Thursday, April 5, 2012

Atypical Foreign Bank Account Related Sentencing (4/5/12)

Marlyn D. Hinders, a one-time fugitive for his actions with the Genesis Fund, has been sentenced based on a plea of one count of tax obstruction, Section 7212 (an charge consistent with but unrelated to his name).   The Plea Agreement is here.

I say this is an atypical sentencing principally because (1) the events predate the present offshore initiatives beginning in 2009 and (2) illegal income appears to be involved.

Other Key Details:

Taxpayer:  Marlyn D. Hinders
Sentence Date: 4/4/12
Bank: Banco Cuscatlan (Costa Rica)
Entities: Yes
Guilt: By Plea Agreement
Count(s) of Conviction: Tax Obstruction, 7212 (1 count unclear which year or years it was for, but the plea agreement says the obstruction was from September 1999 through March 2005)
Maximum Possible Sentence:  3 years.
Sentence Imposed: 21 months.
Probation: ?
Age at Sentencing:  72
Tax Loss: ? (Parties stipulated to a Guidelines Base Offense Level of 14 which has a tax loss range of $30,000 to $80,000; the amount stipulated is odd, since he agreed that during the years 1999 through 2002, he received "at least $925,060.64" in taxable distributions from the Fund; perhaps some had been previously taxed?).
Civil income tax with penalties and interest:  Defendant agrees to cooperate in IRS determination of liability for 1999-2001 and "will not file any claim for refund of taxes, penalties, or interest for payments made in connection with unreported income from the Genesis Fund, unless the Court or the government agree that he is due a refund.
Restitution:  None (Government agreed not to seek restitution; but defendant has obligation to assist in computation of tax liabilities and not contest them)
FBAR Penalty: ?
Court: Central District of California
Judge: Dale S. Fischer (Wikipedia entry here)

Michael Cohn, Foreign Exchange Fund Promoter Sentenced on Tax Charges (Accounting Today 4/4/12), here.


  1. he received 21 months which is a lot compared to the tax loss caused by him in comparison to other sentences mentioned earlier in the blog. i wonder if the fact the he was a fugitive increased his sentencing.

  2. Per the article he was involved in running and promoting a Ponzi scheme, as an investment fund. Some of the other principals were sentenced to as much as 60 and 70 months.

    For some reason they were not charged with that crime, but rather with tax evasion.

    Although they were ordered to pay some restitution to the clients.

    Maybe, like with Al Capone, if they can't be sure to convict him on the more serious charges, they use the "lesser" crime of tax evasion instead.

    In this case, the reason could have been that he moved to fund to Costa Rica, and removed all evidence from the US. Not being able to subpoena evidence could have hampered a prosecution on the more serious charges.


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