,983 in restitution.

Other investors may find themselves facing jail time and large restitution costs if they did not comply with all IRS rules including the FBAR mandate. A tax attorney in New Jersey can help to fight charges or help you try to avoid being faced with a criminal charge in the first place. Contact attorney Kevin Thorn to learn more.

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